必和必拓 (BHP) 2026 Q2 法說會逐字稿

Thank you for joining us to hear about BHP's December 2025 half year results. I'm joined by our Chief Financial Officer, Vandita Pant.

This has been another good half both operationally and financially. Our strong performance on production delivery and cost control, coupled with a strong commodity price environment, has underpinned continued balance sheet strength and growth in cash returns for the period.

We continue to deliver well against our strategy, and we can see the fruits of our strategy execution evident not only in our continued operational excellence, but also in the fact that just over half of our earnings for the period came from our copper business.

That's up 30 percentage points over the past three years, and this is the result of our deliberate actions to grow our copper business, including through more reliable operations at Olympic Dam, our focus on grade and sequencing at Escondida, and our OZ Minerals acquisition.

This has positioned us well for the strengthening copper dynamics that we had forecast, and we have built a strong pipeline of growth in both copper and in potash.

I remember one of my predecessors many years ago talking about how the combination of a strong, stable asset base, operational performance, and balance sheet combined with growth options was the winning formula for value creation. And in the almost 25 years since the merger of BHP and Billiton, we have delivered the highest total shareholder return of the major diversified miners and around 4 times that of the MSCI World Metals and Mining Index. That formula is as valid today as it was then.

Today, Vandita and I will share how we are well placed to continue delivering on our strategy and growing value for shareholders.

This half we set operational records in copper and iron ore at a time of high commodity prices, and we did it safely. At Escondida, we raised copper production guidance for this year and next, and we remain on track to meet full year guidance across the rest of our business. We advanced our copper growth options, targeting around 2.5 million tons of copper equivalent per year, including byproducts by the mid-2030s.

And over the past three months, we've announced agreements in relation to Western Australia iron ore's inland power use and Antamina's future silver production.

Across the group, we see potential for up to $10 billion in capital that could be unlocked and reinvested into higher returning opportunities and/or increased shareholder returns. Our performance and our confidence in the business have allowed us to determine an interim dividend of USD0.73 per share, up 46% half on half.

Of course, nothing matters more than safety. Key safety metrics improved during the half with a lower high potential injury frequency and improved hazard identification. Most importantly, no one lost their life on the job. Alongside the improvements enabled by our BHP operating system, we're also using more technology to keep people out of harm's way and detect risks earlier.

BHP's strategy remains clear and simple. We invest in highly attractive commodities, operate world-class assets excellently, allocate capital with discipline, and offer a distinctive approach to social value.

Our track record is compelling. Margins averaging above 50% over 25 years. A strong balance sheet, and over $110 billion returned to shareholders over the past decade. We are also progressing organic growth options to deliver compound annual copper equivalent production growth of 3% to 4% through to 2035. Stability plus growth equals value.

Let me delve into a couple of these quickly, starting with operational excellence. At our assets, our prioritization of safety, operational reliability, and continuous improvement is enabled through our BHP Operating System, or BOS.

BOS empowers our teams to identify opportunities and act on them quickly. It has also been a key factor in our track record of meeting our production and unit cost guidance more reliably than our competitors.

In copper, we've raised production guidance by a cumulative 150,000 tons over the next two years. We're capturing the current high copper and gold prices.

And at Western Australia iron ore, we've increased our lead as the world's lowest cost major producer. In fact, we've reduced costs in real terms post COVID, the only major Pilbara producer to do so. This is a critical advantage as competition in this market intensifies.

Why are we so focused on operational performance? Because it's incumbent on us to generate maximum value for the capital we have deployed in the business. It has also positioned us to derive maximum benefit from this period of higher prices. This delivers value for shareholders now through higher payouts.

It also allows us to invest in the future. And this investment will drive growth over both the near and longer-term, from around 3% per year through to 2030 and accelerating beyond that.

Underpinning this is expected growth of around 5% per year on average in our copper business. A significant portion of our growth comes from brownfield expansions or greenfield projects which we have de-risked through partnerships and stage development. Shareholders can have confidence in our execution.

Now of course, not all dollars get reinvested in growth. We have a clear capital allocation framework that has ensured attractive cash returns to shareholders are protected. In doing so, this has ensured better discipline in how we invest through forcing competition for capital.

Disciplined capital allocation has been central to BHP's strategy for many years and contributed to our consistently strong shareholder returns. As I mentioned before, we have returned over $110 billion to shareholders via dividends, share buybacks, and demergers over the past decade. This represents over 70% of today's market capitalization.

With that, I'll hand over to Vandita to take you through our financial performance.

Thanks, Mike.

Our strong operational performance is reflected in our healthy set of financial results. Our underlying EBITDA grew by 25% with an increased margin of 58%. Our underlying attributable profit was $6.2 billion and our return on capital employed was 24%, both up significantly over the past year.

Every six months we assess shareholder returns through our capital allocation framework to ensure dividends reflect performance. Based on our strong results, confidence in our outlook and cash flows, we have determined a half-year dividend of $3.7 billion, a payout ratio of 60%.

As you can see on the slide, we delivered well in the areas we can control. This enabled us to fully capture the benefit of higher copper, gold, and iron ore prices.

Across the group, production increased 2% and unit costs improved around 4.5% despite inflation of more than 2% and currency pressures. These financial results are the outcome of the strong performance Mike has mentioned from across our business.

In copper, we generated a record $8 billion of EBITDA in the half, over half the group total at a margin of 66%. Our copper assets each produce significant amount of byproducts. We are not only the world's largest copper producer but also a global top 20 gold producer and the world's third largest uranium producer, valuable positions at a time of near record prices of these commodities.

Escondida delivers steady volumes, despite 10% lower grade. The team has done well to identify opportunities to improve throughput and recovery, along with higher prices for byproducts. This delivered a 16% improvement in costs.

Copper South Australia also delivered solid performance, with copper production up 2% and gold up 12%. A strong gold production was key to its more than 50% reduction in unit costs.

Western Australia Iron Ore achieved record first half production and shipments, while completing the car dumper 3 rebuild on budget and ahead of schedule. With C1 costs up only 1% to $17.66 per ton, WAIO has extended its lead as the lowest cost major iron ore producer globally.

Steelmaking coal volumes at BMA rose 2% with strong performance at our open cut mines, offsetting geotechnical challenges at our underground mine. Our work to stabilize the supply chain is progressing well with the team delivering the highest first half stripping volumes in five years.

And New South Wales Energy Coal continues to perform well as the transition to closure progresses as planned.

Now, BHP is by design a diversified miner rather than focused on a single commodity. This is our competitive advantage. Our diversified portfolio helps deliver consistently strong cash flow which supports investment and returns to shareholders through the cycle. This not only helps protect us from downturns in commodity price cycles, it positions us to thrive through them relative to a single commodity company.

As this slide shows, at spot prices we expect to generate around $60 billion in attributable free cash flow over the next five years. That's cash flow after funding our investment in growth. Even in an extreme and prolonged low-price environment, one in which prices fell 20% to 40% below current levels and stayed there for five years, we would generate around $10 billion in attributable free cash flow over that period.

Now let me talk about our capital allocation framework, which ensures all users of capital compete to maximize value and return for our shareholders. You're all familiar with the framework, so I won't go through it in detail, but let me just highlight one aspect.

As I mentioned six months ago, we continuously seek to unlock additional value from our capital base and assets. Today we announce the most valuable ever silver streaming agreement relating to our share of Antamina's future silver production. This unlocks value from a non-core commodity at a time of strong silver market conditions. BHP retains full exposure to our share of all future copper production of Antamina.

On completion, we will receive $4.3 billion in cash, an amount just shy of broker estimates of our share of Antamina's entire value.

This follows our agreement in December in relation to our share of WAIO's inland power consumption. On completion of that transaction, we will receive $2 billion in return for a tariff linked to power use over 25 years. Importantly, this will not impact the ownership of any assets. BHP will retain full operational and strategic control of WAIO.

These agreements are examples of BHP's razor-sharp approach to capital portfolio and asset management. They improve our financial flexibility, unlock value, and benefit BHP's shareholders. Together they will unlock over $6 billion of cash.

Across the business, we see potential to unlock up to a total of $10 billion. As always, this will go through a capital allocation assessment to be applied to higher returning and more value-accretive users, including growth and shareholder returns. This disciplined approach is central to how we maximize long-term value for shareholders.

With that, I'll now hand back to Mike.

Thanks, Vandita. Let me briefly share our view on the markets before I take you through our growth plans.

Commodities saw healthy demand in 2025, supported by more favorable trade outcomes than expected, supportive policy, and improved confidence. Despite continued policy and geopolitical uncertainty, we expect global GDP growth in 2026 to be broadly in line with last year, supported by policy responses in major economies.

We expect China's 15th five-year plan to lift domestic household demand and to prioritize technological development. Exports are also likely to remain resilient due to their cost competitiveness.

India's positive momentum should continue, driven by ongoing infrastructure investment, expanding manufacturing capacity, including in steel and metals, and improved financial conditions.

We also see European growth picking up through 2026 and the US remaining steady. This backdrop is expected to support ongoing robust demand for our commodities. Combined with tight supply, fundamentals for our commodities remain supportive, and BHP is well placed against this backdrop.

Our success over time has been underpinned by our ability to regularly reshape our portfolio for the future, and we have done so yet again in recent years. Our world-class assets are large, long life, low cost, and have options to grow.

We are the world's largest copper producer. We run the world's highest margin iron ore business. Our steelmaking coal business produces some of the world's best metallurgical coal, and we are building a significant new business in potash.

Let's take a closer look at some of our assets.

In iron ore, we set about positioning ourselves for fiercer competition in iron ore markets. We became the world's lowest cost major iron ore producer, and we've maintained and in fact grown that position over the past six years. But we're not stopping there. We have a clear pathway to grow volumes to over 305 million tons per year by the end of financial year '28 and to reduce costs by 10% to below $17.50 per ton in the medium term.

We have created the option to grow up to 330 million tons per year should market conditions warrant. Our cost leadership delivers $10 per ton more free cash flow than our next closest major competitor. That has delivered $10 billion to $15 billion in extra free cash flow than our major competitors since financial year '20.

In January, we completed a detailed review of the cost and schedule estimates for Stage 1. First production remains on track for mid 2027, but we updated our cost estimate to $8.4 billion. We believe our Jensen potash asset in Canada can be another whale-like asset.

What do I mean by that? Once ramped up, Jansen will be a world-class low-cost potash producer. It's expected to deliver around $1 billion of EBITDA per year per stage with margins above 60%. It will also make BHP stronger because potash demand drivers in key customer markets are differentiated from our other commodities, meaning even lower volatility in earnings and cash flow generation.

In copper, we are already the world's largest producer, and we have clear plans to increase our production. Our lower risk pathway represents production growth of around 40% by 2035. This is capital efficient, predominantly brownfield growth that will further increase the proportion of our earnings from copper.

This is an exciting position to be in. Global demand for copper is projected to grow by around 70% between 2021 and 2050. That demand is durable and multifaceted. Traditional economic growth, the energy transition, and the need for data centers to support increasing use of artificial intelligence. These will all need more copper.

Let me explain how BHP plans to help supply this. Escondida continues to perform strongly, and we are progressing towards submitting the application for the environmental permit for the new concentrator within the next six months. A final investment decision remains on track for 2027 or 2028.

After lifting production guidance for financial year '26 last month, we've also raised financial year '27 guidance to between 1 million and 1.1 million tons. Including the 400,000 tons of incremental production over 2027 to 2031 that we announced last year, the recent increase in guidance means we now expect to deliver over 500,000 more tons over the next five years compared to what we announced at the Chile site visit in 2024.

At today's prices and margins, that would be an additional $5 billion of EBITDA over that period.

Also in South America, the Vicuña joint venture with Lundin Mining is advancing rapidly. Vicuña recently applied for Argentina's RIGI scheme, which would provide 40 years of greater stability and improved economic conditions for its development. The opportunity in the district is significant and continues to grow, with recent drilling adding another 9 million tons of contained copper. That's equivalent to another 1.5 Josemarias.

Vicuña's staged approach to development, which de-risks the project, remains unchanged. We could make a final investment decision on Stage 1 as early as the end of this calendar year. Once all three stages are fully developed, Vicuña has the potential to be a global top five copper and top five gold producing asset.

Finally, at Copper South Australia, we are progressing our plan to unlock the full potential of this polymetallic resource. If it were a standalone business, today, Copper South Australia would be a global top 15 copper producing asset, the fifth largest gold producer on the ASX and produce around 5% of the world's uranium. This is a considerable base from which to grow.

With strong and reliable performance at Olympic Dam and the addition of Carrapateena and Prominent Hill, Copper South Australia is well positioned for growth towards 650,000 tons of copper per year, or close to 1 million tons, including byproducts in the late 2030s, and to do so at a competitive capital intensity. We expect to provide an update on Copper South Australia's growth plans later this year.

In closing, we have a clear and simple strategy proven over many years. We are delivering strong, stable operational and financial results. And from our position as the world's largest copper producer today, we have a clear path to significantly grow our production. Our stability and our growth means we are well positioned to create value both now and far into the future.

Thank you.

Thank you for standing by, and welcome to BHP's results for the December 2025 half year investor and analyst presentation and Q&A session. Firstly, I advise you that this conference is being recorded today. (Operator Instructions)

I would now like to hand the conference over to Mike Henry.

Thank you, operator. And welcome, everyone. Good morning, good evening, depending on where you are. Thank you for joining this morning. I have in the room here with me Vandita and Mark, who I know you all know well. I assume that you've watched the video or seen the results, and it's a strong set of operating results.

Copper equivalent, growth up 2% for the period, whilst costs are down 5%. And that's a 7% real cost decline. In fact, we're the only major Pilbara producer, if I speak about Western Australian iron ore to generate real cost decline since COVID, and that's coming through our real focus on operational excellence underpinned by the BHP operating system.

And this confidence in our underlying performance and our outlook for the business has enabled us to declare a substantially higher dividend this half, up over 40% to USD0.73 per share. Of course, we've also during the period undertaken a pretty sharp -- we've brought to bear our sharp focus on how we go about maximizing returns from the capital we have deployed in the business, hunting down every opportunity.

You saw that in the GIP deal that we did with power in Western Australian iron ore, and today we've also announced a USD4.3 billion silver streaming deal with Wheaton. All part of our active capital recycling initiatives, and we continue to hunt for further opportunities, and we've said that there's potentially $10 billion here to be done, and we've already realized 6.3% of that.

We've also announced an increase in Escondida's copper guidance by 100,000 tons. And when you combine that with the increase in -- or combined with the increase in 2026 guidance, that means we've increased our group copper guidance over 2026 and 2027 by 150,000 tons.

And that's at a time when many of our competitors are cutting their guidance. You'll have seen in the presentation that we're providing a lot more detail on our copper growth program than we have in the past. You've heard me say many times that if all we did was execute on our growth program and copper and potash, and alongside that continue to run our underlying business better and better every day, that's already a great result for shareholders.

Our copper growth program is going to see copper growth increase around 5% on a CGAR basis from 2027 to 2035. And based on the CapEx estimates we're now providing, you can see that the capital intensities behind this growth are pretty attractive. We'll have more to say on Copper South Australia growth over and above what we published today at a site visit that we're planning for the end of the year.

So overall, great set of results. Operationally, financially, I hope you can see that. Our strategic execution on the portfolio front is going well, and the growth outlook now, you can be confident in that both because of the way that we're running the underlying base business as well as what you see being revealed today in terms of capital intensities.

With that operator, I will open up lines to questions.

Paul Young, Goldman Sachs.

Can I start with the silver stream and then also just infrastructure sales in general? I mean, a really good outcome here. You've pointed out that you're selling -- the silver stream is down at a value above consensus [MPV Fantom] mean playing cost of capital arbitrage, well above, I think the $1 billion.

One of your partners sold their stream for a decade ago. So just curious around -- you have the balance sheet's strong, how does this -- how could this come back to shareholders, Vandita, like going forward? And is therefore 60% sort of the new 50% if we can call that on the payout?

Okay, I'm going to get ahead of you at this one point. So 60% is not the new 50%, but I hope that you can see coming through this period's results, which where we had strong underlying operations, good markets, and of course, we've been very thoughtful about capital allocation, as you can see coming through the GIP deal on power. We're very thoughtful about the interests of shareholders, and needing to balance between reinvestment in growth in the business, but always with an eye to healthy cash returns for shareholders.

But Paul's question, Vandita, specifically about the Wheaton silver stream that --

Yeah, very pleased with that value unlock maximizing at a time, Paul, when the silver market was so constructed. From a use of proceeds perspective, I hope you know our track record of how we every six months take all the proceeds, be it operational cash flows or cash flow generated through silver streaming, for example, for the six months into our capital allocation framework.

As Mike clearly pointed out, 50% is the minimum, but that is the minimum. And hence, we'll be very thoughtful about taking these proceeds and allocating these to some very attractive growth projects and to shareholder returns as well. And then there's the form question, which will come as a second order question, but very comfortable for you to think of.

This is not one use or the other. These are the users which go into the capital allocation assessment and through that, get allocated to maximize value and returns, both on our projects as well as for shareholder returns.

Okay, thanks, Vandita. And then, Mike, a question on Vicuña, obviously tech documents out this morning, and this is a pure mega project, it's CapEx of total, I think, of $18 billion for all the stages, but economics do look attractive at the north of $3,000 an ounce gold assumption within the base case. It's an equitable county unit, so the CapEx -- this CapEx is actually not in your CapEx guidance to point that out.

But can you talk through the -- your comments about the ability for BHP to execute on this project? And potentially, when we could see first production if we do FID this project to Josemaria, that is stage one at the end of the year?

Okay, so the -- just addressing the first point you made there, Paul, around -- this capital isn't in our CapEx guide. That's true. But the other thing I would just want to draw everybody's attention to is that we also have 40%-odd some of Escondida that's currently built into our fourth CapEx guidance that comes out if we were looking at everything through a purely attributable lens, and so they kind of largely offset each other.

Now this is a great project, so very large resource. You'll see the three stages that we've mapped out here. We've been clear that we could see FID on this as soon as by the end of this calendar year, and things are looking pretty attractive on that project.

Now, stage one, so the stage you're referring to could see first production in calendar year '30. And so that's just ahead of us, and this is in a part of our overall strong copper growth story. 5% CAGR between 2027 and 2035, so we're in a pretty enviable position in that regard.

Rob Stein, Macquarie.

If I may say, it's a bit of an un-BHP approach into selling streams, and I think it's to be applauded, capturing that value arbitrage. If we think about it then in the context of OD, the gold stream there that sits against that asset, quite significant, one of the largest gold miners globally.

How would you think about fully capturing value of that to offset some of the capital requirements of the OD expansion plan? Because for argument's sake, I don't think the full 600 (inaudible) is being included there.

Well, so Rob, I'll answer this first. Vandita, if you may have some things you'd like to add. Would we like to see the gold portion in our portfolio, which is going to get bigger, by the way, with Vicuña, of course, because it's a gold rich asset. We do want to make sure that that's fully valued. However, if you think about the silver stream that we've done at Antamina, silver is a much smaller part of the portfolio than gold is.

Secondly, we know that we're not giving up material upside or the risk of giving up material upside at Antamina because we largely know what the production profile from here looks like. There are life extensions, but there is a life extension. But that's being incorporated into the value of the $4.3 billion. The challenge that we have with gold is that it's an assets where the upside is still not quite known.

We have our expansion plans to 650,000 tons per granum of copper cathode at Copper South Australia. But the resource is so large, who knows where it goes from there? And same thing with Vicuña. So any consideration of a gold stream gets tempered by the fact that it's a more core asset for us.

And secondly, we would be at greater risk of giving up upside and later coming to regret having done it. Vandita, was there anything you wanted to add?

No, I think that's right. And given the valuation of Antamina's entire stake from a consensus perspective being [4.6 odd], and given the upside that we were looking to sort of give up, we're very confident that this is a value generating deal, which is almost doubling our stake value in Antamina by unlocking it.

So our confidence in the deals to generate value has to be very high, and hence the upside being surrendered for gold is not something which we like to do.

But Rob, one of the things I would just say, the overarching point here that I'd like people to take away is that we are super sharp when it comes to looking at how we go about maximizing returns for every dollar invested in the business, and you can see us hunting down the opportunities to do that through our power deal with GIP in Western Australian Iron ore, now the silver stream.

But always with a good understanding of the risk that comes with that as well. So in the case of the power deal, we maintain strategic and operational control over the underlying asset. In this case, we did a deal that for a commodity that was non-core and where we were confident that we weren't giving away long-term upside.

Thank you. And then just -- sorry, follow-up question on ID. The cap intensities have come through, which is thank you very much for providing that detail. I think the market was looking for it. In terms of the copper intensive, capital intensity for the smelter expansion, obviously that accumulates through the mining expansions given that it's an enabler.

But can you perhaps give us a feel for how you think about returns of that smelter expansion in its own right in terms of cost reduction, what it enables underground, and how that can drive a differentiating cost advantage of that asset going forward?

Super good callout, Rob, and if you think back to what we said shortly after the acquisition of OZ Minerals, we talked about the -- one of the big synergies to be unlocked, and this wasn't in the initial basket of synergies that we committed to and we've well and truly achieved.

This was in the long-term potential upside. It was being able to, as we move to two-stage smelting at Olympic Dam, and I'll come back to the importance of that in a second. At the same time look to expand the smelter and then the refinery to allow us to bring in material from Carrapateena and Prominent Hill, to be able to extract more value by way of needing to transport at less distance, recover more of the byproducts and so on and not have to pay -- to pay away the upside on TCRCs in it.

And so you're now seeing that come through in the numbers that we're bringing forward and the real upside that existed in that acquisition. Now, part of what enables that is the fact that we wanted to move to two-stage smelting anyways. Why did we move to two-stage smelting? It's because that will deconstrain the underground at Olympic Dam, where right now we're having to hunt for both copper-sulfur ratio and copper grade in parallel, and that gives rise to a less efficient operation that was only going to get worse over time.

Moving to two-stage smelting will deconstrain us. It will allow us to have a more efficient underground, so you get better underground efficiencies at Olympic Dam. You capture the upside from the OZ Minerals deal, and then we capture the growth upside from all of those assets combined, which has been de-risked through greater resource optionality.

Rahul Anand, Morgan Stanley.

Look, my first question's probably a follow-up to Paul's question, but perhaps, this time directed towards Mike. Look, obviously the balance sheet continues to look better. I mean, you look at slide 38, and as you pointed out, Mike, how your attributable CapEx is pretty much in line with what your guided range is, despite including Vicuña in there.

That kind of points me to the fact that you've freed up about $6 billion year to date in terms of fuel asset sales, and the balance sheet continues to look good and even better in the future given where commodity prices are.

So I guess we've talked a bit about dividends with Vandita, but is there anything else, Mike, that we can do in terms of bringing some of the growth forward? I mean, can the [zero] restart be brought forward? Can you perhaps do a bit of leaching quicker by spending a bit more CapEx on it? I mean, what kind of growth, potentially can we bring forward, in the business, if anything?

That's the first one.

Look, it's an interesting question, Rahul. And you'll see that it is not like we're sitting on our hands and not always pursuing opportunities to grow more quickly. And you see that come through in what we did -- with what we've done with the reprofiling at Escondida.

Now part of that was driven through operational excellence, but part of it was also through very surgical disaggregation of some of the components of the Laguna Seca expansion and bringing subelements of that forward, so we do look for those opportunities, but those -- it's not like CapEx is the big constraint on our opportunity to grow more quickly. The constraints are around technical studies, permitting, and so on and so forth.

And so I'm pretty confident and comfortable with the plans that we have in place currently, not to say that we won't look for discrete small opportunities to advance things where it's sensible to do so, but I wouldn't want you to go away from this call expecting that there's going to be a major shift in what I think is already a pretty attractive growth path from here on out.

And if I may add, I think Vicuña guiding to an FID potential for as early as this year is an acceleration of thoughts, Rahul. Because from memory, most of the analysts are not putting Vicuña growth in the numbers in the way it is. So I'm hoping that with the details given of capital intensity, FID date, first production for Vicuña as well, you get confidence to inject that into our growth plan as well.

Absolutely, thank you for that extra detail, Vandita, as well. Look, the second one's on way -- and obviously, Mike, you've highlighted the potential in the asset and also the performance year to date and how well it's gone. I guess my question's more around your medium-term guidance, moving to below that $17.5 a ton run rate.

I guess, what are some of the critical path items there? I mean, obviously it's going to be driven in part by that 305 million tons per annum run rate that you get to, but are there any other assumptions that perhaps look like critical factors in that guidance?

And you have guided that $17.5 as the top end. I guess if we need to move to an even lower number, what could potentially drive that? And I'm excluding sort of FX from the argument here, I know you've got an FX argument of $0.65.

Yeah, so look, I'll provide some comments and Vandita, I know you've got things set on this as well. It's interesting that you call out that point around $17.50 being at the top end, and the relevance of that is one of the things that we know about the BHP operating system and getting all of our people mobilized on continuous improvement if we reach one horizon, and then the teams will come up with creative solutions to take us to the next horizon.

So year in, year out, we're going to be looking for opportunities to improve productivity further. Now, sometimes that'll result in more volume, sometimes lower cost or a combination of both. So that is genuinely how we see it. $17.50 is the horizon that we can see at this point.

But we also know that when we get there, we're an organization that wants to back itself to find even more opportunities. Now what allows us to get there, part of it is the volume dilution that you call out, part of it is the moving to the implementation of our rail technology program, so RTP 1. It's driving further productivity in our minds underpinned by the BHP operating system and its development of some new resources.

Yeah, just to add to what Mike said, some of the other supply chain constraints which we are unlocking, our port debottlenecking project PDP-1, which has been completed and resulted in us being able to do record shipments in the first half, goes towards that supply chain. Our car dumpers will come in. Car dumper 6 is part of it.

And then there is a sustaining mine, which is all for ministers north, which will get approved FID by the end of the financial year. Western Ridge Crushers part of it and going very well execution wise. And one extra part I would say on productivity point that Mike mentioned is our autonomous haulage. We are almost at 80% now across Wales, which is a safety and productivity uptick.

And we intend to get to more than 90%, 95% with the area, Mining Area C, the last one, which will also come in by FY28. So the guidance of [305], I would say $17.5 is very bankable, very specific.

Lyndon Fagan, JPMorgan.

Thanks very much for the presentation today. The first one I had was just on slide 31, some great detail there for all the projects. I'm just wondering if you -- for Copper SA, whether you're able to disaggregate the Carra Block Cave and the Olympic Dam expansion growth? It looks like there's a 220 per KT production uplift.

I'm wondering, is it about 70 coming from Carra with the rest at OD?

So Lyndon, what I'm going to ask you to do is to hang off until the site visit, where you're going to have opportunities to hear more detail and engage with people on it, but we're -- at this point in time, we're electing not to break it down.

Okay. All right, no worries. The next one is, I guess just a challenge on Jansen, with only 14% of Phase 2 done, and I guess the CapEx, under a lot of pressure there. Maybe you could sort of talk about why not pausing that project?

We obviously have to come forward with an updated view on CapEx lending, which we will do later in the year. If I start at a high level, we see the industry and Jansen as long-term very attractive. We think the industry fundamentals are great, potash demand going to grow by 70% by between now and 2050 with very low substitution, risk for or [mill] substitution risk for that commodity. So lots to like about it.

Of course, it has to be done for acceptable returns, and that's the work that we have underway currently. We do know that there's efficiencies to be gained in executing one off the back of the other. And so -- and hence the earlier decision to continue on with it, and when we come forward with our updated view of CapEx, where we are taking the learnings, by the way, out of JS1 to apply into JS2.

So it's a different set of considerations for JS2. Then that will give us even greater confidence. I believe that it remains an attractive investment for shareholders, and it's going to give us the combined a material business, between the two of them, it'll be circa 10% of the global market. So it becomes a meaningful business for BHP on path to an even more BHP-like business as we get Stages 3 and 4 executed at some point in the future.

Mitch Ryan, Jefferies.

Thank you for all the detail on Vicuña, clearly a lot there. I wanted to focus on the CapEx estimate table. Can you just provide a breakdown of the $4.8 billion of indirect costs? Can you help us understand what is in and out of that? Is the desal plant inside that number?

Thank you.

These are regular owners' cost plus indirects that you have for projects, nothing extraordinary there. In fact, the proportions of categories of spend which Vicuña presentation has gone into are broadly aligned with what you would expect for these projects. I have to say that as has been mentioned by Lundin's in their presentation, Phase 1 is more advanced, and as you would expect, more specific on cost.

The subsequent stages, there is more optimization yet to be done. So I would just point to that. But overall, from a spend category perspective, these are broadly aligned to what you would expect for projects of this kind.

Okay, thank you. And on the point of the desal plant being included or excluded from those numbers?

Sorry, say that again?

So desal plant, so what the -- slurry line, desal plant is excluded with an assumption that that infrastructure could be done off balance sheet in the project. And as you know, that is Phase 3 aligned timeline for that.

Okay, thank you.

And my second question just relates to slide 32, just a point of clarification really. You talked to the attributable byproduct cop equivalent production growth from '26 to '35. Is that pre or post the stream deal, like that F35 number? Does that include the Antamina silver in it at this point in time?

So that would have included, but it's so marginal as to not make a difference to the outcome, but it would have included, so it would have been pre a silver stream deal.

But let me say, Mike is right, it would have been pre silver stream. However, Vicuña is a major copper, gold, and silver project, so this uptick that you are seeing, it was not expected from Antamina alone. The uptick in terms of the growth is mainly Vicuña driven.

Kaan Peker, RBC.

Just on Vicuña. I understand that a lot's been talked about, but just in terms of what you're thinking as the key single biggest risk factor from converting a PA for sanctioning FID and a feasibility study by the end of the year, what would be the key technical risk that you would flag?

And then maybe going on with Mitch's question on the infrastructure spend for the $18 billion. What's the longer-term solution for that, and how much is being spent on that infrastructure?

And I'll circle back in a second. Thanks.

So on the first one, Kaan, from the perspective of, I wouldn't call them risk, but the threshold that need to go, you know that we have already submitted RIGI application, so that will come through over a period of time, which is there. The team, Vicuña team is continuing to work and sharpen its engineering maturity as you would expect at this time in the cycle. So that's just normal views.

EIA, we already have for that project that was submitted last year, July. So no material, technical thresholds, but of course the maturity of the project needs to continue, as would be the case before FID for projects of this size.

As you would have seen, Lundins have talked about how EPCM Contractors, three or four of them, the main one, as well as the local ones, are already working very closely with the teams and are inside the tent.

I think we can be pretty confident about Stage 1, Kaan. We're also confident about Stages 2 and 3, but we recognize that there's more work to go on 2 and 3 to continue to optimize. And that's where you get into more by way of infrastructure as well.

But Stage 1 was already well progressed by the time that we brought together the joint venture. And it's a simpler development on a number of fronts.

Sure, thank you. And the second question is on the CMRG. Some of your peers have taken a more commercially integrated approach to the CMRG. What do you see as the advantage of remaining anchored to existing benchmarks rather than pursuing deeper integration? And what's the current sticking points that are still in question? Thanks.

So Kaan, I don't know exactly what our competitors have done, so I'm not quite sure what you're referring to by way of commercial integration. But let me start with a couple of points here. So one, you can see how well the business performed both operationally and financially, including outturn pricing during the first half when commercial negotiations were already underway.

But as with any commercial negotiations, they get tough from time to time, and it's our job to look after the interests of BHP shareholders, not just in the short-term, but the long-term. I know it's CMRG's interest to get the best possible deal for their customers, which are in use customers, and so it's not unnatural for us to be locked in a tough negotiation.

But at the end of the day, we're both commercial parties. And we have strong relationships with our end-use customers in China. We continue to look to work constructively with CMRG to find a solution that's acceptable for both sides.

Lachlan Shaw, UBS.

Two from me. Firstly, I just wanted to, I guess, touch on Jansen. Nice slide 34 there, just highlighting how Jansen's a bit of an outlier. I suppose my question is, you've got a lot of work coming up organically in the portfolio.

How are you feeling and what are you doing to build out that capability and capacity to execute, given the outlook in the next sort of 5 to 10 years in terms of that copper equivalent growth profile? And I'll come back in a second.

Okay, look, it's a great callout, Lachlan, and obviously one that we've reflected on a lot internally, even before Jansen, but of course Jansen's brought all of that into stark relief. Now, there's some very specific learnings that we've taken away from Jansen Stage 1 around our processes and systems, how we integrate contractors, and project tracking and so on.

But the bigger point I would make here is that you've seen us go from being an industry laggard in terms of operations. We've set an objective for ourselves to become much more reliable and best in class when it comes to operate our operating performance. It's exactly the same approach in projects. And in fact, we were doing very well in projects as you can see from some of the averages there until we hit Jansen.

Now we need to recognize that we're going to be spending more. And so it becomes even more important that we bolster that capability. We'll do it in part through full deployment of the BHP operating system into projects. That was one of our learnings that we took away from Jansen, is that it wasn't at the front of the pack in terms of our BHP operating system deployment.

Since we've been more aggressive in deploying it into Jansen, lo and behold, we've seen an uplift in productivity and an uplift in eliability. We need to do that across the board. We are continuing to look to bring, to build even more experience and capability in our projects community within BHP. There's more senior level oversight happening of projects.

And then the final point I would make is in this big growth program that we have ahead of us, I think that there can be an assumption that BHP is executing all of it, but of course, that's not the case.

If you look at Vicuña, that's being executed by the joint venture where we've brought together the best of the Lundins and their capability and BHP, but it's a joint venture that has its own resources, and then resolution in the US would be managed or executed by Rio.

So what we're talking about is the ongoing projects that we have underway in Western Australia in iron ore, and you can see the good job that the team's been doing with that, and then we have copper South Australia and our Escondida project.

So it's a narrower footprint than it might appear at first blush.

Great, so thanks, Mike, really helpful. And my second question, the 536, just looking at ROCE by asset, some great numbers in the west there. BMA, I suppose stands out at the other end of the spectrum. So that's great, okay.

What is the pathway forward there? Obviously, the Metco markets last year and more recently have had a bit of a trough, some question marks around durability, all that. But in terms of what you can control there, you've made some steps, there's been some headcount reductions, South Saraji packed up.

What more can you do? Are you looking at doing to get that asset back up across the left of that curve? Thank you.

So I'll use a Copper South Australia analogy in that. A number of years ago we were an underperforming asset and we said first thing we have to do is secure stability. And then we have to drive better productivity, and you've seen the fruits of that effort in our Olympic Dam performance, which has kind of gone from an average of 160,000 tons per annum copper production to now being well over 200,000 tons, very reliably.

It's kind of the same focus that we've had at BMA, which is, it's been an asset that's been plagued by disruptions as we've tried to do the best we can in the face of disruptions. We've taken steps that have depleted inventories at times. And so between Geraldine and Adam, they embarked upon an even more rigorous effort to stabilize the business to get inventories in the right place, to get better at mine planning and executing the plan.

And you can see the outcomes of that effort starting to shine through, but there's still further to go. And that's why we've guided to higher production in the medium term and better cost. That will be -- that's within the domain of what we control, which was part of your question.

But of course, we're also relying upon better coal prices, and we can be confident in that because of the expansion in part because of the expansion that we see in Indian blast furnace production.

The final point I would make is, even with all of those things coming together, the upside in this asset will be bounded by the draconian royalty approach that's in place in Queensland, where the bulk of any upside gets swept away by the combination of these world's highest coal royalties and corporate tax.

So that's always going to be going to contain the upside, but things will get better from where they are today.

Baden Moore, CLSA.

I was interested in the -- I mean, congratulations on the $6.3 billion of asset sales. So I was interested in the target for $10 billion. How do you come up with that number? Is it simply the number of projects you've got in the pipeline that you're actively working on? And now the genie is sort of out of the bottle, and we look across your portfolio, it seems like the opportunity sets somewhat larger than the $10 billion.

Would you give us a guide on how to think about what would be acceptable to be selling down, and how you think about that going forward?

Well, Baden, I could say it was just a nice round number, but of course, there's more science to it than that. So Vandita, maybe you want to talk about the opportunity set and how we've arrived at $10 billion?

Sure. So as we've seen with the $6.3 billion as well, our bar on these transactions is pretty high. But we look at every opportunity to unlock value. The bar is strategic control and operational control, not to be given up for our critical assets. The bar is real unlock of value, which means the commercial terms need to make sense and the cost of funding and cost of capital arbitrage needs to come through, or the transactions are based on assets or a capital base, which is valued by some other investors more than it is within our balance sheet.

So that's the one principle. But in terms of what else is out there, we are a big company. There are infrastructure assets of power, of desal, et cetera, which all lend themselves to this kind of capital unlock. But as I mentioned, our bar will remain high, so that we are absolutely clear that these are going to unlock value for ourselves without injecting any risk in our portfolio.

So $10 billion number is a is a good number in that sense for the opportunity ahead. But as Mike said, we have materially done $6.3 billion out of that already.

And I think that's such an important point, Vandita, because the risk is that people see us pursuing these just because we've got a number out there. No, every deal gets pursued because we believe it unlocks more value for shareholders, and you can see that shining through in both the power deal and the silver stream.

Okay, thank you.

Glyn Lawcock, Barrejoey.

I was just wondering if you could, might like to share some of the underlying assumptions for the silver streams sale and also what tax we may have to pay on it. Thanks.

So, Glyn, maybe I just take a high level. There are some transaction details which have been given in exchange release. There's no tax deduction upfront. 4.3% will be the cash value which is unlocked upfront. There is no taxation upfront on it. And metal credits which are submitted also do not have 20%, do not have any tax attached to it. The rest of it comes through like an accounting loss or gain. But.

But other assumption here, Glyn, of course, is we've got a certain, assumed view of production profile here which is aligned with Antamina, and it includes the life extension for Antamina.

And I assume there's an inherent silver price in your view as well?

That's right. So that would be, but as we do with everything, we do not have a single view of the price. We range the economics through everything. And on this deal, you can put your discount rate for the relevant precious metal, and you'll be able to see that the breakeven of this deal is very, very, very high silver price given the profile of the production is known for us. And.

And one of the great things about this deal, and I'm sure you would have picked up on this is the value that we've sold the silver stream alone at is roughly aligned with consensus value for the whole of our stake in Antamina. And so, just intuitively this is a pretty good transaction for us and creates a lot of value for shareholders.

Roughly twice of the PNAV is the way to think about it, Glyn.

Paul Young, Goldman Sachs.

Thanks for the follow-up. Mike, can I just focus on Escondida and the upgrade, just considering it's the world's biggest copper mine, you're upgrading production and your peers are downgrading, as you point out. I think Escondida delivered record EBITDA for a half. I'm just on the performance has been exceptional, certainly around mining productivity and in particular the improvement and recoveries, from 80% a couple of years ago to now 85%.

It's actually now starting to really move the needle for you as a company, so [Alejandra Tapia] and the team are obviously doing a great job, but I know on the site visit 18 months ago, and the reason why I raise this is because it is material now, you raised the -- you outlined the potential to improve recoveries by around sort of 3% to 5% of both Escondida and Spence.

So I'm just curious around, obviously delivery to date, is that 3% to 5% you think incremental on what you've achieved so far? Because you actually, in theory, haven't actually started implementing those improvements yet.

Well, so I wouldn't say that it's incremental at Escondida. I think there's opportunity for us to replicate what we've done at Escondida into Spence. As with all these things, when you've got a business that is as big as long standing as Escondida, there's generally not silver bullets. And so it's not like this has all come through use of new reagents, for example.

It's been a combination of incremental improvements, all starting with getting the people who understand the intricacies of the work the best. More engaged on how to improve ynderlying business performance, and that's what comes through the BHP operating system.

So no surprise, Escondida is one of the poster childs for BHP operating system maturity across BHP alongside Vale and Copper South Australia. And through that you can see and we're only partway through that agenda. I think we've done a good job of deploying the BHP operating system so far.

As I mentioned in response to an earlier question, further to go still in projects, even further to go in operations, and so there's a lot more value yet to be unlocked, and you can use Escondida as a proof point of the value at hand once we're running on all cylinders.

Glyn Lawcock, Barrenjoey.

Sorry, I got cut off before I got my second question in, so thanks. Just with Vicuña and the FID, and I know you're targeting late this calendar year, and you said it could move around, what's going to drive it moving around? What can we sort of watch for over the next, I guess, 10 months till the end of the year to give us some confidence that you can get FID this year? Like, what's moving it around in your mind?

So a big one of course is RIGI approval, Glyn. We've got to get that in place. We've got our application in. All indications are that that should be forthcoming. But that's going to be an important underpin to it. Then there's the ongoing engineering work we obviously don't foresee any material issue with.

So I'm pretty confident that, subject to getting that RIGI approval in place, that we are moving to FID in that time frame, give or take a little bit.

Vandita, anything else that you wanted to raise?

No, that's right. Comfortable with as early as late this calendar year, yeah.

So, operator, I think that was time on questions. So we are going to bring draw the call to a close. I know we'll be speaking with many of you separately in the coming days. I really do hope that you look at this set of results and see not just the strength of this period of results, but how this builds period on period over many periods now and is reflective of the strategy that we've laid out.

So we continue to do simply what we said we were going to do. But I hope that we've been -- we've continued to build confidence from you and our shareholders in our ability to drive performance and strategy in the way that we've committed to do.

Thank you, everybody, for joining.