Please join us in welcoming to the stage Mr. Joe Collard. Joe is a Bibbulmun Noongar man with traditional and ancestral ties to the Whadjuk Noongar area and surrounding region.
Shalom. Guten tag. Bonjour. Hola. Ni hao. Konnichiwa. Howzit. Selamat. Namaste. In some of our areas here in Australia, pre-colonization, we would say, Wayapa, Kaya, Yaama, or here we say, Kaya. Have you ever played Celebrity, the game Celebrity Heads? You know how it goes. You get this great name above your head. Well, let's say Gina. For the sake of this illustration, now with this name above my head, everyone can see that. All in the audience, except me. In a similar way, we hold our reputation, and it works in a similar way. We all wear our reputation above our heads. We all walk in the room, and we say, "Hey, that's blah. And he's from blah." What would you choose for that ultimate reputation? Wouldn't you agree that BHP has a great reputation?
Did you know most cities in the United States of America, we in Perth have more people. Philadelphia, San Diego, Phoenix, Las Vegas, Boston, Dallas, San Francisco, Miami, we in Perth, our population is way bigger. Outside of London, in the United Kingdom, besides London, we have more people. Glasgow, Cardiff. We have a big mob here in Perth. It's really good to see that BHP is set up here. Thank you for allowing me to do a welcome to country as a Whadjuk representative to represent our mob from this way. I would say, thank you. Thank you all for allowing me to speak in front of you. I'm happy to talk in front of you, standing strong like a jarrah tree. Welcome you to this country. We call this area Gummak. We call this part of the river, the Derbarl Yerrigan.
I am descendant of the Paperbark people. I'm from the Black Swan Totemic clan group. My skin group is the Brown Hawk. My moiety is the Karrella. We welcome you to this land. I acknowledge my people, our land, our elders, the coastal plain, the bush, the Darling Range, which we call Kattamorda, the Black Hills. We are from the waterways, the Bilya. We are from the coastline, the Wardangard. We are from the old people, the Koromok. We have many clan groups, the Karlakab. Our maternal and paternal grandparents lived on this land for a very long time. This is our land. This land is sacred, this land is old, and this land has power for healing. Standing together, creating together, walking as one, this is good for the heart. Thank you very much. I hope today that it goes well for yous all. Thank you.
We might just give a minute or two for people to take their seats. Ladies and gentlemen, my name is Ken MacKenzie, and I'm your chair. Let me first thank Joe Collard for his warm welcome to country and his kind words about BHP. I should mention that Joe was a participant this week in a traditional owner forum that we had here in Perth, where we had 16 of our traditional owners from around the country come together for some dialogue, which we found incredibly valuable. I'd like to acknowledge and pay my respects to the Whadjuk Noongar people who are the traditional owners of this land on which we meet.
I'd also like to pay respects to their elders, both past and present, and extend that respect to other First Nations peoples who are joining us today. Thank you for joining us, and I'd like to welcome you to this annual general meeting. I mean, after two years of virtual meetings, we're delighted to be together in Perth at the first AGM of the newly unified BHP Group.
Western Australia has played an integral role in BHP's history since the 1960s, when we first developed significant deposits of iron ore in the Pilbara. Today, our Western Australian iron ore business, or WAIO for short, is the lowest cost iron ore operation in the world. Further, our nickel operations at Nickel West in Western Australia produce an important commodity for electrification and decarbonization. We are very proud of our operations in and our connections to Western Australia. We're thrilled to be meeting you here today in person in Perth. Today I'm joined on stage by Chief Executive Officer Mike Henry, Group Company Secretary Stefanie Wilkinson, and my fellow directors. Now, Dion Weisler is regrettably unable to attend today due to a preexisting conflict which predates his joining the BHP board.
We also have our external auditors from Ernst & Young and Chief Financial Officer David Lamont in attendance. A particularly warm welcome to Michelle Hinchliffe and Catherine Tanna, who joined the board earlier this year and who are standing for election today for the first time. We'll get the chance to hear from Michelle and Catherine shortly. I'd also like to take this opportunity to thank Malcolm Broomhead, who will retire from the board at the conclusion of this AGM, and John Mogford, who retired from the board last week. Malcolm and John have been instrumental to our ongoing success, and in particular over the last 12 months as BHP has navigated major strategic changes such as unification, the investment decision for the Jansen Mine, the demerger of petroleum business to Woodside.
I'd like to thank both Malcolm and John for their support and counsel over the years, and we wish them both all the best for the future. Now, I can confirm that there's a quorum present, and as it's shortly after 10 A.M. in Perth, we can now start the meeting. The notice of this annual general meeting was sent out and made available to shareholders on the 3rd of October, 2022. The poll is now open for all of the items to be considered at today's meeting, and you may now start casting your votes. I'll also give you a warning before the end of the meeting to ensure that you are able to cast your votes. Now, our Group Company Secretary, Stefanie Wilkinson, will outline the procedures for voting at today's AGM later in the meeting.
In January, at our general meeting, I commented that BHP was in a strong position. The 2022 financial year results delivered in a climate that was very challenging, a lot of uncertainty and change, really demonstrate that strength. I'd like to take this opportunity to explain why we believe your company is well-positioned today, and more importantly, the key elements we're working on to ensure BHP is positioned for tomorrow. Namely, our approach to safety, culture, and capability, our portfolio positioning for the future, our continued capital discipline, and our focus on social value. I wanna begin with safety because it has been and will continue to be our number one priority. 2022 marked another fatality-free year for BHP. That means your company has gone more than three and a half years without a workplace fatality.
Our safety indicators have continued to improve. For instance, we experienced fewer high potential incidents, which are those that could cause significant injury or fatality. We're not just focused on operational safety. Our commitment to safety extends to the total elimination of sexual harassment, racism, and bullying in BHP workplaces. That's why I want to apologize to all of those who experienced or continue to experience any form of sexual harassment, racism, or bullying anywhere at BHP. We are determined to eliminate these harmful behaviors. At BHP, we're committed to providing a safe, inclusive, and supportive workplace culture where everyone can bring the best of themselves to work. Although we are making progress in these areas, we know we have a lot more work to do. We recognize the important contribution BHP can make, both within our industry and to global economic development.
BHP has supplied the resources the world needs for almost 140 years. Over that period, as the world has changed, BHP has continually adapted to keep supplying essential commodities safely, efficiently, and sustainably. Your board and management team are the stewards of this successful history, and our collective responsibility is to plan and prepare for the future of BHP with the next 140 years in mind. This means we need to plan and prepare for the long term because mines are long life investments with a substantial upfront capital commitment that can positively transform the regions in which they're established. This is why positioning the portfolio for the future is so important. This is a very different company to what it was when we gathered virtually a year ago. It's a company fundamentally repositioned and better positioned for the future.
In the past year, BHP has unified our corporate structure, becoming simpler, more efficient, and agile. We've merged our petroleum business with Woodside, and in the process, created a top 10 independent energy provider, and we've given BHP shareholders further choice about their investment in oil and gas. We've simplified our coal portfolio to focus on higher quality metallurgical coal used for steel making. Finally, we approved the investment in our new Jansen potash mine in Canada. Potash is a new commodity for BHP, which has the potential to deliver value for a century or more. The changes we've made across BHP align your company with the mega trends of decarbonization, population growth, and demand for higher standards of living.
According to our modeling, to deliver our Paris-aligned 1.5-degree scenario, the demand for copper, nickel, and steel will grow to enable the infrastructure and products required for the energy transition. Our portfolio has some of the best assets in the world to meet this increase in demand. WAIO is the lowest cost major iron ore business in the world and one of the lowest emission intensity iron ore operations. Escondida is the largest copper mine in the world with the largest copper endowment. Nickel West holds the second-largest nickel sulfide endowment and, again, has one of the lowest production emission intensities. While our metallurgical coal business, BMA, is one of the world's premier suppliers of higher quality metallurgical coal used for steel making.
The Jansen Potash project is also expected to be one of the world's largest and lowest cost potash mines when it comes into production. Now, while we're well-positioned for the future, we also spent 2022 navigating significant uncertainty, and the short-term outlook remains complex. The geopolitical landscape continues to change, economic conditions remain uncertain, there's ongoing labor and skill shortages, and countries are emerging from the impact of the global pandemic at different paces. Despite the challenging environment, your company delivered strong operational and financial results in 2022. Our financial performance included record EBITDA of $40.6 billion. That's up 16%. Free cash flow of $25.2 billion, and that's up 30%.
The return on capital employed was 48.7%, and there was a further strengthening of our balance sheet with net debt at less than $400 million. These results are due to the extraordinary efforts of all the people at BHP and to the leadership of Mike Henry and his management team. This performance enabled the board to declare a total dividend of $3.25 per share, bringing BHP's cash returns to shareholders for the year to a record $16.4 billion. We also distributed a further $19.6 billion in value as an in-specie dividend through the merger of our petroleum business with Woodside. Now combined, that's $36 billion in value returned to shareholders in 2022.
This is just one part of BHP's total economic contribution, which is a measure of the financial value we create through our employment, taxes and royalties, payments to our suppliers, community contributions, and yes, dividends to shareholders. In the last financial year, our global economic contribution topped $78 billion, and this includes over $57 billion in Australia, with BHP paying close to 10% of all corporate tax in Australia. Our total economic contribution is important because it relates to BHP's focus on long-term shareholder value and social value. In June, we released our new social value framework, and this framework spells out our priorities and approach to social value creation. Importantly, it sets targets and goals for 2030 in the vital areas of decarbonization, the environment, indigenous partnerships, workforce, communities, and supply chains.
Our approach is deliberate and proactive, measuring the social and financial impact of our choices, and it's delivering tangible outcomes. For example, we've reduced operational greenhouse gas emissions by 24% from a baseline year, and we're on track to achieve our goal of at least a 30% reduction by financial year 2030. We've reduced our fresh water withdrawals by nearly 30% on our baseline year, and we've increased female participation in our workforce to 33%, and that's up from 17% in 2016, which is the year we set our aspirational goal, to achieve gender balance by financial year 2025. Today, we're also releasing our revised global indigenous peoples policy. Our revised policy is based on consultation with indigenous peoples, global stakeholders, and employees.
This policy statement sets out our commitment to respecting indigenous people's rights. Listening to their voices and perspectives, and embedding that knowledge into how we work in partnership to achieve mutually beneficial outcomes. This focus on partnership and mutual benefit is crucial to our business, as our operations are often on or near the traditional lands of indigenous peoples. I'm delighted to announce this next step in strengthening our approach. In conclusion, I wanna come back to the strength of your company.
Our position, as demonstrated in the 2022 financial year results, is a credit to the efforts of thousands of BHP people over the past year. Our success is a product of their relentless focus on safety, culture and capability, the positioning of our portfolio, capital discipline, and social value. Our success is also a credit to the support of our stakeholders. With that in mind, I wanna thank you, our shareholders, for your continued support and for investing in the future of BHP. Look, it's now my pleasure to invite your CEO, Mike Henry, to speak with you. Thank you.
Well, thanks, Ken. It really is great that we can once again hold this event in person and to see so many faces in the audience. This was a big year for BHP. It was a safe and successful year. Successful in terms of performance, both operational and financial, and in terms of the strategic transformation to better position the company for the future. As Ken has touched on, we reshaped our portfolio, increasing our relative exposure to businesses that will generate greater long-term value and returns for shareholders. We unified our corporate structure. We're more agile, efficient, and profitable. We set out our Climate Transition Action Plan, which received strong support from shareholders, and our social value framework, which goes to how we will ensure we maximize the value we create with and for the various stakeholders who support or rely upon BHP.
All of this was achieved in the face of significant challenges in our operating environment. High inflation, tight labor markets, ongoing COVID impacts, disrupted supply chains, and of course, the war in the Ukraine. This was only possible with the incredible combined effort of 80,000 employees and contractors across BHP, and I really do want to thank all of them for their hard work and commitment. The combined mega trends of global decarbonization, electrification, population growth, and increased living standards are going to mean even greater demand for many metals and minerals, and being positioned to ride the tide of global trends like these is part of what has enabled BHP value growth historically. We are continuing this track record of transforming BHP to meet the needs of the world. We're positioning BHP at the center of the opportunity these mega trend s present.
I am going to speak more about this shortly, but first I'd like to mention some highlights from the last financial year. We continued to deliver strong operational and financial performance and delivered a number of performance records. We achieved record shipments from our iron ore business here in Western Australia for the third year running. In copper, Escondida in Chile had record material mined and near-record concentrator throughput, while Olympic Dam in South Australia performed strongly after a planned smelter maintenance.
The Olympic Dam asset is showing much better operational reliability in recent years, reflecting the investments we've made over the past 5 years in asset integrity and on building capability. Our reliable operational performance enabled us to capture maximum benefit from high commodity prices and deliver strong financial results, including record returns to shareholders and contributions to governments.
Our results demonstrate the positive momentum we've built over a number of years now, and I hope our ability to consistently deliver financially and operationally, in parallel with the transformative changes we're making to set BHP up for a bright future, is a source of confidence for you, our shareholders. At the heart of our resilient, strong results and of our ability to grow value lies our people and our culture. We've invested, and continue to invest, significant effort in making BHP a better, more inclusive place to work, a place that's more creative and agile, where people look out for one another, where we're able to tap into the ingenuity, motivation, and discretionary effort of our teams.
It's not a coincidence that our safety and operational performance has improved hand-in-hand with this focus on culture and the strong progress we've made in achieving a more gender-balanced workforce. As Ken noted, we've increased female participation from 17% - 33% over the past six years. We've increased Indigenous and First Nations employment to now represent more than 8% of our operational workforce here in Australia and in Chile, and more than 7% in our Jansen Potash Operation in Canada. We've also increased the proportion of the workforce with permanent jobs here in Australia by almost 60% since 2017, adding more than 10,000 permanent jobs. This combination of culture and capability provides us with enduring competitive advantage, allowing us to operate more safely, to reduce our impact on the environment, and to generate higher value from our assets.
Now notwithstanding how far we've come, it's not yet far enough. We've not yet been successful in stopping damaging behavior in BHP sites and villages, and this includes sexual harassment, racism, and bullying. I am deeply sorry and apologize to those who have experienced or continue to experience any form of sexual harassment, racism, or bullying anywhere at BHP. I am fiercely determined to do everything I can to stop this conduct, and I know I speak on behalf of the whole of the senior management team in this regard. We are continuing to take action. In the past year, we've spent more than $200 million in upgrades to security at accommodation villages, with faster progress constrained only by the supply chain's ability to keep up with us.
We've enhanced our training programs, including for both leaders and bystanders, and we've established and improved our support services. I know we have more to do on, and this is a priority that's reflected in my and our team's performance measures. Like with sexual harassment, two years ago, we took the decision to elevate all claims of racism to our most serious category of investigation under our EthicsPoint process. More recently, we've stood up a specific dedicated effort to stamp out racism across BHP. Eight months ago, I asked Vandita Pant to lead this effort at an executive level. In the period since, employees and contractors across 10 locations in eight countries have participated in sessions where we've been able to hear about their experiences.
A dedicated project management office has also been established to progress our work towards eliminating this behavior and ensuring an environment in which people from all backgrounds can thrive. As I said, our people are the heart of our business, and we must provide a safe, inclusive, and supportive workplace that engages and empowers everyone every day. A key means of truly empowering our people is the BHP Operating System, and this is our proprietary way of working that creates a culture and capability where we make continuous improvement central to everyone's role. The BHP Operating System is giving people right throughout BHP, both the license and the tools to bring their knowledge to bear in identifying and locking in new and better ways of doing things.
Our centers of excellence encourage deep technical capability, allow us to bring in best practice from other industries, and enable faster deployment of improvement ideas across our business. When we combine these with the power of data, we accelerate improvements across our value chain from the geoscience required in exploration through to the marketing of our products. The BHP Operating System supported the delivery of over $1.3 billion in savings and efficiencies in the last financial year. We are continuing to grow the talent needed to support us to meet our goals through initiatives such as our FutureFit Academy in Perth and in Mackay. We are committed to training 2,500 apprentices and trainees through the academy with an investment of $300 million over five years.
Across issues of safety, of culture, and of capability, we're driving BHP forward, and we're also working to be stronger and better partners to those around us. Given that the timelines of our investments are measured in decades and our operations can be near and part of communities for 100 years or more, we must be open and collaborative in our dealings with stakeholders. We need to be true partners with the full range of stakeholders we work with and rely upon for our success. This sort of open engagement was integral to the development of the social value framework we announced in June, along with our 2030 scorecard, which stretches our ambitions and provides a more sophisticated way to measure performance. Our new framework further embeds social value into our thinking, planning, and performance, helping us to work with others to create better outcomes.
It includes a new 2030 goal of at least 30% of the area of land and water we steward under conservation, improved land management, and restoration, working in partnership with indigenous peoples and local communities. Now, to give some perspective on the scale of this goal, 30% of the land and water that we steward is around two million hectares. That's about half the size of Switzerland. As part of our goal to pursue net zero Scope three emissions by 2050, we've progressed partnerships with some of the world's biggest steelmakers, representing close to one-fifth of global production.
Our customer partnerships will help to advance the green transition of the steel industry through the development of low-carbon steelmaking technologies and their future application at plant scale. We also have, through our ventures work, a number of investments in emerging breakthrough technologies focused on carbon-free steelmaking.
We've made significant changes this year to reshape our business with a portfolio more aligned to the global mega trends unfolding around us, so we're better positioned to grow value as demand for our commodities grows. We have five levers available to grow value for shareholders. Operational excellence, improved productivity. This is getting better at what we do every day. This is priority number one, and it's the lever most within our control. Then it's organic growth, getting more out of these incredible resources that we have. Thirdly is exploration, finding new resources and potential growth projects globally. Then comes early-stage entry. This is getting in on the ground floor with potential tier one deposits found by others but not yet developed, where BHP can bring its capabilities and balance sheet in a positive way. Finally, acquisitions.
The right assets at the right time and at the right value, always with the discipline to ensure we're creating further value for shareholders. I've already spoken about ours to become more productive. On the organic growth front, we've accelerated studies to unlock more copper at Escondida, including a concentrator strategy and leaching operations, and we're now studying two-stage smelting at Olympic Dam and progressing drilling at Oak Dam. At Nickel West, we already have the largest, the second-largest nickel sulfide resource globally, and we've increased exploration spend over the next two years on highly prospective areas. We're also increasing our output at Western Australian Iron Ore to 300 million tons per annum, with studies underway for a 330 million tons per annum option.
Stage one of the Jansen potash project in Canada, where we're looking to bring forward production into 2026, and we've already commenced studies on stage two. We're building our suite of options in future-facing commodities to ensure that the group is well-placed in five to 10 years’ time. Just before I conclude, I would like to reiterate Ken's thanks to our two departing directors, and I'm pleased that both Malcolm and John are leaving at a time when BHP is seeing improved safety, improved operational performance, stronger growth, and increased trust from our shareholders. Both Malcolm and John have been tireless advocates for exactly these things in their time as BHP directors. Thank you both, and I hope you'll be able to look back with some pride on what you've helped to create.
In conclusion, over recent years, BHP has delivered a strong track record of disciplined allocation of capital and operational excellence, returning profits to shareholders while reinvesting in the business. Our portfolio, our people, and our processes are built for enduring success. We're confident of the fundamentals of decarbonization, population growth, rising living standards, and urbanization, and that they will drive demand for the commodities in our reshaped portfolio for decades into the future. BHP will continue to provide the commodities the world needs and deliver value for our stakeholders. With your support, we will help to build a better future. Thank you.
Thank you, Mike. I'll now ask our group company secretary, Stefanie Wilkinson, to outline the procedures for voting at today's AGM.
Thank you again, and hello, everyone. My name is Stefanie Wilkinson, and I'm the group company secretary of BHP. I'll now run through the procedural aspects of today's meeting. Voting on all items will go by poll. On a poll, each shareholder attending or present by proxy or corporate representative has one vote for every share held. If you're able to vote, you have received a handset. The resolutions are displayed on the screen of your device. Press the green button to open a resolution and again to vote. To cast your vote, simply select one to vote for, two to vote against, and three to abstain each resolution. Press the red triangle to return to the list of resolutions. The chair has opened the poll, and you can vote at any time. You do not need to wait for the resolution to be discussed before casting your vote.
Results of the voting will be announced to the stock exchanges shortly after the conclusion of today's meeting and will also be published on our website. Tim Hughan from Computershare has been appointed Returning Officer for the meeting and will scrutinize the vote. Turning to the items of business in the notice of meeting. Items one to 12 in the notice of meeting are endorsed by your board, and the board recommends that you vote in favor of them. Items 13 to 15 have been requisitioned by a group of shareholders. Item 13 is a special resolution seeking to amend BHP's constitution. A special resolution requires a majority of at least 75% of votes cast by shareholders entitled to vote on the resolution. Item 13 is not endorsed by your board, and the board recommends that you vote against Item 13.
Items 14 and 15 will only be valid if Item 13 passes and are advisory resolutions. Items 14 and 15 are ordinary resolutions that require a majority of the votes cast by shareholders entitled to vote on the resolution. Items 14 and 15 are not endorsed by your board, and the board recommends that you vote against Items 14 and 15. We will ensure that there is a reasonable opportunity for shareholders as a whole to ask questions or make comments at this meeting. However, we might not be able to answer every question or address every comment received. If you would like to ask a question today, please register your question at the registration outside the main room. Please provide your name together with the nature of your question to the attendant.
When it is your turn to ask a question, an attendant will let you know to come to the microphone. To ensure that shareholders as a whole have a reasonable opportunity to be heard at today's meeting, we ask that you respect the rights of others in the room and limit the number of your questions to two questions and your comments to no more than one or two minutes. Back to you, Ken.
Okay, great. Thank you, Stefanie. We'll now open floor questions, as Stefanie said, we'll do our best to get to as many of your questions and comments as possible. I ask that shareholders and guests are courteous and respectful to others. Item one of today's business is to consider the financial statements and reports of the directors and auditor for the year ended 30 June 2022. Shareholders are not required to vote on this item, but you may ask questions or make comments. If your question relates to director reelections, executive remuneration, or shareholder requisition resolution, you'll have the opportunity to ask your question when we come to those items. We're taking questions and comments on item one at this point. Go ahead, please.
Chairman, may I introduce John Campbell?
Welcome, Mr. Campbell.
Chairman, I'm representing Australian Shareholders' Association today. We have proxies for about six million shares, about 1,400 shareholders, which is approximately half what we had last time you had an annual meeting in Perth, which was 2015. I suspect that indicates that your body of shareholders as a whole is very happy with the progress BHP's made in the last 12 months. I think I should express congratulations to board and management on the achievements.
Thank you.
My first question is in relation to coal. The energy market has been sort of boosted by the war in Ukraine, Russia's invasion. That's had a major effect on the profitability of the coal division and particularly thermal coal assets. I know that you tried to dispose of some of those thermal coal assets in the past 12 months unsuccessfully. Just ask what your future plans are in relation to those assets and to what extent, if any, they've been affected by recent flooding in the eastern states.
Okay. Terrific. Well, I'll talk to where we are with the assets. I might ask Mike to talk to the impact of the flooding in Queensland. Just maybe to clarify for shareholders the difference between energy coal or thermal coal, which is used for power generation and metallurgical coal, which is used for steel making. In January 2022, we divested our 33.3% holding in a company called Cerrejón in Colombia. That was an energy coal business. We owned one-third, Anglo American owned one-third, and Glencore owned one-third. It was one of these non-operative joint ventures. It was a separate company, and we had only board representation as a shareholder. We sold our interest. Anglo sold their interest as well.
Today that's wholly owned by Glencore. That's one. Second, 2022, following a two-year review, we determined to retain the New South Wales Energy Coal business. It's our intention to continue to operate that asset to 2030, at which time we'll close it down. When I say close it down, there'll still be 10 or 15 years of rehabilitation work that needs to launch. That thing will actually be active for probably 25 years. It is our intent to close that operation from a production perspective of energy coal in 2030. That's been an economically driven decision. It's not been driven by ESG concerns, but this is how we maximize the outcome for shareholders through tha t process.
What's great about the timing around that, Mr. Campbell, is that it's gonna give us the time to do a just transition of the coworkers and the community. It gives us seven or eight years to engage with the community, engage with the workforce, and work our way through life in that region post the closure of the asset. We've also divested our 8% interest in BMC. BMC's a metallurgical coal business, but it was at the lower quality end. Where we are today, in summary, is we have metallurgical coal assets, BMA. That's some of the highest quality metallurgical coal in the world, and that's important because the higher the quality of the metallurgical coal, the lower the emission profile is when you're producing steel. That's important.
The New South Wales Energy Coal I've talked about, we'll be holding that asset for the next eight years, and then we will exit. All of those decisions were driven based on our strategy and our understanding of our commodities and the future, and the fundamental future of those commodities. Now, this is a cyclical business. It's volatile right now. Commodity prices will go up and down, and we sort of have to look through, we have to manage that, but we have to look through that. In the case of energy coal, you know, we don't think that's a good place for our shareholders to be invested in the medium and long term. We're not gonna invest in those anymore.
In the case of metallurgical coal, we still see, as I mentioned in my speech, you know, the mega trend of decarbonization is gonna require a lot of steel. It's gonna require a lot of iron ore. It's gonna require a lot of metallurgical coal. The demand for metallurgical coal, particularly at the higher quality end with a lower emission profile, we still wanna participate there. We think that's in the interest of our shareholders.
Yep. Mr. Campbell, in respect of your question about the impact of flooding on the coal operations both in Queensland and New South Wales, as has been widely reported from other coal producers and we indicated in our first quarter operational review, there has been impact from wet weather. Not necessarily flooding, but the heavy rains that we've seen right across the East Coast. For the benefit of shareholders, these are large open cut mines, and so when it rains, it can be quite difficult or unsafe to drive some of these large trucks around, so operations will be slowed during that period. We indicated that that did have an impact on production in the first quarter, directly correlated with the level of and frequency of rainfall.
Okay. I do have a couple of other questions of a general nature. Gentlemen, would you like me to ask them now or?
Yeah, sure. I mean, we, typically we limit to two, but you are representing 1,400 shareholders, so we'll give you three.
My second question is on the Jansen project. I'd like a bit of background, if I may, on what your competitors are, where potash is provided at present around the world and the market sort of generally for and the board's confidence that the marketplace will handle the volume of potash that you're going to be producing there and perhaps why it's taking so long to get to production and why you had to write off $1.3 billion a couple of years ago on it.
I think you're pushing the limit. That's several questions there, wrapped up as one. Look, we're really excited about the Jansen potash project. As we mentioned earlier, $5.7 billion investment, but that's the investment for stage one. This we've been working on, when I say we, BHP's been working on potash for decades. Up until the final investment decision where we said, "I'm gonna spend the final $5.7 billion to bring stage one to production," we'd already spent over $4 billion putting the infrastructure in place that would support not just stage one, but stage two, stage three, and subsequent stages beyond that.
The short answer to your question is, because of that upfront infrastructure investment that was done for the scalability of this asset for the next hundred years, some of that had to be written off when we sanctioned the first phase of the project. That answers that question. We are looking at accelerating it, bringing it forward. Originally, when we sanctioned it, we would've talked about 2027. Now we talk about 2026, and Mike and his team are already doing the work around stage two, as well. It's largely a market that, to answer your question about competitors, it's largely from a geographic perspective. It's Canada, and it's the sort of Eastern Baltic States of former Soviet Union. Those are the two core markets. Our major competitors company called Mosaic and another company called Nutrien are our two North American-based competitors. I think I've answered all the questions there.
Okay. Well, perhaps on the market situation, what gives you confidence that the world will take the larger production of potash?
Chair, I might.
Yes.
I might take this. There's three primary fertilizers that the world's agricultural industry needs. You have nitrates, phosphates, and potassium. Potassium being potash. It's an essential element in plant growth. For plant growth, it needs potassium, and it either gets it from the soil or it gets it from fertilizer. Of course, over time, the potassium available in the soil depletes, and so it needs to be replenished with fertilizer. Against the backdrop of a growing global population and improving global diet. As you see, economies around the world develop and move out of poverty, the diets then tend to become better and more calorie intensive. That requires more agricultural input. Against that backdrop, you have decreasing arable land or constraints on arable land globally.
We're needing to get more production out of the same land footprint. Therefore, more fertilizer needs to be applied to increase that yield. That combination of global growth, increasing quality of diets, and constraints on arable land, we believe is going to drive pretty sustained strong growth in potash demand for a long time. Yet, as Ken noted, two really just two big basins that are supplying the world's needs of potash. We have the best greenfields capacity, so we're very well-positioned to meet the world's needs for potash and more sustainable agriculture.
Well, Chairman, may I ask my third question?
Sure.
Samarco. When you had held your AGM here in 2015, it had just happened, the dam had broken a few weeks before. I'd like to know how much it's cost the company to date. I know that it's cost $2 billion in the last three financial years. But how much over the period has it cost the company? And to what extent can shareholders be confident that it's not gonna go on costing the company the sort of money it's been costing in the last 12 months or more? You know, that's probably $0.20 a share in dividends or something like that in my calculation.
Yeah. Thanks, Mr. Campbell. Look, first and foremost, you know, Samarco was a tragedy, and it's one that we're never gonna forget. We're deeply sorry for the impacts that were caused and the losses that occurred. We've been working really hard through the Renova Foundation and through Samarco, which is the asset, to put all that right. It's been a lot of work. Really the three focus areas, remediating the environment, that's gone really well, and we're largely through that. Relocating and reestablishing the communities, and that's been challenging, to be honest. A lot of red tape, but also a lot of consultation with the communities. Of course, we got hit by COVID, which had an impact.
We're making good progress there. Finally, there's compensation. There's about almost 400,000 people have received compensation now. We've got a system up and running for those people who have difficulty documenting their losses. It's called the Novel System, and it's been court-approved, and we're working our way through that, and we're making good progress there now. You know, I think we're moving more quickly. The short answer to your question is, to date, so this is BHP, not Samarco and not Vale. I'll talk about the total afterwards. We've spent $1.8 billion to date. You would have noticed in our accounts that we have a further $3.4 billion provisioned.
You know, the latest forecast that we've gotten from management is that, you know, a lot of that will be spent in 2023, and the majority will be spent, you know, will be complete in 2024. Something like 80% in 2023 will be spent and 15% in 2024. A lot of work still ahead. The money's there. It's provided for. There's nobody who wants all of these issues resolved. There's 42 work programs here. There's nobody who wants this resolved more than BHP. It has been difficult, and there's a lot of stakeholders.
When I talked about our share in terms of the total impact, it's at least twice that because Vale would have a similar number, and Samarco is also up and running again, generating profit and able to pay some of the expenses itself. You roughly need to double it a bit those numbers. It would be sort of $3.6 billion spent to date and $6.8 billion to go in the next two years roughly.
Yeah. Is there confidence that you stopped the damage? Each time it rains, there's more effluent go down into the river system, and is there-
The, the-
-any continuing-
The river system has returned to pre-failure, probably even better, to be honest, better quality than pre. We've done a lot of work actually improving the sewage treatment and water treatment through the whole basin. I think that will be probably better than it was pre-dam failure.
Thank you.
Thanks, Mr. Campbell. Next question, please.
Good morning, Chair. I would like to introduce to you Mia Pepper.
Welcome, Ms. Pepper.
Hi. Thanks so much for having me here today. My name is Mia, and I'm here representing a proxy. I have a proxy representing a shareholder, sorry. I'm here to ask a question also about Samarco, and I thank the Chair for your response so far and welcome the commitment from BHP to repairing the damage there. Although the question I have comes directly from the community, and there are still so many outstanding issues, both environmentally and with the communities. I'm here to read out the question directly from the community, which is really more of a picture of what that community is facing now. They say seven years ago, the Fundão dam collapsed.
Did you know that it's been seven years since no house has been delivered in any of the resettlements, and that still there has only been 42 houses partially delivered, placing 42 families there in January 2023, what will be within a construction site? Did you know that seven years after the crime, Renova Foundation has only hired technical assistance in three out of the 19 territories affected by the crime? Did you know seven years after the rupture, the tailings were not removed from Rio Doce, and that every year with the floods, they pollute the river, the fish, the agricultural land again and contaminate people? Seven years after the dam collapsed, the families of Bento, Paracatu, and Gesteira still do not have their houses returned in collective resettlements, either because they were not considered or because the works were delayed. How is this justified?
71 of the approximate 400 houses are being completed according to Renova. Seven years for 71 houses in the middle of a construction site. Did you know seven years after the dam break, 100 or more people have died in Mariana, since the dam break and without compensation? How does it feel to own a company that killed 20 people, displaced thousands, and ended the lives of a watershed and still failed to repair the victims? That is the end of this statement, and I appreciate that there's been comments and that there's a strong feeling and sadness about what has happened.
Comments that Mr. Campbell made about the continuing flooding, the tailings issues that are still there and the comments from the community that point to the tailings that are still there, and every time it rains that the agricultural land, the fish, the waterways are still being polluted. We're really keen and really eager to understand what kind of work Renova are doing, and what kind of evidence, scientific evidence do they have prepared, and in what way is that being documented? How can we see that have visibility over the actual science and the evidence that these areas are being remediated and the progress?
Yeah. Look, thanks for your question. I don't agree with all the data, but you know, I appreciate that you've come here, that you're representing the community, and you're clearly very well-intentioned. I think the progress has been better than what you've talked about. You know, there's 100 cases of resettlement have already been completed. Over 60 homes have been done. They're actually gonna be moving into the communities, the school. All the infrastructure's in place. The hospital, medical centers, the schools, the roads, the sewage treatment is in place, and the families are moving into their new communities in the first quarter of next year, and school's starting. I accept that the resettlement process has been slower than we would have liked.
We would love for this to be done, but there's been. You can imagine when you're recreating a community, just how much urban planning, consultation, approvals need to go on. So there's a lot of work. We had three of our directors go to Samarco this year to see firsthand the progress that's being made. We are making progress, and I think 2023 is gonna be an important year. I think COVID also, you know, slowed things down. To your question around the scientific evidence, we do a lot of that work, and we're of the view, for example, there continues to be a fishing ban in Rio Doce. We're of the view that there's no need for that anymore.
Many of the government authorities are also of the view that that's no longer needed. In the meantime, there's a fishing ban, and we're providing compensation to all the fisher folk who aren't able to continue to work. Look, 42 programs of work underway. The money has been provided. There's no issue there. We're committed to making this right, and we are working through the environmental resettlement and compensation programs, but it's challenging.
Of course it is. I suppose from the community perspective, there's a kind of open request here for about accountability and visibility over the studies, the programs. Of the 42 programs, how long will they operate? Have they evaluation and monitoring that the community can see and have evidence and visibility over so that there's.
Yeah. Well, look.
a greater sense of transparency about that?
To be honest, I'll take it as fact, but I'm surprised by the comment because there is so much community consultation that goes on, that I'm surprised that there's lack of information. I will take it on board as fact. Thank you. We'll look into it.
Thank you.
Next question, please.
Chair, I'd like to introduce Derek Miller.
Mr. Miller, welcome.
Thank you. I'm a long-term shareholder, and I've got a couple of comments I'd like to make. The first is in relation to fly in, fly out, which is a growing issue around the place. The question is in relation to fly in, fly out as a basis for Pilbara mine design, and that seems to be where we are today, fly in, fly out as the basis of design. There's been recent newspaper articles highlighting the problems, and Mr. Henry mentioned them then, assault and harassment of fly in, fly out. There's a report, Enough is Enough, which is well worth reading. A very massive report. Fly in, fly out was good in the early days for small mines. The first mine was Argyle in the Pilbara, or the Kimberleys, I mean. That was in mid-1980s, and it's now closed.
It ran for 40 years. That gives you an idea how long fly-in fly-out has been around. It grew massively from Argyle to the fact that it's flown through the whole Pilbara now, and in particular, in some of the bigger sites. It overcame some of the problems in small towns, though, and for short life mines, and that was good. Some people liked it, and some people found it a bit difficult to work with. Particularly long-term employees who, frankly, I have-- find it hard to imagine working fly-in fly-out for 30 years. I worked something like that for BHP. Sites are now very large, and the classic example in your case is Mining Area C. The Mining Area C hub is 140 million tons a year, which is half your total production.
I wonder if it's time now to reexamine the future of fly-in fly-out as the basis for the design. That point was raised by Tim Treadgold recently in an article in The West Australian. Further on fly-in fly-out has now crept not only into the mines but into the established towns. I understand that both Hedland and Newman are partly fly-in fly-out and partly residential. To the extent that a significant number of your senior people are actually on fly-in fly-out in the mines. Not all of them, but a significant number. This has affected the community. Your senior people are leaders in the community, and if they're not there, the community tends to run down. In Port Hedland, you particularly got that, I think, with the collapse of service clubs, Rotary, Lions. The collapse of the yacht club, collapse of the sporting clubs. That's something that needs looking at.
Well-
In broad terms, iron ore industry's boomed, but the towns haven't. When Mining Area C was first designed, the MAC hub, in the mid-1980s, Goldsworthy Mining had a town included in the design. That was for 20 million tons a year. We're now 140 million tons a year, and I would think that hub could support a town of Newman size rather than fly-in fly-out.
Mr. Miller, you're raising some important questions. Let me just respond.
Yeah.
Around fly-in fly-out. We get the question a lot. I'll let Mike talk to sort of the basis of design question. We recognize that to attract and retain a talented workforce, we need to offer a mix of employment options. Residential, drive-in drive-out, and fly-in fly-out all have a role to play. Importantly, some of our mines are a long distance from any sort of regional centers where services or the infrastructure quite frankly, are insufficient. It's not practical to have a residential workforce. The health and safety of our people and communities in which we operate is central to our thinking, and it's central to our business.
When someone's thinking about joining BHP and making the decision about FIFO, we provide a lot of information about the nature, the challenges, and the benefits and the shortcomings to employees and to their families. A lot of people choose FIFO because it suits their circumstances. But we're always gonna support the communities in which we operate. We're doing a lot of work in Port Hedland right now to rejuvenate the West End. I think we're spending $40 million to rejuvenate the West End, including the marina that you talked about. We as a board, we're heading up there in the next couple of days, and we'll spend time in Port Hedland. We'll spend time in Newman, in the communities and see how it's going. Why don't I let Mike talk to the basis of design.
Sure. Well, look, thanks, Ken, and thank you, Mr. Miller, for the question. The company doesn't start with a preference for fly-in fly-out. This is really. It's driven by employee choice or prospective employees. We need to be able to compete effectively for talent in the marketplace. Some employees prefer residential, and we have options at Port Hedland, at Newman, at Moranbah, Dysart, Blackwater, Roxby Downs. There's a number of residential communities or mining towns across Australia where employees who want to live residentially, that option is available to them. There's other employees who prefer to live in an urban setting and prefer the FIFO roster and FIFO lifestyle.
Now, of course, one of the things we always keep an eye on, and the chair alluded to this, is that in providing a fly-in fly-out option, we don't want to denude existing communities from people. Therefore, we invest quite heavily in ensuring that these communities are attractive places to live. There's more work to be done on that front, but that's an ongoing effort for us. The support services there in terms of medical support services, education, daycare, and so on, those facilities are there. We're also investing in infrastructure, and there's a number of examples in Port Hedland where we're doing exactly that. I acknowledge that there's a tension there. We're actively seeking to manage that tension, but it's not always as straightforward as us building a town and employees coming to it. Many employees actually prefer fly-in fly-out.
Mr. Miller, I know that I'm just conscious of time here.
No, I understand.
I know there's a lot of shareholders who wanna ask questions. I'm just gonna actually ask Geraldine Slattery to stand up. She's our new Asset President for Minerals Americas. You should have a cup of tea with Geraldine at the end of the AGM, and you can ask all the questions around FIFO and basis of design and those sorts of things.
I'll definitely do that. Look, I'm just suggesting the balance needs examined.
Understood
by the board. That you've gone a bit far in the fly-in fly-out direction. Particularly with Mining Area C, which is a project like Yandi.
Yeah.
That hub will run for 50 years.
Yeah. You've made your point, Mr. Miller. Understood. Message received.
Okay. Can I have a second question?
Sure. It's gotta be shorter this time, though, Mr. Miller. It's gotta be shorter this time.
The second one relates to industrial relations. Four years ago, I went to a Rio meeting and raised a question there. Bill Shorten said he was going to run the country like a union. To me, that was a worry. I asked Rio, "Why wasn't that on your risk register?" It wasn't. I think, just coming quickly to the point, I think we've got the same thing now. The current government looks like running the country not like a union, but running it for a union. I wonder how you're thinking in your industrial relations, how resilient you are to handle that. Because your workplace agreements were introduced 20 years ago. They've worked excellently. Your whole productive performance depends on the consistency of running without strikes and stoppages.
Yeah.
I worry about that at the moment.
Right. Look, we work with the government of the day. We're constantly engaged with government around industrial relations policy and, you know, we get. The great thing about being BHP, you know, the largest company in the country is that we, you know, we get access and so we have the opportunity to put our views forward. That said, if you look at the results of BHP, you know, we are moving forward and improving productivity in the current environment.
You know, I think, from a board perspective, we back our management team to continue to move the business forward and to work collaboratively with our unions and our coworkers, and to get the right outcomes for the company. That's probably why you don't see it on the risk register is because, you know, we feel like we're in a position of engagement with the stakeholders that are important here, and we're making positive progress. We're not taking anything for granted.
Thank you.
Thank you. Next question, please.
Chair, may I introduce you to Jan Rotta?
Welcome, Ms. Rotta.
Hi. Thank you for the opportunity to ask this question. The International Energy Agency's latest analysis shows that in order to have just a 50% chance of limiting global warming to 1.5 degrees Celsius, new or expanded coal mines should no longer be approved. Metallurgical coal production must fall by a third by 2030 and nearly 90% by 2050. Yet, BHP is planning new coal mines that could extend into the next century. In fact, South Blackwater wouldn't even start producing until well into next decade. Why is the company prepared to take on such staggering transition risk? Thank you.
Okay. Well, we've already had a good discussion around the difference between metallurgical coal and energy coal. As I've talked about, we are decommissioning our only thermal coal asset in New South Wales Energy Coal by 2030. We'll not be in the fossil fuels business anymore. In terms of metallurgical coal, metallurgical coal is used in steel making. Steel is required for the decarbonization and the energy transition. Wind turbines need steel. Solar energy needs steel. Pumped hydro needs lots of steel. Nuclear needs steel. The reality is we're gonna have to continue to manufacture steel if we're going to enable decarbonization and put the infrastructure in place. At the same time, steel emits carbon.
We've got to look at how do we reduce the emissions profile of steel manufacturing, which is our scope three emissions that we talk about. We're with partnerships with six of our steel making customers, which represent about 17% of global steel supply, working on a number of initiatives to reduce the emission profile of steel making. For example, higher quality iron ore and higher quality metallurgical coal reduces the emissions profile. Looking at how do we use alternative sources of energy to actually power the blast furnace process. Alternative solutions and technologies to the blast furnace, which aren't proven yet, but you know using DRI processes, direct reduced iron, then an electric arc furnace, perhaps replacing metallurgical coal with hydrogen and also CCUS. The report that you're referring to, the IEA.
Whether it's the IEA or the IPCC, all of them have in their scenario analysis in 2050, the challenge is that you know, there is no known pathway at this point in time to reduce steel emissions to zero. It's not there. We're working really hard in these partnerships to find it and to unlock it. But it's probably decades away. If you look at the IEA, IPCC and others' scenario analysis, including our own. Steel is still emitting in 2050 in their own analyses. Now we wanna try to get it to zero, but the reason it's there, it is emitting at lower levels is because it's really hard.
We're gonna have to use CCUS, or we're gonna have to use some form of DRI to get there. But in the meantime, you need steel to decarbonize. You know, it is a challenge. We've laid that out in our CTAP. I don't know if you've read our Climate Transition Action Plan. We've laid this challenge out, and we're working hard at trying to overcome it.
Okay, thank you.
Thank you. Next question, please.
Chair, I'd like to introduce Alia.
Welcome, Alia.
Oh, hi. I'm representing the Australasian Centre for Corporate Responsibility, and my question's in relation to Commonwealth Cultural Heritage Law Reform. Does BHP, like the WA Chamber of Minerals, regard Commonwealth Heritage protection law as needless duplication, or does BHP support Commonwealth Heritage law and the current co-design process? Can BHP point to its own statement of support for Commonwealth Heritage protection law, or has it relied to date on the advocacy of the WA Chamber of Minerals?
Okay. I'm not sure I got it. To be honest, we might get you to repeat some of those as we go through. Let me just talk about, first of all, how we look at cultural heritage in general from a policy perspective at BHP. First and foremost, we've got deep respect for indigenous peoples and their culture, and that's been built up through long-standing relationships over a long period of time. It's really important that our business is informed by the views of our traditional owners, and that's why we had this traditional owner forum this week, where we brought all 16 of our traditional owners together and spent a couple of days making sure that we understand their perspectives, and that's an absolutely ongoing process. In our case, you know, I know you're talking about legislation.
In our case, in managing cultural heritage, we always operate to a standard that's higher than the existing legislation. Our senior BHP leaders regularly engage with traditional owners, and we wanna also make sure that our workforce is inclusive of Indigenous owners. 93% of our Australian workforce have completed Indigenous history and culture training. We're very alive to this issue. We're just announcing the Indigenous people's policy framework today, our new ones, where we've moved that forward in consultation with our traditional owners and other stakeholders. In terms of the specific items that you raised, I might pass that over to Mike.
BHP's been an advocate for reform of cultural heritage management legislation at the state level pre-Juukan Gorge. In the review that was underway, BHP had provided submission into that supporting reform because clearly the old standards weren't what BHP was operating to at the time, and there was a clear recognition of the need for higher standards. Now, of course, if in any legislation at the national level, it's in everybody's interest to ensure that the processes are as efficient as possible. That's different from saying that there's no need for it. All I'm saying is that you want to avoid double up generally. Now, most important thing is that any legislation that's put in place, either at the federal level or at the state level, is informed by Indigenous voices.
We've been engaged with our traditional owners and other Indigenous leaders across Australia on what's needed by way of legislative reform, but also in terms of the practices that the company adopts. Chair, this is perhaps something, because we've got Caroline in the audience, that afterwards, if there is a desire to discuss further some of the specifics, we can have that discussion post the meeting.
Caroline, you just wanna stand up. Caroline Cox is our Chief Legal and External Affairs Officer. Maybe Alia, if you want to, you can connect with her.
Thank you.
At the break. Thank you for your question. Next question, please.
Chair, I'd like to introduce Stefan Grill.
Welcome, Mr. Grill.
Thanks. Thank you very much. At the end of your talk, you mentioned a better future. I think you weren't just talking about we shareholders and employees, you were talking about the whole community. From that point of view, I'm wondering about the steel industry that was in New South Wales but particularly in the Pilbara, where the initial export licenses for iron ore were only given to give a cash flow to the companies to put in ports and steel mills and railway lines and things. We haven't got a steel industry in the Pilbara, which is just relentlessly a disappointment for me.
When you were closing down your steel mills, I forget if it was in Newcastle or south of Sydney years ago, I did read that prior to that that BHP were the cheapest producers of steel in the world, and I couldn't work out why they were closing down steel mills. I made an appointment, and I was gonna go over to and talk to one of the directors in I forget if it was Sydney or wherever it was, where your head office was, but one was coming over here. I came down from Kalgoorlie, and when I had an interview with him, he told me, "We still are.
We still are the cheapest producers of steel." To me, getting back to your last statement, for the community, we're doing it for the community, all of us. Why and how and when are we going to get a steel industry if we're the cheapest producers of steel in the world? We've got the best iron ore. Let's have a. Which was the original concept of everyone, back when export licenses, they were only given to give a cash flow to get the steel industry going in the Pilbara and development of, which some of the other questioners have been indicating. Building a better.
Right.
Pilbara.
So-
Sorry.
No, that's okay, Mr. Grill. As you've made your point. I think Mike wants to answer the question.
Sure. Thanks for the question, Mr. Grill. There of course has been discussion recently in the broader market about whether there's a rejuvenation of the steel industry in Australia as the world moves towards green steel, and that may yet provide the opportunity. I don't think it'll be an opportunity for BHP because as we think about BHP's capital allocation framework and where the company can generate the highest margins and frankly where the company's capability set lies because BHP no longer has the capabilities required to be a good steel maker. As to whether a rejuvenation of steel making in Australia will occur at all, it will come back to the base economics.
The reality is that going forward, Australia will need to compete against nations where there's an existing steel industry in place, so there's some capital, and that will need to be overcome if Australia is to compete globally in the steel sector. Now that opportunity may be presented by green steel, where there's hydrogen production that then goes into steel making. As the chair noted earlier, that will play out over multiple decades. It won't be something that happens immediately, and it's going to be a business for others, not likely a business for BHP, given the amount of capital required and the fact it's not within BHP's capability set, and it's probably not the place to generate highest returns for BHP shareholders. It may be attractive for somebody else.
The steel producers you talked about are producing steel with our beautiful iron ore. It's cheaper and better to use our iron ore than any other iron ore around the world. I think there might be a little bit in South America somewhere. One of the things that was talked about by everyone at the time, including BHP people, was that we were gonna have in the Pilbara research facilities, a couple of universities and things like that. That, you know, was gonna be a huge thing for the. It still could be if we choose it. Thanks for your answers anyway.
Okay. Thanks. Thank you, Mr. Grill. Next question, please.
Chair, I would like to introduce you to Melissa Leggett.
Welcome, Ms. Leggett.
Thank you. I'm here today on behalf of indigenous communities in the Atacama Desert. Last year, BHP reached a conciliation agreement with the Chilean State Defense Council and the indigenous communities of the Atacama Desert, where BHP's Escondida open-pit copper mine overexploited water sources for 27 years. Under this agreement, BHP has committed to undertaking an assessment of the impact of the mine's operation on the flora and fauna of the Salar de Punta Negra salt flats. Could BHP inform us of the exact date of the launch of the impact assessment it has committed to as part of this agreement? In regards to the environmental recovery, when will BHP carry out a study to verify the amount of water that it must reinject into the aquifer to, for the salt flat to recover?
Thanks for the question. For the benefit of all shareholders, Escondida, I talked about it in my speech, is the world's largest copper mine. It had used two aquifers over a long period of time, where it had licenses for extraction of certain amount of water, and it never exceeded those licenses. It was. It's always been in compliance. We have made the decision, and we've been successful. We ceased all continental water extraction in 2019. From the Salar Punta Negra in 2017, we stopped using its water. In 2019 at Monturaqui, we stopped using the water there as well.
We spent $4 billion and built a desalination plant, and we pump the water up, and we use no water from the local aquifers anymore at all at Escondida. There has been some environmental impact, and we have put agreements together with the local communities, and we've got the governance structure set up, and we are working our way through it. In the meantime, there are mitigation actions that we're taking around the irrigation. We pump the table water up, and we irrigate the tablelands there in order to keep the flora and the fauna impact until we finish the studies and understand just exactly when it will revert back to where it was before we started extracting water from it.
Yeah. Okay. Thank you.
Thank you. Next question.
Yeah. I'd like to introduce Liam Lilley.
Welcome, Mr. Lilley.
Thank you. Reports issued by various national institutions in Peru have verified that heavy metals in bodies of water around BHP's Antamina copper mine exceed environmental quality standards. The cause has been clearly identified as spills of mining sediments and dumping of industrial waters from BHP's Antamina copper mine that have put the lives of people and ecosystems at risk. What are the concrete measures that BHP will use to stop contaminating the community and environment around the Antamina mine with heavy metals and toxic waste?
Okay. Well, thanks for your comments, Mr. Lilley. Neither Mike nor I are aware of any of those reports or any contamination at Antamina.
This is coming straight from the community. Yeah, I would hope and imagine that you would be aware of it. Is one of the mines?
Not aware. I mean, for the benefit of all shareholders, Antamina, we're a shareholder of Antamina. We don't operate that mine. We're 33.75% shareholder. There are three other shareholders, so there's four of us. It's a non-operated joint venture. It, you know, all the work that we've done through our influence through the board is that this mine is operated at the same standards that we would expect if we were operating it. I'm not aware of these reports or of any contamination of heavy metals.
as a 33% shareholder-
I'm happy for you if you wanna engage with George.
I'm happy to engage with you right now. As a 33% shareholder, you seem uninterested in these reports.
No, I'm not uninterested. As a matter of fact, what I'm saying is, George, you wanna stand up? Why don't you connect with Mr. Lilley? I'm completely interested, but we're just not aware of any reports. From all the information we have, that mine's been operating to the same standards we'd use elsewhere, and I'd like you to engage with George at the break, and let's get to the bottom of it. You know, reports from the community, let's get to understand what that means. Thank you.
Okay. I just have a second question. BHP's same mine, Antamina copper mine, has two water licenses without quantification. Since the mine's inception, four natural lagoons have disappeared in this region. Why does BHP remove unlimited amounts of water from local people and the environment? What will BHP do to acknowledge the situation and restore these lagoons to their natural state?
Look, I have the same answer. I'm not aware of any of these issues that you're raising. I'd like you to talk to George about it afterwards. If there's something there, he'll bring it back to us.
The board is not aware of any issues with the Antamina mine in Peru?
Correct.
Not those issues, no.
Not those issues.
Environmentally or community?
Not those issues, no. Not the ones you've raised with us, no. Thank you. Next question, please.
Chair, I would like to introduce to you Rhiannon Hardwick.
Thank you, Chair. I'm here with a proxy to ask a question on behalf of the indigenous Guajira community in Colombia, who've been impacted and displaced by BHP's Cerrejón coal mine. There is a growing sense in the community that BHP's sale of their stake in the mine in 2021 is an attempt to evade responsibility over the long-term impacts to the community and the environment. After the sale of its shares of the Cerrejón mine, what actions were taken by BHP in order to not evade its responsibility for the environmental and social liabilities that remained at the time of its departure? Is BHP willing to contribute resources to a reparation fund for the adverse impacts caused by Cerrejón?
Thanks for the question. For the benefit of all shareholders, it's true, we exited Cerrejón last year. We had a 33% shareholding. Anglo American had a 33% shareholding, and Glencore had a 33% shareholding. It was an independent, non-operated joint venture, which meant we could only influence through our board position. That's changed.
The ownership structure now is 100% owned by Glencore. They're the operator of the asset. That's a very, I believe, positive move forward for the governance of Cerrejón going forward, where Glencore, which is one of the world's largest mining companies, well-capitalized, will have responsibility for that operation going forward. The questions that you raise here aren't a matter for the BHP AGM, but you should raise them with Glencore, who is a responsible operator and the whole owner of that asset now, which I think is a positive going forward for governance. Thank you. Next question, please.
Chair, I'd like to introduce Margaret Chinchilla Bulbeck.
Thank you. Thank you for this opportunity to ask a question. I'd just like to follow up on your response to Ms. Rotta, and maybe you can elaborate on that. BHP's climate change position statement says the company will support emissions reduction in our value chain and the economy-wide transitions necessary to meet the Paris Agreement goals. In this age of heightened regulatory, legal and community focus on greenwashing and misleading claims, don't the company's significant coking coal expansion plans pose a large legal risk? Are we going to be the next company sued or hauled in by the regulator for greenwashing?
When we put the Climate Transition Action Plan together, we were very aware of the concerns around greenwashing. That's why, for example, we have only set a goal for Scope three emissions in the downstream side of our supply chain, because we're not certain of the pathway that will allow us to get to decarbonization. You should think of it as an ambition as opposed to a commitment to get there. It shouldn't be interpreted as a lack of ambition, because we're doing a lot of work there with, and I won't go through it again, with our downstream steel customers in order to reduce the emissions of the supply chain. To your question around metallurgical coal, I might just ask Mike to comment on the plans for metallurgical coal because your comments aren't quite right there, but I'll let Mike explain.
Thank you for the question. I just want to be clear, and I've been clear about this in the press previously. There is no growth capital, zero growth capital allocated to our metallurgical coal business. In fact, it's the only one of the BHP businesses where there's no growth capital currently allocated to that business. Now, there was reference made to the South Blackwater process. This is a regulatory application, and it's something that you go through to maintain tenure, and it's largely based upon reserve size, but there's been no decision taken to pursue an expansion. I've been clear externally that we're not intending to allocate any growth capital to the metallurgical coal business.
Albeit, as the chair has said, steel, there is going to be a lot of steel needed for the world's transition towards net zero, and that steel, based upon current technologies, is going to require coking coal for its production. BHP's investing in breakthrough technologies through our ventures arm that may give rise to a solution where steel can be made without coking coal. For today, this world needs coking coal. What we're trying to do is ensure that we're producing the highest quality coking coal to ensure that steel can be made at the lowest possible carbon emissions footprint.
Sorry. Can I just clarify, if you don't mind. You're saying that it's kind of like ensuring that there's a reserve if necessary, but there are no explicit plans at the moment to expand. Is that right?
I'm saying that there's no explicit plan. There's no plans at this point in time to allocate or no growth capital allocated to our coking coal business. Now, one of the things that we've demonstrated progress in is becoming more productive out of existing assets. We've seen that in our iron ore business here in Western Australia. As we become more productive in coal, could that give rise to some production creep? Possibly, yes. It's not through us pursuing specific expansion to the allocation of growth capital.
Okay. Thank you.
Great. Thank you, Ms. Bulbeck. Next question, please.
Chair, may I introduce you de Villiers?
Welcome, de Villiers.
Good morning. Thanks very much for this opportunity. I represent shareholder Peter Seligman. We've spoken a bit about coking coal or metallurgical coal this morning already. My question relates to that as well. BHP's scenario analysis models metallurgical coal demand over the next 30 years to be only slightly lower in a 1.5-degree Celsius scenario compared to the under three-degree central case. Yet the International Energy Agency's latest World Energy Outlook models metallurgical coal demand virtually disappearing by 2050 in the net zero by 2050 scenario. Can you please explain why BHP's modeling differs so significantly from the most widely used industry source? And will the company conduct analysis against alternative scenarios like the IEA's in the future?
You want me to talk about this?
Yeah, sure.
Thank you for the question, and it will come down to the scenario in question. There's a number of different scenarios, including from the IEA, as to how the world progresses towards net zero. BHP's modeling indicates, as the chair said earlier, that steel is going to be required for a long period of time yet, including in 2050, and that is the case in a number of the IEA scenarios and from other leading forecasters. Having said that, I think the point that you raise in your question towards the end of it is very relevant, and that is us testing against other scenarios, and that's the work that we have underway currently. In short, the answer is yes. We will be looking to test BHP's portfolio against different scenarios. Of course, we will continue to look to refresh BHP's scenario as well.
Thank you.
Thank you. Next question, please.
Chair, I'd like to introduce Martin Dickie.
Mr. Dickie, welcome.
My name is Martin Dickie. I'm a shareholder, and I thank you for taking my question, which relates to those previously. BHP's analysis of its 1.5-degree Paris-aligned scenario projects industrial emissions to remain roughly flat until 2050, leaving a massive requirement for nature-based emissions offsets. Is the company concerned that advances in the technology of steel making could displace the demand for metallurgical coal at a much faster rate than this 1.5-degree scenario anticipates?
In short, BHP is investing in the technologies that may make that a reality, faster displacement of coking coal. As I said earlier, BHP is investing through its ventures arm in breakthrough technologies that may give rise to a removal of the need for coking coal in steel making. In addition to working with steel makers that account for about one-fifth of global steel production to help them become more efficient in existing steel production as well.
Thank you. I understand that.
Thank you, Mr. Dickie. Next question, please.
Chair, I would like to introduce you to Paul Slythe.
Welcome, Mr. Slythe.
Thank you, Mr. Chairman, and I congratulate you on your performance. I'll take my mask off now. The question I have is quite simple. How much value of green hydrogen is being used now to produce green steel? And how much carbon pollution apart from CO2 is BHP causing to produce steel? And what allowance is made for CO2 pollution? Can you answer that question, please?
Yeah. Well, just for clarity, we don't produce steel. Our customers are the ones that produce steel. I don't know if you wanna comment about the fact, you know.
So-
Green hydrogen in this industry is at the very early stages. I mean, maybe just a little bit of a landscape here. The only green steel currently produced in quantities today is recycled steel through the electric arc furnace. You take recycled steel, you put it through an electric arc furnace, and if that electric arc furnace is powered by renewable energy, then you have green steel. The problem is there isn't enough recycled steel in the world to meet demand going forward. We have to make fresh steel, and it's about 30% recycled steel, and it's about 70% fresh steel. The only economic way to make fresh steel these days is with the traditional blast furnace.
Now, you can make the existing blast furnace greener by having it powered by renewable energy, but you're still gonna have the process itself emitting carbon dioxide. That's the nut that we're trying to crack by using these partnerships with our customers. Step one is to improve the existing process through improving raw materials and reducing the emission profile in steel and starting to power some of these blast furnaces with renewable energy. Step two, we'll be using carbon capture utilization and storage technology, which will still allow us to use the existing blast furnace technology with metallurgical coal, but we capture the emissions around that. Then ideally, you know, going forward, there'll be hydrogen displacement through the DRI process that I talked about. But it's very early stages.
Requires massive amounts of energy, and there isn't enough of the quality of iron ore in the world that actually powers that to input and supply that process. We're sort of got a crawl, walk, run approach here, and there's going to be two competing paths. There's gonna be CCUS with the existing technology capturing carbon, and then there's going to be the DRI process, displacing metallurgical coal using hydrogen, but it's decades away from being commercial.
Thank you, Mr. Chairman, for clarifying that. I'll further like to ask a little bit further, is that if the iron ore is being extracted, and that is the prime substance of BHP, isn't it? That would be
Correct. Yeah.
Can I rephrase that question back to iron ore production? How much hydrogen is currently being used to produce the iron ore? How much is also that other aspect that I mentioned earlier, how much carbon dioxide is being allowed for?
Yeah. Got it. Mike's gonna answer that question.
Essentially zero hydrogen being used for the production of iron ore, currently. I think maybe where you're going with the question is how do we go about removing the use of diesel on-site to run our haul trucks and so on? That's an effort that is currently underway. We're working with the likes of Komatsu, Caterpillar, and others to try to develop solutions that allow us to run these big trucks without the use of diesel, because diesel makes up about 40% of BHP's operational emissions. There's 40% that comes from the electricity that we purchase to run our operations and 20% from hard to abate. Now, for the 40% from electricity, we're making big inroads in terms of moving to renewable power.
For example, there was recently a contract entered into to supply 50% of the electricity we need for Port Hedland from renewable power. 100% of our downstream processing activity at Nickel West moving towards renewable power. Big inroads there. The technologies are not yet ready to be able to move material on-site without the use of diesel. We're trying to accelerate that through the collaborations that we have with others in the industry and with the equipment manufacturers. I chair an advisory group within the ICMM, which is the International Council on Mining and Metals, where we've brought together equipment manufacturers and a number of global industry participants to try to accelerate this effort as well.
Thank you very much for that answer. I guess fuel cell is also the issue that comes up, and that's one of the key issues as well for the future, is it not?
Yeah. We're looking at both hydrogen-based options, but also, trolley assist options, where we're buying renewable power for trolley-assist movement of of-
Thank you again.
Thank you, Mr. Slythe. I don't believe there are any further questions on item one, so we're gonna move to the next item, which is the next nine items actually relate to the election and reelection of your non-executive directors. Michelle Hinchliffe and Catherine Tanna are seeking election by shareholders for the first time, having each been appointed a director after the 2021 AGM. I'd like to invite them each to say a few words now. Michelle, why don't you go first?
Thank you, Ken. Good morning, ladies and gentlemen. It really is an honor to be here today to seek election at BHP. I believe our company is well-positioned to create significant long-term value for all stakeholders, and particularly including for our shareholders. Since I joined the board in March earlier this year, I've seen firsthand the company's commitment to social value and capital allocation discipline. Applied within a very strong strategic framework, I believe this has produced a high-quality asset portfolio, which really will help build a better world. For me, this sets BHP apart from its peers and makes it a company that I really am proud to be a part of. Now, prior to joining the board, I was at KPMG as a partner in its financial services division for over 20 years.
During my time, I served as a member of the U.K. board. I was the Chair of Audit, and I was also a member of the Executive Committee in my role as the Head of Audit. Prior to this, I was also a Senior Audit Partner within KPMG Australia's practice, and this has given me significant experience in financial controls and risk management, both in Australia and in Europe.
After retiring from KPMG early this year, it's been a pleasure to begin my journey on the board of BHP. I'm absolutely committed to further continuous development and am confident I can manage the time commitments to fulfill my responsibilities on the board. If elected, I look forward to working with my fellow directors and also with the members of the Risk and Audit Committee and BHP's management. I believe together we can create long-term value and high returns and deliver on our purpose. Thank you.
Michelle. Catherine, would you like to say a few words?
Thanks very much, Ken, and good morning, everyone. I really feel privileged to seek election to the board of BHP today, especially at such a transformational time, for the company. BHP is reshaping its portfolio and accelerating growth in future-facing commodities. The company is aligning with global mega trends like decarbonization and electrification, and is positioning itself to deliver shareholder value for decades to come. It's truly an exciting period. I hope that I can bring a value to BHP with my experience in the resources, oil and gas sectors, long life capital allocation, and health, safety and environment. Most recently, I was the managing director of EnergyAustralia for seven years. Before that, I held senior executive roles with Shell and BG Group, with responsibility for operations around the globe.
I've also been a member of the board of the Reserve Bank of Australia and a director of the Business Council of Australia. I'm confident that I'm going to be able to devote the time required to this role on the board and the Remuneration Committee and Sustainability Committee. If elected, I look forward to contributing to the culture of strong commitment to performance and continuous development here at BHP, so that we can continue to deliver value to you, our shareholders, now and into the future. Thank you.
Great. Thanks. Thanks, Catherine. The remaining non-executive directors, other than Malcolm Broomhead and John Mogford, submit themselves for re-election. Are there any questions on director elections or re-election items two to 10?
Chair, I'd like to introduce John Campbell.
Welcome back, Mr. Campbell.
Thank you, Chairman. The question that I've got doesn't relate to the re-election of any individual director, but it relates to the size of the board overall. The operations of BHP have contracted by the removal of petroleum. That must affect the agenda, I would imagine, at board meetings quite significantly. The research that I've read suggests that meetings are more productive and more effective if there are less people than 10. 10 is, I think, the current board. The meetings can be conducted more effectively with less numbers than 10. I'd like your comments, please, about.
We're currently 11 board members, and that'll reduce to 10 when Malcolm retires at the conclusion of this meeting. John stepped off last week. That's broadly in line with the ASX 10. That number of 10 would be in line with the ASX 10, the largest ASX-listed companies. I'm with you. I favor a relatively small board. I've consistently talked about 10 being the right number, and that's not something that we pulled out of the air. There's a big workload in this company, and for the directors. We have four committees.
We've got the Nomination Committee, the RemCo Committee, we've got the Risk and Audit Committee, and we have a Sustainability Committee, which a lot of companies don't have. There's a lot of work to be done in the Sustainability Committee, as you can imagine, with when you're in the mining sector, not just across the operational safety issues, but climate, indigenous heritage, sexual assault, sexual harassment. I mean, there's a lot of work to be done within that Sustainability Committee. Secondly, it's a global company and we need to have a spread of directors from a not just a geographic diversity perspective, but from an experience perspective as well.
It's something that we give a lot of thought to, and I give a lot of thought to. I think 10, notwithstanding your comments about, you know, smaller boards having probably better dialogue, this is a very effective collegiate board where we have a lot of open discussions. It works really well at 10. I think we also need to have 10 in order to fully staff with the right level of experience, the committees that we have in the company.
Thank you.
Thanks for your question. Okay, as there's no further questions, we'll now move to items 11 and 12. During the 2022 financial year, our Remuneration Committee continued its focus on achieving outcomes that fairly reflect the performance of BHP and the contribution of our employees, and which are aligned to the interest of shareholders and other stakeholders. The 2022 financial year was the third year of the application of the revised remuneration framework that was approved by shareholders at the 2019 AGMs. We believe this framework is continuing to serve shareholders well. During the year, Mike Henry, our CEO, achieved an outcome of 96% of target, which is 64% of maximum outcome against the FY 2022 cash and deferred plan scorecard, which we set at the beginning of the year.
The vesting outcome of the 2017 long-term incentive plans was 100%. With BHP significantly outperforming both the sector peer group and the MSCI World Index. Item 11 requests adoption of the remuneration report for the year ended 30 June 2022. Item 12 seeks approval for share awards to the CEO. This year, these awards are being made under the cash and deferred plan and long-term incentive plan described in the framework that I mentioned previously was approved at the 2019 AGMs.
Both awards are based on strict performance hurdles and are subject to a holistic five-year look back by the board on performance. In addition, approval is being sought to grant the CEO uplift awards in line with the treatment of employee equity awards following the merger of the petroleum business with Woodside. The objective here is the uplift awards restore the value of the unvested equity awards to their pre-completion value because Mike's unable to participate, or his awards are unable to participate in the Woodside shares going forward. Are there any questions on items 11 and 12?
Chair, I would like to reintroduce John Campbell.
Welcome back, Mr. Campbell.
Just on a point of order, Chairman, before I go ask the question on remuneration. I haven't heard you invite questions from the floor at all in relation. I know we had to pre-register questions, but is it not fair that you ask shareholders to see if there are any further questions that might arise through what they've heard in your addresses and in answer to other questions?
I'll take that on board. That's the first time that's been raised. We've been using this process for some time, and I'll take that comment on board. Thank you, Mr. Campbell.
In relation to remuneration, the size of the company has reduced quite significantly. Mr. Henry’s target package is the largest that I’ve seen in WA. I think the largest other one that I’ve seen is Wesfarmers at AUD 10 million. Mr. Henry’s looks like more like AUD 14 million, when converted to Australian dollars. Is it not reasonable to expect the company to look at cutting the pay to reflect the reduced size of the group?
Thanks for the question. Look, we had an important year last year repositioning the company, and I think everyone would agree that the Woodside transaction was an excellent transaction. It was a, you know, win-win. We created this top ten independent energy company. It comes with a lot of synergies. Shareholders were given the option because they received the shares on whether they wanted to continue to participate in oil and gas. I think from all perspectives, that's been a terrific transaction. We've repositioned the company to take advantage of the mega themes going forward, particularly around decarbonization. I think all of that has been an excellent outcome for BHP shareholders. I think, you know, the results, I think, speak for themselves.
For clarity, petroleum was about 10%-12% of EBIT from the business, sort of, since the time I've been on the board. Now, that obviously depends on whether the oil price was $50 or you know, $100. In general, it's only been about 10% or 12% of our portfolio. Mike's doing a great job, and he's creating a lot of value, and we wanna retain and motivate him.
That's really the objective around the remuneration program. Then through the good work of our committee, our remuneration committee, which Christine O'Reilly chairs, we do a lot of benchmarking of Mike's salary versus his peers. As you know, BHP is the largest mining company in the world. He's still below. He is still below. We're still the biggest, by market capitalization, mining company in the world. He's still below the median of his peers on the benchmarking. We think he's well-positioned where he is now.
Thank you.
Thanks. As there's no further questions, I'm gonna move to the last item, or last items. These last three items of business have been requisitioned by a group of shareholders that represent 0.008% of the register. As Stefanie mentioned earlier, items 14 and 15 are advisory resolutions, and they're conditional on item 13 being passed by special resolution. If item 13 isn't passed, then these items are not required to be put to the meeting. However, we will allow a reasonable opportunity for shareholders to ask questions on these items. Item 13 seeks an amendment to BHP's constitution to permit shareholders to express opinions, ask for information, or make requests about the management of the company by advisory resolution at general meetings.
Item 14 requests that BHP advocate for Australian policy settings that are consistent with the Paris Agreement's objective of limiting global warming to 1.5 degrees Celsius. Item 15 requests that from the 2023 financial year, the notes to BHP's audited financial statements include a quantitative climate sensitivity analysis that includes a Paris-aligned scenario limiting global warming to 1.5 degrees Celsius across all of our commodities. We gave these resolutions very close consideration, and we recommend that shareholders vote against items 13, 14, and 15. I now invite your questions on these items. First question, please.
Chair, I would like to introduce Alex.
Welcome, Alex.
Good morning, Mr. Chair. My name's Alex Hillman. I'm from the Australasian Centre for Corporate Responsibility. I've got a question around policy advocacy. BHP has been telling its shareholders since 2020 that a decarbonization pathway that is aligned with 1.5 degrees is in our best interests due to the enhanced demand for our commodities. Efficient economy-wide carbon policy is the most effective mechanism for driving this outcome, and it is therefore in our interests for BHP to advocate for this.
Within the notice of meeting, you recommend against item 14, stating BHP already advocates for Australian policy settings that are consistent with the Paris Agreement's objective of limiting global warming to 1.5 degrees. We note that there are very few policies currently calibrated to this level of ambition in place or being proposed in Australia. Two questions. First one, can you provide examples of 1.5 degree-aligned policies that BHP is advocating for? Secondly, would you support an increase to Australia's nationally determined contribution above 43% so that it becomes 1.5 degree aligned?
Okay. Well, first and foremost, let me respond to the resolution in general. Alex, I'll be honest with you. When you submitted this proposal to us, on my first very quick reading of it, I thought, "This isn't a problem. This is what we do.
That's what we expected.
Yeah. Unfortunately, the devil's in the detail here. The concern that we had with this resolution, I'll repeat a little bit what's in the notice of meeting. Australian policy is a very broad and ambiguous term. Does that mean government policy? Does it mean opposition policy? Does it mean your policy? Whose policy are we talking about here? For us, it just wasn't clear enough. The second point I'd make is just because a policy is aligned with the 1.5 degree Paris-aligned scenario doesn't mean it's good policy. We don't wanna be required to advocate for policy if we don't think it's good policy or there's better policy. You know, I think that's an issue with this resolution.
The other question is, well, what does advocate mean? Does it mean that we do it in private? Does it mean that we do it in public? If we decide not to advocate, does that mean we have to explain to people why we're not advocating on a particular issue? When we got into the detail, it was ambiguous. Finally, it's a big overreach to require management and the board to have this positive obligation that cuts across our ability to use our judgment on where we wanna advocate and where we don't wanna advocate. I think the other thing is we need to be careful here. We should be advocating where things have relevancy for our business, and we should be advocating where we can have impact, not everywhere.
Otherwise, we end up like we're crying wolf on everything. Oh, here comes BHP again advocating on this issue, and we get lost in the woods. You know, we need to advocate where we can actually have impact. Now, I don't know, Mike, if you wanna talk to current policies. I mean, we're doing a lot of advocacy work but
I might make, you know, two points, Chair. You're right. We've said that a 1.5-degree world is a more valuable world for BHP because of the demand it creates for our commodities. But of course, pretty much all of what BHP produces is being exported to export markets. Where that impact is going to arise isn't here in Australia. I just want to make that clear for the shareholders, that the change in policies that's going to drive that more valuable scenario for BHP is primarily outside of Australia, not in Australia. Having said that, here in Australia, we have been strong advocates initially for the moves for the increase in ambition to the 43%.
We've supported the strengthening of the safeguard mechanisms that's currently underway. Outside of Australia, we've then been active participants in determining how better reporting standards get established for emissions. We've participated directly in things like the First Movers Coalition, where I don't know if we would classify that as advocacy or not, but through our actions, we're seeking to set a standard that others are then able to emulate. Seek to lead the industry towards a 1.5 degree scenario. But it's a combination of our main focus or the main impact on BHP commodities is going to occur in the export markets. However, we also engage in advocacy here in Australia because it's where we operate, and we're Australia's largest company.
To the first question, though, can you identify examples of 1.5-degree aligned policies that you're advocating for?
I would say it's directional, and it's directional. First step is increase the ambition in Australia, and the new government, of course, has locked that in. It's also around the strengthening of the safeguard mechanisms. We had one of our senior leaders in the press last week, talking about or advocating for strength and support for faster deployment of renewable or electric vehicles here in Australia as well.
When you advocate directionally for improved policy, do you also highlight that it's not 1.5 degree aligned, if that's in the best interest of the climate and your shareholders?
Sure. Well, we're now getting into the whole issue here.
Exactly.
You're, you know, you're asking us detailed questions about where we're advocating and where we're not. I mean, that's really left to our judgment. The other thing I'd say is if you look at the leadership of BHP in the corporate market here, we were the first company to bring a Climate Transition Action Plan to its shareholders for a vote. Now there's a number of other companies that have followed suit.
That Climate Transition Action Plan lays out all of our policies, all of our ambitions, all of our targets, and it's a scorecard that people can hold us to account for. I think there's, you know, Mike's already talked through many examples of the advocacy work that we're doing. I think we've made our point on why we don't think that shareholders should vote in favor of this resolution. You're providing your view, which is absolutely fine, on why shareholders should. I think we've all made our point here, and I think we should leave it to shareholders to vote. Thank you.
Second part of the question. Would you support Australia increasing its NDC, nationally determined contribution, to be aligned with the 1.5 degrees?
It.
To be honest, I think Mike answered that question, but go ahead.
I was just going to say it comes back to whether it's the details of the policy, and this is something where, first of all, matter for government. In whether BHP advocates on it, we would have to be confident that BHP's advocacy was going to make a difference. And secondly, we would have to look at the details of the policy, because not all policy is good policy, and this is one of the key points that the chair was making. It's hard to respond to that in the hypothetical.
Thanks.
Thanks, Alex.
You're welcome.
Chair, I would like to introduce to you David Wood.
Welcome, Mr. Wood.
Thank you, Mr. Chairman. I apologize, I had to go and register the question. My thoughts came up when you were covering.
Oh, that's okay. Go ahead.
My concern is the corporate Australia, and there's a lot of AGMs on at the moment, and looking through all the remuneration reports, it's pushing the perhaps the disparity between the low incomes and the corporate Australia is getting really really stretched out. Corporate Australia can afford the housing, can afford those, you know, 80 bucks, AUD 80 million for a house. Yep, no worries. The poor poor bloke that's gotta buy the house next door has got a uphill to get it. I think it's a responsibility. I mean, there's two-three years ago, AUD 23 million for Qantas. Who needs that much money to live on? Everything that, you know, everything should be based on the pension. If you took multiples of the pension to everybody's awards and CEOs and so forth, you guys would be, you know, a thousand times the pension. It's getting too far apart.
Yeah. Look, Mr.
There's gotta be some responsibility on corporate Australia to stop outbidding each other to get employees.
Yeah. Look, Mr. Wood, I acknowledge everything that you're saying. I think the reality is that leadership matters and talent matters, and so we're in the market trying to attract the best talent that we can for this company. We want to attract them, then we want to retain them, and we wanna motivate them. To do so, we've gotta be competitive in the marketplace. We do a lot of work to make sure that we're not outside the bounds. As a matter of fact, I talked about it earlier. You know, Mike is below the median of his peers, even though he's running the largest mining company in the world. We're very conscious of this issue.
You know, I take your comments on board, but it's a competitive market and we. You know, if you just look at the results for the business, you know, I think it's. The market sort of is what the market is, and we need to play in that market and compete in that market and get the best talent that we possibly can. That's one component. The second thing is we need to make sure that Mike's remuneration is aligned with your experience as a shareholder. You know, I think the worst examples of corporate remuneration is when a CEO gets paid bonuses and things when the company isn't performing.
This company is performing, and we work very hard to make sure that the at-risk component, the bonus component of Mike's remuneration is aligned with the performance of the company. We've got a lot of tools at our discretion to use discretion to make sure that the outcomes align with you. Now, I think everybody would acknowledge that last year was a fantastic year for shareholders. You know, it makes sense for it to be a good year for Mike Henry as well. If you go back five years, you know, last three years, there's been some vesting with the LTI. There was a period at BHP, five years in a row, where there was zero vesting at the long-term incentive bonus program. Zero vesting, and that's because the company was underperforming. I think BHP has a really good track record of remuneration being aligned to the shareholder experience. Thanks.
Yeah.
for your comments.
With some of the STIs and LTIs, some of the smaller companies, I'm not saying BHP, the directors end up over a period of years with 51% of the company. The other point is, why not train up in-house people to lead the company?
Yeah.
If you don't
Well-
Get the apprentices in for the trades, then there's no tradesmen around to perform the work.
Look, good stuff. Mike Henry is a product of BHP.
Oh.
The good news is we built him. I think we did a pretty good job. Thank you, Mr. Wood. Look, if there's no further questions on these items, that brings us to the end of the formal business of the meeting today. Shown now on the screen are the proxy results for items two to 15. Thank you, ladies and gentlemen, for attending today and for your questions. We value your comments and feedback, and we'll continue to work for ongoing improvement on your behalf.
I'm gonna close the poll five minutes after the conclusion of this meeting, so if you haven't already done so, please complete your voting now. Results of the meeting will be announced to the stock exchanges shortly after the conclusion of today's meeting and will be published on our website. Now, ladies and gentlemen, I now declare the meeting closed subject to the finalization of the poll, and we invite you all to join your board and management team for some refreshments just outside here. Thanks so much for joining us today.