1 00:00:02,360 --> 00:00:06,680 Speaker 1: Bloomberg Audio Studios, podcasts, radio news. 2 00:00:06,880 --> 00:00:10,360 Speaker 2: Now, soaring demand for copper and the energy transition will 3 00:00:10,400 --> 00:00:13,400 Speaker 2: require some two hundred and fifty billion dollars of investments 4 00:00:13,400 --> 00:00:16,560 Speaker 2: over the next decade, helping to drive further mergers in 5 00:00:16,680 --> 00:00:19,040 Speaker 2: the industry. Now that's a you have PHP TAT executive 6 00:00:19,079 --> 00:00:22,760 Speaker 2: Mike Henry, who says companies will need scale, strong balance sheets, 7 00:00:22,760 --> 00:00:26,599 Speaker 2: and technical capabilities if they're to emerge as winners over 8 00:00:26,720 --> 00:00:28,800 Speaker 2: the coming decades. Well, I'm delighted to be joined by 9 00:00:28,800 --> 00:00:31,680 Speaker 2: Mike Henry himself joining us. Now, Mike, you see, I 10 00:00:31,720 --> 00:00:33,519 Speaker 2: start with your quote because you're kind of like the 11 00:00:33,560 --> 00:00:36,440 Speaker 2: Linch panel of exactly what needs to get the job done. 12 00:00:36,640 --> 00:00:38,680 Speaker 2: How do you see growth in your industry and how 13 00:00:38,680 --> 00:00:40,560 Speaker 2: worried are you about global demand? 14 00:00:40,840 --> 00:00:44,000 Speaker 3: So I'll start by saying BHP's a long term, long 15 00:00:44,080 --> 00:00:46,639 Speaker 3: term company. If you look at the long term trajectory 16 00:00:46,640 --> 00:00:50,680 Speaker 3: from metals and minerals demand, it's very positive. Growing global 17 00:00:50,720 --> 00:00:53,640 Speaker 3: population eight billion today to fifty to ten billion in 18 00:00:53,720 --> 00:00:57,360 Speaker 3: twenty fifty, more urbanizations, so more people living in cities, 19 00:00:57,400 --> 00:00:59,280 Speaker 3: which tends to be more metals and minerals for the 20 00:00:59,360 --> 00:01:03,200 Speaker 3: intensive living standards. The energy transition AI all of these 21 00:01:03,200 --> 00:01:05,800 Speaker 3: things require more metals and minerals, so the long term 22 00:01:05,840 --> 00:01:10,560 Speaker 3: trajectory for metals demand is quite strong, and BHP is 23 00:01:10,600 --> 00:01:12,840 Speaker 3: positioned at the forefront of that to meet the world's 24 00:01:12,840 --> 00:01:14,200 Speaker 3: need for critical minerals. 25 00:01:14,920 --> 00:01:16,600 Speaker 2: Mike, I mean, there's of course a number of some 26 00:01:16,680 --> 00:01:20,520 Speaker 2: of these minerals that most people can't pronounce, lithium and 27 00:01:20,560 --> 00:01:23,440 Speaker 2: then copper. Why have you gone from copper as really 28 00:01:23,480 --> 00:01:26,280 Speaker 2: saying that that actually is needed more than anything else 29 00:01:27,080 --> 00:01:28,199 Speaker 2: for the transition to work. 30 00:01:28,480 --> 00:01:31,280 Speaker 1: So copper demand is ubiquitous if you think about the. 31 00:01:31,640 --> 00:01:33,880 Speaker 3: Number of uses of copper, be it the phones that 32 00:01:34,000 --> 00:01:37,080 Speaker 3: we carry around in our pockets, to televisions, air conditioners, 33 00:01:37,440 --> 00:01:42,640 Speaker 3: wind turbines, electric vehicles. It's pervasive in the economy, and 34 00:01:42,720 --> 00:01:45,520 Speaker 3: so we see that demand growing strongly over time. One 35 00:01:45,560 --> 00:01:47,200 Speaker 3: of the other things we love about copper is that 36 00:01:47,240 --> 00:01:49,840 Speaker 3: it has a steep cost curve, so the cost of 37 00:01:49,840 --> 00:01:52,200 Speaker 3: producing it from one asset can be a lot more 38 00:01:52,200 --> 00:01:54,320 Speaker 3: economic than producing it from another asset. So if you've 39 00:01:54,320 --> 00:01:56,520 Speaker 3: got your hands on the right assets, you can generate 40 00:01:56,560 --> 00:01:59,000 Speaker 3: really healthy margins. BHP is already the world's number one 41 00:01:59,080 --> 00:02:02,200 Speaker 3: or number two copper. We have the world's largest endowment 42 00:02:02,240 --> 00:02:03,720 Speaker 3: of copper resources and we have. 43 00:02:03,680 --> 00:02:05,040 Speaker 1: Big growth prospects now in. 44 00:02:05,000 --> 00:02:09,840 Speaker 3: Australia, the US, Chile and more recently in Argentina. So 45 00:02:09,880 --> 00:02:12,280 Speaker 3: we're positioned quite strongly in this in this quantity that 46 00:02:12,280 --> 00:02:13,600 Speaker 3: the world's going to need so much more of. 47 00:02:13,720 --> 00:02:15,320 Speaker 2: I mean it, do you want more through rem and A? 48 00:02:16,320 --> 00:02:20,080 Speaker 3: So M and A is one lever in our arsenal 49 00:02:20,160 --> 00:02:22,959 Speaker 3: of potential avenues of growth. We're already very well set 50 00:02:22,960 --> 00:02:25,480 Speaker 3: in terms of our existing business, existing resources and the 51 00:02:25,520 --> 00:02:26,480 Speaker 3: growth options that we have. 52 00:02:27,800 --> 00:02:29,640 Speaker 1: And no M and A deal is ever a. 53 00:02:29,680 --> 00:02:32,320 Speaker 3: Must do for us, but where there's an opportunity for 54 00:02:32,400 --> 00:02:34,920 Speaker 3: us to unlock greater shareholder value through it, it's something 55 00:02:34,919 --> 00:02:35,639 Speaker 3: that we've shown. 56 00:02:35,400 --> 00:02:37,040 Speaker 1: Ourselves as willing to consider. 57 00:02:37,360 --> 00:02:39,760 Speaker 3: But again, Plan A for us is develop more of 58 00:02:39,760 --> 00:02:42,080 Speaker 3: the resources that we have and these fantastic growth options 59 00:02:42,120 --> 00:02:44,280 Speaker 3: that we've already developed inside the company. 60 00:02:44,600 --> 00:02:46,200 Speaker 2: So what does M and A depend on? Is it 61 00:02:46,240 --> 00:02:48,440 Speaker 2: price or is it actually a strategic fit or is 62 00:02:48,520 --> 00:02:50,359 Speaker 2: it political blessing. 63 00:02:50,720 --> 00:02:52,960 Speaker 3: It has to be on strategy for BHP, So it's 64 00:02:52,960 --> 00:02:54,440 Speaker 3: in the quantities that we've chosen to be in. 65 00:02:54,520 --> 00:02:57,040 Speaker 1: It has to be of asset quality that is in 66 00:02:57,080 --> 00:02:57,600 Speaker 1: line with the. 67 00:02:57,520 --> 00:03:00,400 Speaker 3: Assets that we want, which are large, long life, low cost, 68 00:03:00,680 --> 00:03:03,160 Speaker 3: and there has to be opportunity to unlock more value 69 00:03:03,200 --> 00:03:07,079 Speaker 3: for shareholders through BHP's ownership, and and and so the 70 00:03:07,760 --> 00:03:09,360 Speaker 3: those opportunities are few and far between. 71 00:03:09,480 --> 00:03:11,320 Speaker 2: I was going to say, there's there's just not much 72 00:03:11,320 --> 00:03:14,400 Speaker 2: around that fits that criteria, yes, which. 73 00:03:14,240 --> 00:03:16,360 Speaker 3: Which is why we focus on making sure that the 74 00:03:16,400 --> 00:03:19,600 Speaker 3: opportunities we have inside the company are so strong. And 75 00:03:19,639 --> 00:03:21,920 Speaker 3: that's really what we rely upon, is this pipeline of 76 00:03:22,000 --> 00:03:23,919 Speaker 3: organic options that we've developed. 77 00:03:24,520 --> 00:03:26,640 Speaker 2: When you look at, of course, the inauguration of Donald 78 00:03:26,639 --> 00:03:28,840 Speaker 2: Trump and we were expecting policies to be pretty much 79 00:03:28,840 --> 00:03:31,799 Speaker 2: in place, what does that mean for China? What does 80 00:03:31,800 --> 00:03:33,480 Speaker 2: that mean for your industry in general? 81 00:03:33,800 --> 00:03:35,280 Speaker 1: So it's still a bit early to tell. 82 00:03:35,320 --> 00:03:38,720 Speaker 3: I think for our industry over the long term, we 83 00:03:38,800 --> 00:03:44,200 Speaker 3: expect growing demand for key commodities to continue unabated. However, 84 00:03:44,480 --> 00:03:47,160 Speaker 3: in the near term or along that path, there is 85 00:03:47,240 --> 00:03:51,200 Speaker 3: going to be uh, you know, a degree of uncertainty 86 00:03:51,240 --> 00:03:55,320 Speaker 3: related to trade flows, tariffs, industrial policy and so on, 87 00:03:55,400 --> 00:03:57,920 Speaker 3: which is something that we keep a very close eye on, 88 00:03:58,400 --> 00:04:01,040 Speaker 3: specifically in respect of the incomingdministration. We know that there's 89 00:04:01,040 --> 00:04:04,480 Speaker 3: strong support for mining, strong understanding of the need for 90 00:04:04,520 --> 00:04:07,520 Speaker 3: security of critical mineral supply chains. Exactly how that plays, 91 00:04:07,520 --> 00:04:10,520 Speaker 3: how we can practice and policy yet to be determined. 92 00:04:10,720 --> 00:04:13,280 Speaker 3: There has been bipartisan support in the US for more 93 00:04:13,320 --> 00:04:16,880 Speaker 3: mining in the US permitting reform, and we expect that 94 00:04:16,880 --> 00:04:19,880 Speaker 3: to continue and to be a strong area of focus 95 00:04:19,960 --> 00:04:20,839 Speaker 3: for the new administration. 96 00:04:21,160 --> 00:04:23,440 Speaker 2: Does that change actually the way you'll run BHP. 97 00:04:24,120 --> 00:04:27,960 Speaker 3: So BHP's strategy is one that is very long term 98 00:04:28,200 --> 00:04:31,800 Speaker 3: focused on the global level. The US isn't currently a 99 00:04:31,800 --> 00:04:34,159 Speaker 3: big market for BHP. It's about three percent four percent 100 00:04:34,160 --> 00:04:37,120 Speaker 3: of our revenues, but of course the US plays a 101 00:04:37,160 --> 00:04:41,080 Speaker 3: key role in determining policies that apply to the industry globally, 102 00:04:41,080 --> 00:04:43,400 Speaker 3: so it's something that we stay very close to. Our 103 00:04:43,480 --> 00:04:46,960 Speaker 3: strategy is one of positioning ourselves in the right commodities, 104 00:04:47,480 --> 00:04:49,960 Speaker 3: large assets that we can expand over time. 105 00:04:50,080 --> 00:04:52,320 Speaker 1: Specific focus on copper, potash. 106 00:04:52,320 --> 00:04:55,880 Speaker 3: We've got a big development underway in Canada iron ore. 107 00:04:55,960 --> 00:04:59,200 Speaker 3: We have the world's lowest cost, best performing iron ore 108 00:04:59,279 --> 00:05:03,039 Speaker 3: business and in a subset of only the best quality 109 00:05:03,040 --> 00:05:06,640 Speaker 3: calls for steelmaking. The other thing I would note is 110 00:05:06,680 --> 00:05:10,919 Speaker 3: that BHP's production is almost exclusively from countries that have 111 00:05:11,000 --> 00:05:13,880 Speaker 3: free trade agreements. In place with the US current, Australia, Chile, 112 00:05:14,760 --> 00:05:15,679 Speaker 3: and Canada. 113 00:05:16,160 --> 00:05:20,200 Speaker 2: What does a Trump presidency mean for the energy transition? 114 00:05:20,240 --> 00:05:22,599 Speaker 2: Does it actually slow it down? And so does it 115 00:05:22,680 --> 00:05:26,200 Speaker 2: mean that everything is a little bit slower, even access 116 00:05:26,279 --> 00:05:28,320 Speaker 2: to these critical minerals, that you have a bit more time. 117 00:05:28,600 --> 00:05:32,000 Speaker 3: So it's a really interesting question, and I don't think 118 00:05:32,000 --> 00:05:33,680 Speaker 3: this applies just to the US. If you look at 119 00:05:33,720 --> 00:05:36,960 Speaker 3: governments around the world these days, they're facing competing pressures. 120 00:05:37,080 --> 00:05:38,840 Speaker 3: I think there's a broad understanding of the need for 121 00:05:39,320 --> 00:05:41,719 Speaker 3: the long term need for the energy transition, but at 122 00:05:41,760 --> 00:05:43,800 Speaker 3: the same time, policy makers are needing to deal with 123 00:05:43,920 --> 00:05:49,360 Speaker 3: cost of living pressures, resurgence of industrial policy, trade protectionism, 124 00:05:50,000 --> 00:05:52,400 Speaker 3: all of these factors coming to bear, and how governments 125 00:05:52,400 --> 00:05:55,080 Speaker 3: then weigh up and balance between those factors and the 126 00:05:55,080 --> 00:05:57,359 Speaker 3: short term, of course, is the key consideration, but I 127 00:05:57,360 --> 00:06:00,280 Speaker 3: don't think it detracts from the long term trajectory of 128 00:06:00,360 --> 00:06:04,159 Speaker 3: the world achieving the energy transition. That energy transition is 129 00:06:04,160 --> 00:06:06,400 Speaker 3: going to be metals and minerals intensive, which is going 130 00:06:06,440 --> 00:06:10,600 Speaker 3: to compound demand for certain commodities often already strong baseline. 131 00:06:10,600 --> 00:06:13,760 Speaker 3: As the world's population grows, urbanization continues to play out, 132 00:06:13,920 --> 00:06:16,760 Speaker 3: and as billions of people around the world chase increase 133 00:06:16,839 --> 00:06:19,080 Speaker 3: living standards akin to those that we enjoy. 134 00:06:19,440 --> 00:06:22,200 Speaker 2: What can shareholders expect in terms of dividends in buyback? 135 00:06:22,520 --> 00:06:26,960 Speaker 3: So BHP has a very clear capital allocation framework. It's 136 00:06:26,960 --> 00:06:29,080 Speaker 3: something that we put in place back in twenty sixteen. 137 00:06:29,120 --> 00:06:31,599 Speaker 3: We've been consistent in execution of it. So one of 138 00:06:31,600 --> 00:06:33,840 Speaker 3: the things that BHP is known for is our very 139 00:06:34,000 --> 00:06:38,839 Speaker 3: simple strategy and are very consistent execution against that strategy. 140 00:06:38,880 --> 00:06:42,000 Speaker 3: We had great progress in recent years. Operationally. The company 141 00:06:42,040 --> 00:06:47,000 Speaker 3: is performing very well. We've returned significant cash dividends to shareholders. 142 00:06:47,000 --> 00:06:51,240 Speaker 3: In fact, we were the largest cash dividend pair in 143 00:06:51,320 --> 00:06:53,919 Speaker 3: the world in any sector for a couple of years running. 144 00:06:54,279 --> 00:06:58,159 Speaker 3: We remain one of the highest. And so this capital 145 00:06:58,200 --> 00:07:01,159 Speaker 3: allocation framework that we have in place, coupled with the 146 00:07:01,279 --> 00:07:04,160 Speaker 3: very clear growth prospects that we have in potash, copper, 147 00:07:04,320 --> 00:07:06,799 Speaker 3: the high performing iron or business that we have, vode 148 00:07:06,839 --> 00:07:09,200 Speaker 3: well for long term shareholder returns. 149 00:07:09,800 --> 00:07:11,640 Speaker 2: I have a couple of things. You know BHP has 150 00:07:11,680 --> 00:07:14,280 Speaker 2: previously say to the same more same pay laws. I 151 00:07:14,280 --> 00:07:16,800 Speaker 2: mean that means that there's like eight hundred million of 152 00:07:17,800 --> 00:07:20,360 Speaker 2: unexpected costs that come from that. What does it mean 153 00:07:20,400 --> 00:07:23,640 Speaker 2: for how you can mitigate that or what's the way forward. 154 00:07:23,880 --> 00:07:27,040 Speaker 3: So we have to continue to drive forward on productivity. 155 00:07:27,200 --> 00:07:30,200 Speaker 3: In the end, productivity is everything, and it's one of 156 00:07:30,200 --> 00:07:32,200 Speaker 3: the key points that we make to policy. 157 00:07:31,840 --> 00:07:34,240 Speaker 1: Makers in Australia and elsewhere is. 158 00:07:34,160 --> 00:07:36,880 Speaker 3: That what countries need to focus on is getting the 159 00:07:36,880 --> 00:07:41,040 Speaker 3: fundamental policy settings in place that support global competitiveness. Down 160 00:07:41,120 --> 00:07:44,040 Speaker 3: respect of that specific policy, we believe that it brings 161 00:07:44,080 --> 00:07:49,280 Speaker 3: with it higher costs for no improvement in productivity. We're 162 00:07:49,400 --> 00:07:53,000 Speaker 3: very big supporters of wage increases that are accompanied by 163 00:07:53,000 --> 00:07:57,080 Speaker 3: productivity increases. In that case that isn't a wage increase, 164 00:07:57,080 --> 00:07:59,320 Speaker 3: wouldn't be a company by productivity improvements, So it would 165 00:07:59,320 --> 00:08:02,160 Speaker 3: pull us backwards on the competitiveness front. We have to 166 00:08:02,200 --> 00:08:06,160 Speaker 3: work very hard to continue to improve productivity through other 167 00:08:06,240 --> 00:08:09,520 Speaker 3: means to upset that increased costs. And the costs are 168 00:08:09,520 --> 00:08:11,360 Speaker 3: still a little bit. We have to see exactly how 169 00:08:11,360 --> 00:08:14,160 Speaker 3: the policy gets implemented, but it will mean more costs 170 00:08:14,440 --> 00:08:17,440 Speaker 3: and we're offsetting that through our application of technology and 171 00:08:17,600 --> 00:08:19,080 Speaker 3: through improving work pack. 172 00:08:19,000 --> 00:08:20,120 Speaker 1: Practices through other means. 173 00:08:20,120 --> 00:08:22,200 Speaker 3: And we have a proprietary system in place called the 174 00:08:22,240 --> 00:08:25,160 Speaker 3: BHP Operating System, which is our way of working inside 175 00:08:25,200 --> 00:08:28,520 Speaker 3: the company and that's what's helped move us from not 176 00:08:28,640 --> 00:08:30,960 Speaker 3: being the best performing in the industry operationally to now 177 00:08:31,000 --> 00:08:32,960 Speaker 3: having the best performing iron ore business in the world, 178 00:08:33,040 --> 00:08:37,120 Speaker 3: lowest costs for five years running now and we'll continue 179 00:08:37,120 --> 00:08:39,680 Speaker 3: our focus on that and how we go about enabling 180 00:08:39,679 --> 00:08:42,000 Speaker 3: the ninety thousand people who work across BHP. 181 00:08:42,360 --> 00:08:45,480 Speaker 2: The productivity puzzle is one of the most important and 182 00:08:45,559 --> 00:08:49,320 Speaker 2: difficult questions that any chief executive can ask themselves. Does 183 00:08:49,400 --> 00:08:52,040 Speaker 2: AI help even at BHP in this regard. 184 00:08:52,200 --> 00:08:54,680 Speaker 3: So we've been using AI now for a few years 185 00:08:54,720 --> 00:08:56,800 Speaker 3: and it is helping with everything from how we go 186 00:08:56,840 --> 00:09:00,600 Speaker 3: about finding resources, how we go about extracting them efficiency 187 00:09:00,600 --> 00:09:02,600 Speaker 3: with which we're able to mine and then process these 188 00:09:02,640 --> 00:09:05,600 Speaker 3: resources and get them to market. And the exciting thing is, 189 00:09:05,640 --> 00:09:07,640 Speaker 3: I don't think we yet know what the full potential 190 00:09:07,679 --> 00:09:09,520 Speaker 3: of AI is. 191 00:09:09,679 --> 00:09:10,959 Speaker 1: It's not the sole focus. 192 00:09:11,280 --> 00:09:13,240 Speaker 3: It's at the end of the day, it's an enabler 193 00:09:13,280 --> 00:09:15,000 Speaker 3: of the underlying business and the way that. 194 00:09:15,360 --> 00:09:16,400 Speaker 1: People people work. 195 00:09:16,720 --> 00:09:19,400 Speaker 3: But yes, it's it's already unlocking value for BHP and 196 00:09:19,440 --> 00:09:20,760 Speaker 3: there's lots more to come. 197 00:09:21,480 --> 00:09:23,760 Speaker 2: Mike, I know there's a UK government's law basically suggests 198 00:09:23,760 --> 00:09:26,400 Speaker 2: that a chair steps down after nine years. What does 199 00:09:26,400 --> 00:09:27,240 Speaker 2: that mean for your chairman? 200 00:09:27,720 --> 00:09:30,200 Speaker 1: Oh so it's probably probably a question better for the 201 00:09:30,760 --> 00:09:31,079 Speaker 1: for the. 202 00:09:31,120 --> 00:09:33,960 Speaker 3: Chair But one of the things that BHP is is 203 00:09:34,000 --> 00:09:35,679 Speaker 3: known for and has done a very good job of 204 00:09:35,720 --> 00:09:39,920 Speaker 3: in the past is our approach to uh to succession. 205 00:09:41,040 --> 00:09:44,000 Speaker 3: But you know, I know that certainly from from my perspective, 206 00:09:44,120 --> 00:09:46,720 Speaker 3: the company is performing well. There's still so much more 207 00:09:46,760 --> 00:09:50,040 Speaker 3: opportunity ahead for BHP, and I can say that both 208 00:09:50,120 --> 00:09:52,240 Speaker 3: the board and the management team are very much focused 209 00:09:52,280 --> 00:09:54,400 Speaker 3: on on on on running the great business that we 210 00:09:54,480 --> 00:09:57,280 Speaker 3: have and unlocking more of that opportunity for shareholders and 211 00:09:57,320 --> 00:09:58,480 Speaker 3: other stakeholders. 212 00:09:58,000 --> 00:09:58,600 Speaker 1: In the coming years. 213 00:09:58,600 --> 00:10:00,000 Speaker 2: Are your biggest challenge for next year? 214 00:10:01,240 --> 00:10:04,760 Speaker 1: Yeah? So just right for next year. 215 00:10:04,800 --> 00:10:07,439 Speaker 3: Of course, safety is always front of front of mind 216 00:10:07,920 --> 00:10:10,640 Speaker 3: in an industry like ours, looking after our people's priority 217 00:10:10,720 --> 00:10:11,880 Speaker 3: number number one. 218 00:10:12,280 --> 00:10:12,480 Speaker 1: UH. 219 00:10:12,760 --> 00:10:14,439 Speaker 3: My management team and I spend a lot of time 220 00:10:14,480 --> 00:10:16,240 Speaker 3: out there in the field talking to people, making sure 221 00:10:16,280 --> 00:10:18,640 Speaker 3: that we understand what their challenges are and how we 222 00:10:18,679 --> 00:10:22,880 Speaker 3: can go about better enabling them. Of course, there's all 223 00:10:22,920 --> 00:10:25,640 Speaker 3: the uncertainty around trade, trade measures and so on in 224 00:10:25,880 --> 00:10:26,160 Speaker 3: the in. 225 00:10:26,120 --> 00:10:30,080 Speaker 1: The year ahead. It creates some some near term uncertainty. 226 00:10:29,640 --> 00:10:32,960 Speaker 3: But the long term outlook for our industry, for BHP 227 00:10:33,000 --> 00:10:35,200 Speaker 3: as a company, and for the commodities that we produce 228 00:10:35,559 --> 00:10:38,640 Speaker 3: is positive, and I'm focused on how we go about 229 00:10:38,679 --> 00:10:41,360 Speaker 3: positioning BHP to best capitalized on those opportunities. 230 00:10:41,400 --> 00:10:43,319 Speaker 1: In the year's ad Mike, thank you so. 231 00:10:43,280 --> 00:10:45,240 Speaker 2: Much for joining us today. That was, of course, Mike Henry, 232 00:10:45,240 --> 00:10:47,160 Speaker 2: the chief executive of VHP