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Speaker 1: Welcome to fear and Greed QNA. We ask can answer

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Speaker 1: questions about business, investing, economics, politics and more. I'm sure

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Speaker 1: in Alma, BHP yesterday announced a bumper half a year profit.

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Speaker 1: It's underlying earnings climbing twenty two percent to six point

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Speaker 1: two billion US dollars for the half and for the

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Speaker 1: first time ever copper has ever taken iron ore as

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Speaker 1: the biggest earnings contributor. Vandet de part is the chief

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Speaker 1: financial officer at BHP. She spoke with Andrew Gagan, who

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Speaker 1: asked her how she would describe the result.

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Speaker 2: Well, I would describe the results as a fantastic both

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Speaker 2: operationally and financially. From an operations perspective, we did everything safely,

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Speaker 2: most importantly, and production is up to a person. Why

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Speaker 2: we managed the cost discipline such a way that to

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Speaker 2: unit gos are down more and a half percent in

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Speaker 2: spite of inflation headwinds of more than two percent and

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Speaker 2: currency pressures as well. If for the first time more

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Speaker 2: than half of our earnings, a bitter is coming from copper,

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Speaker 2: which is belter wilestone here in Australia. Vio continues to

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Speaker 2: form exceptionally well, with the record shipments and production in

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Speaker 2: first half and it continues to extend its gap with

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Speaker 2: the nearest competitor being the lowest cost producer of iron

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Speaker 2: ore in the world. On copper, as you mentioned a

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Speaker 2: great story Escondida, which is a copper mine in Chile.

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Speaker 2: We have increased the guidance production guidance for this year

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Speaker 2: and for next year for Escondida, which is great because

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Speaker 2: of the backdrop of stronger prices, and in all other

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Speaker 2: assets they remain on track for guidance. All of this

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Speaker 2: operational performance showing up in our financials with a bitter

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Speaker 2: underlying earnings top twenty five percent, stronger profits and return

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Speaker 2: on capital employed being higher as well. All this enabled

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Speaker 2: us to declare interim dividend of sixty percent payout, which

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Speaker 2: is the US seventy three cents per share, up by

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Speaker 2: more than forty percent from last year half. And all

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Speaker 2: this has happened with very strong balance sheet which remains

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Speaker 2: in the middle of our net debt range. This has

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Speaker 2: enabled us to continue to progress our copper projects around

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Speaker 2: the world. Here in Australia, in copper South Australia, in Argentina, Chile,

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Speaker 2: and in the US. They're maturing very well and very

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Speaker 2: attractive copper growth to come. So real performance today with

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Speaker 2: more copper growth and potash growth to come in the years.

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Speaker 2: Very pleased with the result.

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Speaker 3: So how are you saying this in the years ahead

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Speaker 3: than thandada As far as that copper growth pipeline is concerned,

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Speaker 3: is that going to be where most of your earnings

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Speaker 3: are coming from in the future. And a point to

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Speaker 3: also obviously your investment there, particularly in that the Kuna

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Speaker 3: project in Argentina that I mentioned.

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Speaker 2: Indeed, our projects, including in Vicunia in Argentina very attractive.

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Speaker 2: So overall we have increased popper in our portfolio by

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Speaker 2: thirty percent over last four years. And what we are

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Speaker 2: going to do is with these projects between now and

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Speaker 2: mid thirties we increase it further by another forty person

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Speaker 2: And this is when we already are the world's largest

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Speaker 2: copper producer in terms of our projects. Vicunia is one

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Speaker 2: which is going to be the top par I have copper,

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Speaker 2: gold and silver basins for us in time to come.

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Speaker 2: Over a period of time here in South Australia, which

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Speaker 2: is performing very well. Our assets here go from three

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Speaker 2: hundred kt and to five hundred kt or for copper

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Speaker 2: production real expansion and it has a lot of goal

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Speaker 2: silver and uranium, which and these prices is very attractive

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Speaker 2: for the asset. In time that doubles. Of course, we

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Speaker 2: also have Escondida growth program in Chile. All this together,

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Speaker 2: what it means is that by mid thirties we are

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Speaker 2: looking at a two and a half million tons of

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Speaker 2: copper equillet, which means including these pie products, a volume

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Speaker 2: of copper and its by products. And that's only our share.

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Speaker 2: It includes Scondida where we are investing in new consent data,

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Speaker 2: Vicunia which is progressing very well. Group of South Australia

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Speaker 2: very excited about that opportunity which will which will include

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Speaker 2: a new smelter and refining and investment in minds and

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Speaker 2: concentrated and in time resolution which is a very attractive

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Speaker 2: high quality copper mind In the.

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Speaker 3: US, well, I see that you're looking to spend more

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Speaker 3: than eleven billion US dollars on growth projects in the

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Speaker 3: next two years. In particular, how are you looking to

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Speaker 3: fund those that copper growth that you speak of? And

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Speaker 3: can I perhaps refer you to what you've done just

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Speaker 3: recently in terms of effectively selling the rights to future

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Speaker 3: silver production with that streaming agreement with wheat and precious metals,

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Speaker 3: is that helping you fund that copper growth.

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Speaker 2: So you're absolutely right. A huge and strong cash flow

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Speaker 2: coming from our operations with real reliable production in all assets,

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Speaker 2: which is one funnel. And secondly, we'll look around. We

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Speaker 2: are a big company. We look around in our capital

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Speaker 2: base and say which is the portion that we can

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Speaker 2: unlock value for on behalf of our shareholders. And that's

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Speaker 2: what we have done today unlocked cash to come in

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Speaker 2: in second half of this financial year of four point

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Speaker 2: three billion dollars against future silver production which is yet

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Speaker 2: to be produced being given away. And that four point

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Speaker 2: three billion along with two billion that we did in

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Speaker 2: December unlocking in WEEO some power agreements as well, together

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Speaker 2: is around six billion. This all goes into, along with

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Speaker 2: our operational cash flow into our capital location framework, where

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Speaker 2: the dividends of fifty percent are of course there those

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Speaker 2: are minimum. But the given this strong cash flow, we

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Speaker 2: look at it and then put that to hills in

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Speaker 2: high returning growth projects that I just mentioned also for

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Speaker 2: additional shareholder returns, so both shareholder returns in here and

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Speaker 2: now in future and value it gets very attractive for

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Speaker 2: these cash flows to be utilized on.

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Speaker 3: And what contribution do you see coming from iron ore

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Speaker 3: in the future, particularly given we're seeing stockpiles in China

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Speaker 3: air record highs.

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Speaker 2: So iron ore has been very resilient in terms of demand,

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Speaker 2: and you have seen the iron O prizes remaining quite

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Speaker 2: resilient last year as well. Our business has done very well,

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Speaker 2: as I said, record shipments and record production. Well. However,

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Speaker 2: almost a decade back, we had said, which is exactly

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Speaker 2: what's happened, that we see that the Chinese team demand

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Speaker 2: will start to platter and that will continue to happen

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Speaker 2: over twenties and then gradually paper off over a long

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Speaker 2: period of time. Given that backdrop, we have been really

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Speaker 2: focused to make sure that we are the lowest cost

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Speaker 2: producer of iron ore in the world. In fact, we

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Speaker 2: produce a ten dollars per ton, more cash flow, more

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Speaker 2: clash than our nearest competitor, and that's really important given

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Speaker 2: these demanded dynamics that I just talked about, Soy, we

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Speaker 2: continue to invest in it as well, and from here

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Speaker 2: to FI twenty eight we were pathway to increase iron

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Speaker 2: ore production to three or five million tons as well.

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Speaker 3: Vandido. Of course you did a bed in your bid

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Speaker 3: to buy a rival Anglo American. Are you looking at

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Speaker 3: further acquisitional opportunity reads or can you be sustained by

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Speaker 3: your organic growth?

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Speaker 2: So if a corporate strategy was based just on MNA,

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Speaker 2: that wouldn't be a sound strategy. In fact, the way

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Speaker 2: we think about this is that we have, as I've

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Speaker 2: been talking about, we have a very mature and practice

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Speaker 2: set of growth options, some of the best in the industry.

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Speaker 2: So if we executed just on our organic growth now

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Speaker 2: for value, our shareholders will do very very well. But

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Speaker 2: of course we also continue to think of inorganic options

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Speaker 2: to grow, but the bar for us is very high

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Speaker 2: and very strict. That bar includes adding real value for

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Speaker 2: the shareholders and being disciplined about that. However, I would

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Speaker 2: say our organic growth in copper, in potash means that

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Speaker 2: if we are focused just on this, this will be

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Speaker 2: a great result for our shareholders.

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Speaker 3: Just very quickly, what do you say is the impact

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Speaker 3: of that strengthening Australian dollar on earnings going forward?

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Speaker 2: As I mentioned as the operating currencies strengthen that does

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Speaker 2: mean that there is pressure on the cost which comes in.

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Speaker 2: Even in this half we saw with the strengthening of

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Speaker 2: Aussie dollar that becomes a headwind. However, to continue to

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Speaker 2: be focused on the things that we can control. We

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Speaker 2: continue to focus on a real cost discipline, running our

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Speaker 2: operations very very well and making sure some of this

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Speaker 2: can be managed through. And our track records speaks for

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Speaker 2: itself with the sixth year in a row of Way,

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Speaker 2: for example being the lowest cost producer. Same thing for

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Speaker 2: Escondida which in this half has reduced cost by sixteen

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Speaker 2: percent and Copper South Australia having that performance on operation's

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Speaker 2: focus also coming through in these results. So it is

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Speaker 2: surely a headwind, but we feel confident to be able

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Speaker 2: to manage it through things that we can control within

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Speaker 2: our sphere.

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Speaker 1: That was Van d Depart, chief financial Officer of BHP,

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Speaker 1: speaking to Osby's, Australia's leading provider of live and on

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Speaker 1: com today. U I'm Schanaema and this is fear and

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Speaker 1: greed Q and a