1 00:00:05,640 --> 00:00:08,880 Speaker 1: Welcome to the Feering Greed Business Interview. I'm Sean Elmam. Yesterday, 2 00:00:08,960 --> 00:00:12,760 Speaker 1: mining giant BHP handed down its full year profit, highlighting 3 00:00:12,760 --> 00:00:15,480 Speaker 1: what a behemoth it is in the iron ore industry. 4 00:00:15,760 --> 00:00:19,200 Speaker 1: Today's interview with the miners chief financial officer gives a 5 00:00:19,239 --> 00:00:23,079 Speaker 1: great insight into just how efficient BHP has become at 6 00:00:23,120 --> 00:00:26,279 Speaker 1: mining iron ore. This earning season, we've been working with 7 00:00:26,320 --> 00:00:28,400 Speaker 1: the team at osbiz to bring new interviews with the 8 00:00:28,480 --> 00:00:32,280 Speaker 1: leaders of some of Australia's biggest companies. Osbiz is Australia's 9 00:00:32,320 --> 00:00:34,680 Speaker 1: leading provider of live and on demand video of the 10 00:00:34,760 --> 00:00:39,160 Speaker 1: latest news in Australian business, markets, economy and startups. Sign 11 00:00:39,240 --> 00:00:42,239 Speaker 1: up at Osby's dot com dot au as well, it's free. 12 00:00:42,720 --> 00:00:47,040 Speaker 1: Andrew Gagan spoke with Vendida Pant, BHP's chief financial officer 13 00:00:47,080 --> 00:00:50,200 Speaker 1: about the company's results, the importance of the Australian iron 14 00:00:50,200 --> 00:00:53,559 Speaker 1: ore assets, still demand in China, the success of the 15 00:00:53,560 --> 00:00:56,440 Speaker 1: copper business, and the failed bid for Anglo American. 16 00:01:01,360 --> 00:01:04,560 Speaker 2: BHP has posted fullyion net profit of seven point nine 17 00:01:04,640 --> 00:01:07,400 Speaker 2: billion US dollars. That's down thirty nine percent year on year, 18 00:01:07,800 --> 00:01:10,800 Speaker 2: well booked underlying profit of thirteen point seven billion US, 19 00:01:10,880 --> 00:01:13,760 Speaker 2: which was ahead of estimates. The mining giant declared a 20 00:01:13,800 --> 00:01:16,720 Speaker 2: final dividend of seventy four US censors share. When added 21 00:01:16,760 --> 00:01:19,679 Speaker 2: to February's interim dividends, share holders will received a dollar 22 00:01:19,720 --> 00:01:22,840 Speaker 2: forty six lower than the dollars seventy paid to investors 23 00:01:22,920 --> 00:01:26,560 Speaker 2: last year. Overall, the group saw revenue rise three percent 24 00:01:26,680 --> 00:01:30,280 Speaker 2: to fifty five point seven billion US dollars. It's improved 25 00:01:30,280 --> 00:01:32,640 Speaker 2: its net debt position to be carrying nine point one 26 00:01:32,680 --> 00:01:36,160 Speaker 2: billion US and the company says the external operating environment 27 00:01:36,200 --> 00:01:40,280 Speaker 2: remains volatile, with demand for commodities being relatively soft over 28 00:01:40,280 --> 00:01:43,560 Speaker 2: the calend of years twenty three and twenty four. It 29 00:01:43,680 --> 00:01:46,480 Speaker 2: expects copper to be in marginal servilus, while China's on 30 00:01:46,640 --> 00:01:51,160 Speaker 2: automand is forecast to be lower than it is today. Well, 31 00:01:51,200 --> 00:01:55,160 Speaker 2: let's get some further detail on that. BHP's chief financial officer, 32 00:01:55,280 --> 00:01:57,680 Speaker 2: Vandida Punt joins us. Now if I did it, welcome, 33 00:01:57,840 --> 00:02:01,000 Speaker 2: Thanks so much for joining us. Congratulations on the results. 34 00:02:01,880 --> 00:02:05,120 Speaker 2: There's a lot of gloom being priced into iron Ore 35 00:02:05,440 --> 00:02:09,200 Speaker 2: at the moment. What did iron Or deliver for the 36 00:02:09,240 --> 00:02:11,360 Speaker 2: company and shells over the past. 37 00:02:11,160 --> 00:02:16,520 Speaker 3: Year, Thank you, Andrew. That is woodles of cash We 38 00:02:16,600 --> 00:02:20,600 Speaker 3: have performed really well this year with the strong financials 39 00:02:20,600 --> 00:02:24,560 Speaker 3: and operations coming through. As you mentioned, underlying profit being 40 00:02:24,919 --> 00:02:29,120 Speaker 3: two percent high year on ear and earnings per share 41 00:02:29,160 --> 00:02:32,520 Speaker 3: being higher two percent as well hear on ear and 42 00:02:32,560 --> 00:02:35,160 Speaker 3: all that is happening because we have great assets like 43 00:02:35,760 --> 00:02:40,080 Speaker 3: Western Australia iron Ore that you mentioned, and our team 44 00:02:40,200 --> 00:02:44,000 Speaker 3: do an incredible job of running them really well with 45 00:02:44,919 --> 00:02:49,000 Speaker 3: real cost discipline as well as our cost capital a 46 00:02:49,120 --> 00:02:54,359 Speaker 3: location which really is very thoughtful around putting money back 47 00:02:54,360 --> 00:02:58,079 Speaker 3: into the balance sheet, giving solid returns to our shareholders 48 00:02:58,400 --> 00:03:02,120 Speaker 3: and going for value in growth. If I talk about 49 00:03:02,120 --> 00:03:08,000 Speaker 3: our assets, what operationally went well? Iron or Western Australia 50 00:03:08,040 --> 00:03:11,720 Speaker 3: iron Ore assets, which are a flagship asset for US, 51 00:03:12,280 --> 00:03:17,200 Speaker 3: delivered another record production volume and not only that for 52 00:03:17,320 --> 00:03:23,160 Speaker 3: the fourth year running. Operations are the lowest cost iron 53 00:03:23,160 --> 00:03:27,640 Speaker 3: O producer globally, which is a fantastic place to be in. 54 00:03:27,639 --> 00:03:31,600 Speaker 3: In Copper also, the company did very well. We have 55 00:03:31,800 --> 00:03:36,080 Speaker 3: had second consecutive year of nine person growth in Copper 56 00:03:36,440 --> 00:03:40,800 Speaker 3: and next year we are forecasting another four years. And 57 00:03:40,360 --> 00:03:44,800 Speaker 3: what does this mean. This means that overall operating cash 58 00:03:44,800 --> 00:03:48,400 Speaker 3: flow from the business was more than twenty billion dollars 59 00:03:48,480 --> 00:03:52,480 Speaker 3: last year, and all that resulted into dividends of a 60 00:03:52,720 --> 00:03:57,520 Speaker 3: seven point four billion US dollars which equates to a 61 00:03:57,640 --> 00:04:03,320 Speaker 3: full year dividend offer two dollars sixteen for our seventeen 62 00:04:03,440 --> 00:04:08,440 Speaker 3: million Australian shareholders, either directly or those who hold us 63 00:04:08,680 --> 00:04:10,080 Speaker 3: through their supers. 64 00:04:10,920 --> 00:04:13,360 Speaker 2: So you expect the iole market to be in surplus 65 00:04:13,360 --> 00:04:15,680 Speaker 2: this calendar year, what impact is that going to have 66 00:04:15,720 --> 00:04:17,120 Speaker 2: on earnings? 67 00:04:17,680 --> 00:04:21,200 Speaker 3: So we do expect that in O market will be 68 00:04:21,240 --> 00:04:23,480 Speaker 3: a little bit in surplus this year. But if I 69 00:04:23,600 --> 00:04:26,240 Speaker 3: step back, this is a view we have had for 70 00:04:26,279 --> 00:04:31,320 Speaker 3: a very long time, and as the plateauing of steel 71 00:04:31,360 --> 00:04:39,960 Speaker 3: demand in China happens, the overall surplus in iron ore continues. However, However, 72 00:04:40,240 --> 00:04:43,440 Speaker 3: quite a few of the end users of steel are 73 00:04:43,440 --> 00:04:49,880 Speaker 3: doing very well in China infrastructure, machinery, auto, shipbuilding. The 74 00:04:50,040 --> 00:04:53,279 Speaker 3: sector which is weak is property and that is only 75 00:04:53,360 --> 00:04:57,680 Speaker 3: twenty percent of the overall steel demand in China. But 76 00:04:57,760 --> 00:04:59,800 Speaker 3: if I were to step back on what does this 77 00:04:59,839 --> 00:05:04,920 Speaker 3: mean for BHP? We are in fantastic shape because being 78 00:05:04,960 --> 00:05:09,000 Speaker 3: the lowest cost producer of iron ore and this year 79 00:05:09,200 --> 00:05:14,640 Speaker 3: actually widening our gap with our next best competitor. We 80 00:05:14,680 --> 00:05:18,720 Speaker 3: are at C one cost of only US dollar fifteen 81 00:05:18,960 --> 00:05:23,840 Speaker 3: point eight four per ton. This means that iron ore 82 00:05:24,200 --> 00:05:27,640 Speaker 3: business will continue to be a great business for US. 83 00:05:28,000 --> 00:05:30,960 Speaker 3: If I step back, I think the hallmark of BHP 84 00:05:31,520 --> 00:05:38,080 Speaker 3: has been our consistency and delivery. So for last fifteen years, 85 00:05:38,120 --> 00:05:43,359 Speaker 3: our cash flows have been more than fifteen billion dollars 86 00:05:43,720 --> 00:05:47,440 Speaker 3: except for one year, and that is the consistency that 87 00:05:47,480 --> 00:05:51,560 Speaker 3: you need when there is volatility and market dynamics can change, 88 00:05:52,000 --> 00:05:54,960 Speaker 3: and that's the resilience that BHP offers. 89 00:05:55,160 --> 00:05:59,160 Speaker 2: So, given that forecast of surplus for iron ore, what's 90 00:05:59,200 --> 00:06:03,960 Speaker 2: your productions? Because certainly some analysts perceive your result here 91 00:06:04,080 --> 00:06:06,480 Speaker 2: what you've had to say is that this essentially is 92 00:06:06,520 --> 00:06:08,680 Speaker 2: the end of the iron ore booms. Is that the 93 00:06:08,720 --> 00:06:09,480 Speaker 2: way you see it. 94 00:06:10,360 --> 00:06:13,200 Speaker 3: Well, when you are a lowest cost producer of iron ore, 95 00:06:13,520 --> 00:06:16,679 Speaker 3: this is not the end of the story at all. 96 00:06:17,000 --> 00:06:20,560 Speaker 3: In fact, I would say that after the fourth year 97 00:06:20,720 --> 00:06:24,400 Speaker 3: record production, we are looking to creep up to three 98 00:06:24,520 --> 00:06:28,919 Speaker 3: zero five million tons over a period of time with 99 00:06:29,360 --> 00:06:34,039 Speaker 3: very low cost and low capital intensity iron ore volumes 100 00:06:34,040 --> 00:06:37,400 Speaker 3: to come in. So expanding that with that view, because 101 00:06:37,440 --> 00:06:42,799 Speaker 3: this is a real cash flow business which is very generative. Equally, 102 00:06:43,080 --> 00:06:46,400 Speaker 3: we will continue to be very disciplined on cost and 103 00:06:46,440 --> 00:06:49,159 Speaker 3: iron ore. But iron ore is one part of the 104 00:06:49,320 --> 00:06:53,040 Speaker 3: big story for us, and very clearly, as you would 105 00:06:53,080 --> 00:06:56,599 Speaker 3: have seen today, we have announced quite a few details 106 00:06:56,680 --> 00:07:01,719 Speaker 3: of our copper business and very excited about attractive returns 107 00:07:01,760 --> 00:07:05,760 Speaker 3: in copper, which is a critical of the critical minerals 108 00:07:06,720 --> 00:07:10,160 Speaker 3: we have in South Australia, in Chile and with the 109 00:07:10,600 --> 00:07:14,080 Speaker 3: investment which we have recently done in Argentina well. 110 00:07:14,080 --> 00:07:16,560 Speaker 2: In fact, to that point, then where do you think 111 00:07:16,720 --> 00:07:20,600 Speaker 2: BHP's future lies. Is it less about iron ore and 112 00:07:20,640 --> 00:07:24,360 Speaker 2: perhaps more about those future facing metals such as copper. 113 00:07:25,280 --> 00:07:28,560 Speaker 3: So iron o will remain a fantastic business for BHP 114 00:07:28,680 --> 00:07:32,200 Speaker 3: for decades to come. But as we have always said that, 115 00:07:32,240 --> 00:07:36,880 Speaker 3: we also want to grow into future facing commodities, that's copper, 116 00:07:37,320 --> 00:07:41,800 Speaker 3: that's portash. Potash project in Canada is going very well 117 00:07:42,040 --> 00:07:46,320 Speaker 3: and first production of Jansen is less is almost two 118 00:07:46,400 --> 00:07:49,960 Speaker 3: years away, and hence it will come in and we 119 00:07:50,080 --> 00:07:52,679 Speaker 3: will be at the lowest end of the cost cuff 120 00:07:53,080 --> 00:07:57,000 Speaker 3: in copper, which we really like as a commodity because 121 00:07:57,400 --> 00:08:01,080 Speaker 3: not only for our traditional way of living, but also 122 00:08:01,320 --> 00:08:05,560 Speaker 3: from the world which is decarbonizing, as well as more 123 00:08:05,720 --> 00:08:09,760 Speaker 3: use of AI and data centers. All of that requires 124 00:08:09,880 --> 00:08:12,320 Speaker 3: a lot of copper, so we are really attracted to 125 00:08:12,360 --> 00:08:16,200 Speaker 3: that commodity. And it's fantastic that we are the largest 126 00:08:16,320 --> 00:08:20,480 Speaker 3: holders of copper resources in the world. Not only that 127 00:08:20,760 --> 00:08:24,400 Speaker 3: in the last two years we have added three hundred 128 00:08:24,640 --> 00:08:30,200 Speaker 3: thousand tons of production in copper, being already one of 129 00:08:30,200 --> 00:08:34,559 Speaker 3: the largest copper producers. But what we are really excited about, Andrew, 130 00:08:35,000 --> 00:08:39,000 Speaker 3: is the growth which is coming. We have today given 131 00:08:39,040 --> 00:08:45,480 Speaker 3: details that here in Australia, in South Australia copper essayesset, 132 00:08:46,040 --> 00:08:49,160 Speaker 3: we are looking to grow from our three twenty three 133 00:08:49,280 --> 00:08:55,360 Speaker 3: forty thousand tons two almost doubling that copper production by 134 00:08:55,440 --> 00:08:59,920 Speaker 3: middle of next decade. And in Chile, where we have 135 00:09:00,080 --> 00:09:04,160 Speaker 3: a fantastic copper business as well, looking to grow over 136 00:09:04,280 --> 00:09:07,160 Speaker 3: this period as well, and that would make that we 137 00:09:07,200 --> 00:09:12,319 Speaker 3: could go towards a two million ton production for copper 138 00:09:13,280 --> 00:09:16,960 Speaker 3: in a decade or so. So very excited about future 139 00:09:17,000 --> 00:09:17,960 Speaker 3: facing commodities. 140 00:09:18,120 --> 00:09:20,480 Speaker 2: Are you still keeping options open as far as perhaps 141 00:09:20,480 --> 00:09:24,560 Speaker 2: some acquisitional growth in the copper space Given your failed 142 00:09:24,600 --> 00:09:28,400 Speaker 2: bid for Anglo American, would you be willing to return 143 00:09:29,600 --> 00:09:35,400 Speaker 2: to that once that becomes availab again, given the UK 144 00:09:35,559 --> 00:09:38,040 Speaker 2: regulations where you can return to that bid. I guess 145 00:09:38,080 --> 00:09:40,880 Speaker 2: in November you're still keeping your options open there or 146 00:09:40,880 --> 00:09:41,960 Speaker 2: perhaps looking elsewhere. 147 00:09:42,920 --> 00:09:46,600 Speaker 3: So, Andrew, we were disappointed that that deal did not 148 00:09:46,720 --> 00:09:49,720 Speaker 3: go through because it did have a strategic logic to it. 149 00:09:50,679 --> 00:09:54,800 Speaker 3: Not only that, we were very clear that that combination 150 00:09:55,320 --> 00:09:59,239 Speaker 3: could really unlock a lot of value for our shareholders 151 00:09:59,440 --> 00:10:03,719 Speaker 3: and for their shareholders. But since then they are executing 152 00:10:03,760 --> 00:10:05,920 Speaker 3: their plan, and as you can see in our own 153 00:10:05,960 --> 00:10:10,040 Speaker 3: results today, we are executing our plans. We have always 154 00:10:10,120 --> 00:10:15,240 Speaker 3: said that BHP's biggest lever of growth is our productivity 155 00:10:15,640 --> 00:10:18,600 Speaker 3: as well as our own organic growth options, and that 156 00:10:18,800 --> 00:10:22,880 Speaker 3: is a very big landscape for us to grow from, 157 00:10:23,120 --> 00:10:26,120 Speaker 3: which we are doing equally. Since then, as you would 158 00:10:26,160 --> 00:10:28,920 Speaker 3: have seen, we have also increased our stake and looked 159 00:10:28,920 --> 00:10:33,160 Speaker 3: at acquisition now which is still to close on Philow, 160 00:10:34,520 --> 00:10:40,080 Speaker 3: which could become a real world class, multi generational copper 161 00:10:40,120 --> 00:10:44,640 Speaker 3: base in Argentina. So very excited about our copper plans. 162 00:10:44,840 --> 00:10:46,760 Speaker 2: And so then, did you feel, as our shareholders, be 163 00:10:46,800 --> 00:10:50,880 Speaker 2: willing to sacrifice some dividends there to fund your future 164 00:10:50,880 --> 00:10:53,480 Speaker 2: growth and also see that you'd be happy to move 165 00:10:53,520 --> 00:10:58,160 Speaker 2: above your net debt target temporarily you say to execute 166 00:10:58,800 --> 00:11:03,959 Speaker 2: value a creative opportunities, So on both fronts, you're happy 167 00:11:04,000 --> 00:11:04,640 Speaker 2: with that position. 168 00:11:06,800 --> 00:11:11,080 Speaker 3: So we know how important dividends are to our shareholders, 169 00:11:11,320 --> 00:11:15,000 Speaker 3: so this is a very important consideration we keep in mind. 170 00:11:15,320 --> 00:11:20,040 Speaker 3: But equally, as yourself said, Andrew, are balance sheeted, really 171 00:11:20,120 --> 00:11:24,800 Speaker 3: resilient and strong, just nine point one billion dollars of 172 00:11:25,000 --> 00:11:27,960 Speaker 3: net debt, which means that we have a lot of 173 00:11:28,000 --> 00:11:36,160 Speaker 3: flexibility on really investing for value for attractive options in growth, 174 00:11:36,480 --> 00:11:42,040 Speaker 3: but equally being able to robustly continue to do share 175 00:11:42,360 --> 00:11:46,320 Speaker 3: cash returns to our shareholders. Very mindful of that, and 176 00:11:46,400 --> 00:11:49,240 Speaker 3: for that we have an approach which is called Capital 177 00:11:49,280 --> 00:11:54,880 Speaker 3: Alocation Framework, which makes sure we maximize use of our 178 00:11:54,920 --> 00:11:58,280 Speaker 3: capital available every six months. 179 00:12:04,240 --> 00:12:07,440 Speaker 1: That was Van Dedit de Pant, chief financial officer at BHP, 180 00:12:07,679 --> 00:12:11,040 Speaker 1: speaking to Andrew Gagan from Osby's sign up at Osby's 181 00:12:11,040 --> 00:12:13,680 Speaker 1: dot com dot au. It's free. This is a Fear 182 00:12:13,720 --> 00:12:15,920 Speaker 1: and Greed Daily interview. Join us every morning for the 183 00:12:15,960 --> 00:12:18,400 Speaker 1: full episode of Fear and Greed Daily. Business us for 184 00:12:18,440 --> 00:12:23,400 Speaker 1: people who make their own decisions. I'm sure Elma enjoy today.