JOHANNESBURG - The world's biggest miner, BHP, yesterday announced that it had approved a multinational global currency subordinated note repurchase plan of up to $1.9billion (R31.76bn) targeting dollar and euro subordinated notes issued in 2015 to reduce its debt.
The miner said yesterday that the repurchase plan would be funded from surplus cash.
It said it wanted to raise money to reduce its gross debt balance and associated interest costs, and enhance the group’s capital structure.
The group’s net debt jumped to $12bn at year ended June, compared to $9.4bn a year earlier, although it was at the lower end of its expected range of between $12bn and $17bn, the BHP Group said.
The group’s profit from operations fell to $14.4bn in 2020 from $16.1bn during the year as a result of lower prices, lower volumes, including copper grade and petroleum field declines, increased deferred stripping depletion at Escondida copper mine in Chile, and an increase in the closure and rehabilitation provision for closed mines. BHP warned that the resurgence of Covid-19 outbreaks threatened the short-term demand outlook for its main commodities.
It said the total impact from Covid-19 on operations was $348million pre-tax, including an exceptional charge of $183m in the 2020 financial year.
The group said this represented lower volumes at the operating assets of $112m, temporary shut-downs at its non-operated equity-accounted investments Antamina.
It said there was also a $53m copper mine in Peru and Cerrejó* and additional costs incurred at operating assets such as temporary relocation costs, screening and hygiene of $183m.
The group said underlying earnings before interest, taxes, depreciation and amortisation of $22.1bn from $23.2bn a year earlier, with lower prices, lower volumes, including copper grade and petroleum field declines, inflation, an increase in the closure and rehabilitation provision for closed mines and other net movements, partially offset by record volumes at a number of the group’s assets.
Earlier, the group said it had signed a renewable power purchasing agreement to meet half of its electricity needs across its Queensland Coal mines in Australia from low emissions sources, including solar and wind.
The agreement would help BHP to reduce emissions from electricity use in its Queensland operations by 50percent by 2025.
“The agreement, with Queensland’s state-owned clean energy generator and retailer CleanCo, will run for five years from January 1, 2021,” it said.
“This will effectively displace an estimated 1.7million tons of CO2e between 2021 and 2025 - equivalent to the annual emissions of around 400000 combustion engine cars.”
The group said the agreement was the first of its kind signed by BHP in Australia and followed the company’s shift to 100percent renewables in its Chilean operations at Escondida and Spence from the mid-2020s.
BHP shares declined 1.47percent on the JSE yesterday to close at R382.81.
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