In December 2021, BHP announced a final decision to unify BHPs corporate structure under its existing
Australian parent company, BHP Group Limited. The Board believes that unification is in the best interests of BHP shareholders. Unification will create a corporate structure that is simpler and more efficient, reduces duplication and streamlines
BHPs governance and internal processes. Shareholder meetings of BHP Group Limited and BHP Group Plc will take place on 20 January 2022 to approve unification. Unification is expected to complete by 31 January 2022 subject to
shareholder approval of both BHP Group Limited and BHP Group Plc and UK Court sanction of the scheme.
In December 2021, BHP announced it would not
increase or extend its offer to acquire Noront Resources. BHP is committed to its strict capital discipline framework and while the Eagles Nest deposit is a promising resource, we do not see adequate long-term value for BHP shareholders to
support an increase in BHPs offer to match the proposal from Wyloo Metals Pty Ltd.
In December 2021, BHP advanced its early-stage nickel interests
by agreeing to invest in the Kabanga Nickel Project (Kabanga), a high-quality nickel sulphide deposit in Tanzania. Kabanga is a joint venture between Kabanga Nickel Limited (84 per cent interest) and the Government of Tanzania (16 per cent).
BHP has made an initial investment of US$40 million in Kabanga, which will convert into an 8.9 per cent equity stake in Kabanga Nickel Limited once approvals and conditions are met. The proceeds will be used to accelerate drilling and
study work. Further investments, including a second tranche of US$50 million, have been agreed in principle subject to the parties agreeing definitive documentation and certain other conditions. In parallel, BHP has invested US$10 million
in Lifezone Limited to progress its low-carbon hydrometallurgical processing technology.
In January 2022, BHP
completed the sale to Glencore of its 33.3 per cent interest in the Cerrejón joint venture in Colombia. The transaction was first announced on 29 June 2021 for a total cash consideration of US$294 million.
Samarco
Samarcos Judicial Reorganisation process
is continuing in the Commercial Courts of Belo Horizonte, State of Minas Gerais. The Judicial Reorganisation is a process for Samarco to restructure its financial debts in order to establish a sustainable independent financial position that would
allow Samarco to continue its operations safely and meet its Renova Foundation obligations. BHP Brasil will continue to support Samarco in this process.
Negotiations are ongoing with State and Federal Prosecutors and certain other Brazilian public authorities in relation to the review of the Framework
Agreement. The Framework Agreement was entered into between Samarco, Vale and BHP Brasil and the relevant Brazilian authorities in March 2016 and established the Renova Foundation to develop and implement environmental and socio-economic programs to
remediate and provide compensation for damage caused by the Samarco dam failure.
In October 2021, the 12th Federal Court delivered a ruling that expanded
the scope of eligible individuals of the court mandated compensation process (Novel System), extended its geographical scope and increased indemnification amounts for certain categories of damage. The decision is under appeal and
applications have been made to clarify certain aspects of the ruling. BHP is currently reviewing the impact of the 12th Federal Courts decision on the Groups provision for the Samarco dam failure and it is possible that the provision
could materially increase.
In December 2021, BHP agreed to fund US$700 million in further financial support for the Renova Foundation, which will be
offset against the Groups provision for the Samarco dam failure. Further funding requirements for the period to 31 December 2022 continue to be assessed and, will be subject to future approval by BHP.
We will provide an update to the ongoing potential financial impacts on BHP Brasil of the Samarco dam failure with the release of the financial results on
15 February 2022. Any financial impacts will continue to be treated as an exceptional item.
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BHP Operational Review for the half year ended 31 December 2021
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