Welcome everyone to BHP Live, our online question and answer session for shareholders. My name's James Agar, and I'm on the line today with the Chief Executive Officer, Mike Henry. Welcome, Mike.
Thanks, James.
Due to the Stage 4 restrictions still in place across much of Victoria, we're unable to run this session face-to-face, but I'm sure it won't be too much of an issue. We've had a number of great questions come in from shareholders. Thank you for those who have submitted questions, and we'll aim to get through as many of those as we can. Mike, if we start by looking back, the last time we caught up on a BHP Live event was in April. We were only just beginning to understand the severity of the COVID-19 pandemic. Shareholders have asked how BHP has performed through the crisis. How would you summarize our performance over the last six months?
James, probably the best way of summing it up is I couldn't be happier with how things have gone. If you look at the challenges that the world posed for the company and the business over the period, in the face of those challenges, the way that people right across the company, all 72,000 people, stepped up to keep themselves safe, to keep communities safe. Then the way that others around BHP rallied in support of what we were trying to achieve, it's been heartwarming. You see what that's done for the company on the safety front. We had a year where safety improved in spite of all of the uncertainty. No fatalities in the business. Other safety indicators improving, and of course, that's our biggest priority. Operationally, we were strong. Financially, the company performed well.
Through that, we were able to pay over $9 billion in taxes and royalties around the world. Of course, a big portion of that here in Australia at a time when governments were in dire need of those revenues. We've been able to continue to provide business opportunities for all of the business partners that we have. That includes small, local businesses. We've sought to provide further support. In line with the support they provided to BHP, we've also tried to look after our business partners who we knew we would be seeing stress throughout the COVID-19 period. Keeping people and communities safe, supporting those around BHP, keeping our operations running reliably, it all went well. A real testament to people and to the relationships that we have in place. Very pleased, James.
Thanks, Mike. Well, it didn't take long to get into the dividend. We've had a number of questions from retail shareholders on BHP's dividend. Not surprising. This one I'll take from Graham. He says, "In your recent results briefing, you made the point about having a very strong balance sheet and just the right amount of net debt. If that's the case, why was your dividend only $0.55 per share?
Well, thanks for the question, Graham. We think $0.55 was a pretty strong dividend. The minimum payout ratio for the company is 50% of underlying attributable earnings, and that would have been about $0.38 for the period. We elected to top that up by $0.17 for the $0.55. That's a 72% payout ratio. In Australian dollar terms for the period, that $0.55 translates to about AUD 0.76 at current exchange rates. That brings the full year to about AUD 1.75. The final dividend will be in your bank accounts by September 22nd. Overall, we think it was a strong number. I do acknowledge, though, Graham, that there's been a few comments externally about it being perhaps a little bit light, a few cents below what some people were expecting.
I think that that reflects the continuing uncertain environment that we find ourselves in. We had a strong operational and financial performance. We recognize, of course, the importance of the dividend to retail shareholders, in fact, to all of our shareholders. We wanted to recognize that with a strong number, but we also wanted to take into account that there's continuing uncertainty because the world isn't through COVID yet. The $0.55 that we landed on, we think has struck a good balance.
Mike, as well as announcing the results last week, you also flagged BHP's intention to exit a number of assets within the BHP portfolio. We've got a question on that from Glenn. He asks, "Can you explain your decision to sell your coal mines in New South Wales and Queensland? Is this a result of pressure from climate change activists?" He goes on to ask, "Who are the likely buyers of these assets? What will the proceeds be? And can shareholders be confident that those proceeds will be returned directly to them?
Well, thanks, Glenn. All relevant questions. I'm afraid I'm not going to be able to answer all of them today. Let me start with the first part of the question, which is really why are we doing this? I want to be clear, what we're selling or what we've announced that we intend to divest is one part of our coal business. It's a couple of mines up in Queensland, a thermal coal mine in New South Wales, and our stake in a thermal coal mine Cerrejón, Colombia . In very simple terms, this is because we believe that there will be better value generated for BHP shareholders through either selling these assets to other parties for cash, which can benefit BHP shareholders, or through demerging them into a different company.
Key reason for that is because the value in these assets is going to come from in part from considering future capital expansion opportunities. We don't think that those capital expansions will compete well relative to other opportunities within the BHP portfolio, either that we currently have or we expect to have. Better that these assets are held under a different ownership. Now, we are, though, keeping another part of our coal business, and that is a series of assets up in Queensland that are high quality, hard coking coal. That's a type of coal that we believe is going to have some upside exposure in a decarbonizing world. As steel makers seek to reduce their emissions footprint, they're going to have to improve the efficiency of their operations, and that's going to require more of this type of coal.
That coal, those coal assets will stay with BHP and will realize value for BHP shareholders through becoming even more productive, so lower cost, through focusing on improving returns on the capital that we have deployed in that business, and through riding the upside that we expect to exist in future, as the decarbonization thematic plays out. As to the other parts of your question about, well, to who will we sell these assets, for how much and so on. I'm afraid we don't know at this point. We've announced this intent quite early. Part of announcing it early was to create the space for us to be able to engage with interested parties, to speak with shareholders, to look at the different options available to us, and we'll make those decisions in the next two years then. Watch this space.
We'll have more news on that in due course. For now, I hope that I've been able to make it clear as to why we're heading down this route and how this is really going to support long- run value for shareholders.
Thanks, Mike. We'll stick with the portfolio. This one relates to BHP's petroleum business. Roger's obviously looking at the recent weakness of the oil price, and he wonders if COVID-19 is accelerating the demise of oil businesses around the world. He notes that we're selling the Bass Strait assets and he's also read that we don't want to keep the North West Shelf joint venture interest over the long term. He asks, "Is BHP getting out of oil altogether?
Short answer is no. We were very clear in our results that we continue to think that the fundamentals for oil and advantaged gas are going to be strong for some time yet. I mentioned in response to the earlier question that we're a company that wants to create value and returns for shareholders over many decades. We do need to be thinking about what the long term holds, for different commodities that BHP currently owns. We've been clear that we want to increase our options and exposure in what we've termed future-facing commodities. Things like copper and nickel and possibly potash. As to oil and gas, we think that the fundamentals are going to remain strong and that we're going to be able to create value in returns for shareholders for at least the next decade and probably beyond, as well.
What sits behind that is notwithstanding the near- term reduction in demand arising from COVID-19, we believe that as the world comes out of COVID-19, that there will be a recovery in demand. The stronger demand, coupled with how quickly production from existing facilities declines, means that the world's going to need more investment in new supply of oil. For a company like BHP that has a demonstrated track record of being able to secure new opportunities, to invest in them, to operate them well, there's going to be real opportunity here for us to create more value for shareholders. Recognizing that our confidence around the fundamentals for oil and gas is in the short to medium term, we want to be balanced in our approach to investing in the petroleum business.
That balance will come in part through taking assets where there's less remaining upside for shareholders, like Bass Strait, and divesting it, and then using those proceeds to create new value for shareholders in other opportunities that are still earlier in their life cycle. It's a combination of those things that will help us grow value for shareholders in the near term in the petroleum business.
Mike, a number of shareholders have picked up on your references to future-facing commodities and BHP's appetite to secure more options in those future-facing commodities. Some shareholders have asked, what do we mean by this in terms of future-facing commodities, and some shareholders have asked, can we expect BHP to enter into some acquisitions in order to secure some of these options?
Thanks, James. What do I mean by future-facing commodities? Really simple. It's that we want more copper, more nickel. We have a decision to take around potash in the course of the next year. Basically, these are the commodities that we think as the world continues to evolve, that are going to be in greater demand. Due to the electrification trend, the decarbonization trend that's at play around the world, due to rising standards of living, the world's going to need more copper, more nickel, more potash. Demand for these commodities is going to be particularly strong. We already have businesses in copper and nickel, but we would like to be able to grow those businesses in future because we think there's some pretty attractive value and returns that can be generated for shareholders.
We have to secure more options to be able to do so. As to the question about whether that implies more acquisitions, maybe, but only if the right opportunities come along. It has to be really attractive assets in the places that we like and for an attractive price. Those factors don't line up that frequently. We don't have a strategy that is reliant upon acquisitions. Rather, our first focus is going to be on securing more options through innovation. We have a lot of copper, we have a lot of nickel. Some of our copper resources and some of our nickel resources are lower grade. In order to be able to extract and process them economically, we're going to need to continue to come up with more innovative ways of doing so. We'll have a targeted effort underway around innovation.
We'll also look to exploration, and early-stage partnering. Exploration means us going out and finding new resources, and you've seen us do that recently with the Oak Dam deposit in South Australia. On the early-stage partnering front, we've been entering into exploration partnerships where we gain a toehold in early-stage resources in Canada, in Mexico, in Ecuador. We'll look for more of those sorts of opportunities. Finally, on the acquisition front, we have done some small acquisitions. In the past half, we were successful in securing more nickel resources through the acquisition of the Honeymoon Well tenements in Western Australia. Lots of levers to pull, but all of them can help be successful in increasing our exposure to what the world's going to want more of in the coming decades.
Mike, we'll turn now to BHP's markets, and in particular, China. We have a question here from Karina, who asks, "Given the strained relationship between China and Australia, does BHP have a contingency plan in the event that the Chinese government should impose restrictions on top of BHP's pricing to China?" John asks, "BHP's asset weighting and EBITDA dependency seem highly skewed towards iron ore. How are we addressing this imbalance given that China is by far our largest customer and demand is expected to decline?
John, I'll answer your question first. Yes. Right now, because of what's happened over the past 6- 12 months, we've seen high iron ore prices at a time when prices for some of our other commodities have been relatively low. I think the iron ore weighting that sits behind your question has been exacerbated over the course of the past six months. In a good way for shareholders, because our iron ore business has underpinned a terrific performance in the past year financially. We have a great business in iron ore, and it's going to be a business that's going to remain strong for a long time yet. We aren't expecting prices to hold up at current levels.
We do expect that as supply recovers, as other jurisdictions get past some of the near-term COVID-19 impacts, that we're going to see more iron ore supply in the market. We'll probably see prices come off a little bit. At the same time, we'll see prices for other BHP commodities increase as the rest of the world recovers. Because some other commodities like coking coal, for example, are less leveraged to demand in China and are more leveraged to demand from other jurisdictions. We'll see a bit of iron ore price coming down, other commodity prices coming up, and that will bring a bit more balance back to our earnings in the near term. In the medium to long term, as I've said, I want BHP to be securing more options in future-facing commodities.
We'd like to be able to grow our copper business further, grow our nickel business further. We have a decision to take in the next year on whether we proceed with the first phase of our potash development. I think what you'll find, John, is over time, we'll see more balance coming in and increased exposure to the global trends that are afoot currently, and to these future-facing commodities. On the first part of the question, James, that I recall was from Karina, around China and the risk that we have arising from some of the tensions that are out there currently. Probably the best way of putting it is that in our direct relationships with our customers and suppliers in China, things are on a very solid footing. They remain strong.
In fact, through the COVID period, they did a wonderful job and went out of their way, even in the depths of their COVID crisis within China, to meet their commitments to BHP. That was both the suppliers to BHP and customers of BHP. Rest assured that we have very good relationships with our customers and suppliers. As to the level above that, and the risk that arises from some of the trade tensions that exist, probably the best thing to say is that I think based on all our conversations, the trade relationship as it relates to the commodities that BHP produces is held as important by both parties.
That recognition, coupled with the strength of our relationships and the nature of the portfolio, which is diversified, as I mentioned in the response to John's question earlier, I think is something that should give us confidence.
Thanks, Mike. We'll turn now to the environment. We've had a couple of questions on BHP's management of the environment and in particular, its approach to climate change. Nicola says, "As a shareholder, I'm concerned about the environmental damage that BHP is inflicting on our planet. What moves are BHP planning, and when will they come into effect to become carbon neutral?" Hannah asks along the same lines, "What is your strategy to meet your carbon emissions targets?
Nicola, if I answer the question that you've raised or the point that you've made around the environmental footprint that's associated with BHP's activities, this is something that's front and center, and occupies a lot of my mind, as well as the minds of the management team and the board. This is something that we pay a lot of attention to. I hope that you can see that coming through in the actions that we're taking and our performance on the ESG front. You've asked about when we expect to be carbon neutral. We've been clear that we want to be net zero, our ambition is to be net zero by 2050. 2050 is a long time away, we have to be ensuring that we're progressing towards that ambition.
To that end, on September 10th, I'll be coming out with a renewed set of commitments and actions around climate change. That will include a 2030 target for reducing our operational emissions, so Scope 1 and Scope 2, that keeps us on path to being net zero by 2050. You can see some actions that we've already taken. Last year, or actually in the course of financial year 2020, we announced that we had entered into contracts in Chile that will see us move to fully renewable power in our Chilean operations in the coming period. We'll be looking for similar types of operations across the rest of BHP, and I'll make all that clear in this target that we set out on September 10th. We will also announce a series of very tangible actions related to Scope 3 emissions.
These are the actions that we take to work with others in the value chain to reduce their emissions, and in doing so, to help address global emissions. What you can count on is that the actions that we take will be tangible. They'll be things that can really help to reduce emissions in the industries that BHP supplies to. We'll announce an updated portfolio assessment, taking into account the Paris Agreement goal of the world only seeing temperature rises of well below 2°C and aiming for 1.5°C . The final thing is, it's important that we're held to account on this, so I'll be talking about how we're strengthening the linkage between executive remuneration and climate change action. Now, of course, BHP's environmental footprint doesn't stop at climate change. We also have to be thinking about things like water and water stewardship.
In the course of the last year, you've seen us announce that we're moving to fully desalinated water in our Chilean operations, a full decade prior to what we had previously indicated. On the second question around our strategy for addressing climate change, it really comes back to the actions that I've outlined. First and foremost, on those things that we control by way of operational emissions, we have to be taking tangible action. In the near term, that's going to be moving greater portions of renewable energy, but we also have to find a route to removing the need to use diesel in our operations. We'll be looking at electrification of much of the equipment in our operations, but that's a slightly longer-term effort.
Then on the Scope 3 front, as I mentioned, there's a series of actions that we'll speak to, and we'll continue to look for other things that we can be doing to help address emissions in the broader supply chain as well. Some of this will be funded through a Climate Investment Program of $400 million over five years that we announced last year. We're looking at bringing projects forward on that front. I really do want to make the point that the $400 million Climate Investment Program is but one small part of our quite extensive efforts on climate change that I've spoken to.
Mike, moving now to a topic that much has been written about in the news in recent weeks and months, cultural heritage in Australia and relationship with traditional owners. Robin asks, "What steps are BHP taking to ensure that the destruction of cultural heritage sites that occurred at the Juukan Gorge area in the Pilbara doesn't happen at BHP under your watch?" Richard wants to know, "What is BHP's process of due diligence in ensuring that all community stakeholders are engaged and satisfied with current agreements prior to breaking ground as part of any mine development?
Thank you for the question, Robin. Let me start by saying that this can never happen under the watch of any BHP CEO, starting with me. Now, I'm confident that this has been an issue that BHP has taken very seriously for many years now. It gets a lot of attention within the company, and it's something that there's a real commitment within BHP to ensure that we're engaging with traditional owners in the right way, and we have strong and respectful relationships with our traditional owners, and that we're working with them to protect cultural heritage. Now, that's not just an intent. We also have solid capability in place. We have some really capable people in place who are at BHP working on this. That's backed up by the right systems and processes. Of course, it all needs to be underpinned by the right culture.
That is a culture that treats these matters very seriously and understands the importance of respecting traditional owners and their wishes when it comes to cultural heritage. It's also a culture that sees any concerns that people have raised quickly and including to the uppermost reaches of the company. We have instances where decisions, and it may not be related to cultural or limited to cultural heritage. It's on a whole range of things, where people in the company may be concerned about a decision that's about to be taken. They're able to voice that concern. It gets listened to amongst the decision-makers, and then reflected in an improved decision or an altered decision. We've been working on that culture for many years now. It's something that gets measured annually. We call it our safe- to- speak- up culture.
That forms a part of the way that we assess leaders within BHP. The combination of the relationships that we have in place with traditional owners, the importance that we place on this topic, the capability, the processes and controls that we have in place backed up with the right culture are what we need to continue to focus on to ensure this doesn't happen at BHP. We'll continue to look for opportunities to improve, including learning from the findings that come from the other company arising from the incident that you've spoken about. As to Richard's question about how we go about community engagement, that's something that we already have built into our processes. Part of our formal project planning process is to ensure that we're out there understanding the needs and concerns of the broader community.
Some of that is mandated by legislation, but we go well beyond that. We have specific things that we do as BHP, as we progress individual projects, Richard. That's something that we remain committed to. Again, we'll look to improve that over time. I think that we have strong processes in place already.
Thanks, Mike. We've got time for one more question before I ask you to wrap up with an outlook statement for BHP. This question's about the nature of BHP's workforce, and in Australia particularly. The question is, why is there a big push for BHP to get rid of labor hire workers?
Thanks, James. I would couch it slightly more positively in that it's a push to increase permanent employment. This is something I am personally really passionate about and I'm quite excited about. Where it starts is us wanting to have a workforce that can help BHP achieve its ambition of being even safer, even more reliable, and even more productive. In order to do that, we have to have a workforce that we can invest in, a workforce that is with BHP for the long time, sees a future with the company, and where we can invest in building their skills, such that they can achieve the exceptional performance both on the safety front and on the operational front. Today, BHP as a workforce is maybe 30%-40% are permanent BHP employees. We want to increase that to between 60% and 80%.
That's going to require a pretty big effort to hire on more people permanently. Now, the other side of that coin is we'll need fewer labor or less labor hire, but I think that's a good trade-off. It's creating a lot more by way of well-paid permanent jobs where people can be confident in their future with the company. It's certainly going to be good for shareholders and other people who have a stake in the company, because we'll be performing at higher levels. As I said, this is something I'm excited about. We've got one example of this right now in Australia with Operations Services. In very short order, we've increased Operations Services to 3,000 permanent jobs. This year, we're looking to get to 5,000 permanent jobs or more, on our way to increasing BHP's overall kind of proportion of permanent workers.
We'll look at similar initiatives across in Chile.
Thanks, Mike. If we could finish off now with you sharing your outlook for BHP. Obviously, the whole world is facing a very uncertain period in the near term as we battle through the COVID-19 pandemic. Could you let BHP's shareholders know how you think BHP's placed to manage both the near-term uncertainty, but also the opportunities that will arise over the medium to long term?
James, the future is bright. I can't downplay the current uncertainty that the world is facing and the tragedy that is COVID-19. We can see what this company has been able to achieve in this past six months in spite of these unprecedented challenges. That comes back to the strong balance sheet, this portfolio of great assets that we have, the great people that we have, and the strong relationships we have with other people who have a stake in the company. That combination has allowed us to perform so well in the past six months. I think that that should give all shareholders great confidence about our ability to navigate through the uncertainty that's going to be with us for some time.
If we look at the medium to long term, everything that the company is doing by way of wanting to become even better operators of the assets that we have, being great stewards of capital or allocators of capital. The strong focus and commitment that we have around social value, the understanding of the importance to that for the future success of the company. If we couple all of that with securing more options in these commodities that the world is going to need more of in the coming decades, that's a winning formula. It's a formula that's going to allow us to continue to grow value and returns for shareholders for a very long time and will allow us to also continue to create value for all others out there, all the other stakeholders that BHP has.
Well, that's a good note to finish on, Mike. Thanks very much for your time, and thanks for all those shareholders that joined in to the session today and submitted questions. We're coming up to our AGM season in October. We look forward to seeing you all again, and connecting with you. Until that time, stay safe, and thanks again for joining.
Thank you, everyone.