Investments accounted for using the equity method
 12 Months Ended
Jun. 30, 2021
Text block [abstract]  
Investments accounted for using the equity method
31     Investments accounted for using the equity method
S
ignificant interests in equity accounted investments of the Group are those with the most significant contribution to the Group’s net profit or net assets. The Group’s ownership interest in equity accounted investments results are listed in the table below. For a complete list of the Group’s associates and joint ventures, refer to Exhibit 8.1 - List of Subsidiaries.
 
Significant associates
and joint ventures
  
Country of
incorporation/
principal
place of
business
  
Associate or
joint
venture
  
Principal
activity
  
Reporting
date
  
Ownership interest
  
 
2021

%
     2020
%		  
Cerrejón
  
Anguilla/
Colombia/Ireland
   Associate   Coal mining in Colombia   31 December  
 
33.33
 
     33.33  
Compañía Minera Antamina S.A. (Antamina)
   Peru   Associate   Copper and zinc mining   31 December  
 
33.75
 
     33.75  
Samarco Mineração S.A. (Samarco)
   Brazil   Joint venture   Iron ore mining   31 December  
 
50.00
 
     50.00  
Voting in relation to relevant activities in Antamina and Cerrejón, determined to be the approval of the operating and capital budgets, does not require unanimous consent of all participants to the arrangement, therefore joint control does not exist. Instead, because the Group has the power to participate in the financial and operating policies of the investee, these investments are accounted for as associates.
Samarco is jointly owned by BHP Billiton Brasil Ltda (BHP Brasil) and Vale S.A. (Vale). As the Samarco entity has the rights to the assets and obligations to the liabilities relating to the joint arrangement and not its owners, this investment is accounted for as a joint venture.
The Group is restricted in its ability to make dividend payments from its investments in associates and joint ventures as any such payments require the approval of all investors in the associates and joint ventures. The ownership interest at the Group’s and the associates’ or joint ventures’ reporting dates are the same. When the annual financial reporting date is different to the Group’s, financial information is obtained as at 30 June in order to report on an annual basis consistent with the Group’s reporting date.
The movement for the year in the Group’s investments accounted for using the equity method is as follows:
 
2021
US$M
   
Investment in
associates
    
Investment in
joint ventures
    
Total equity
accounted
investments
  
At the beginning of the financial year
   
 
2,585
 
  
 
–
 
  
 
2,585
 
Profit/(loss) from equity accounted investments, related impairments and
expenses
(1)
   
 
69
 
  
 
(990
) 
  
 
(921
) 
Investment in equity accounted investments
   
 
108
 
  
 
111
 
  
 
219
 
Dividends received from equity accounted investments
   
 
(737
) 
  
 
–
 
  
 
(737
) 
Transfer to assets held for sale
(2)
   
 
(284
) 
  
 
–
 
  
 
(284
) 
Other
   
 
1
 
  
 
879
 
  
 
880
 
    
 
 
    
 
 
    
 
 
  
At the end of the financial year
   
 
1,742
 
  
 
–
 
  
 
1,742
 
    
 
 
    
 
 
    
 
 
  
 
(1)
 
US$(990) million represents US$(111) million impairment relating to US$(111) million funding provided during the period, US$(1,000) million movement in the Samarco dam failure provision including US$(842) million change in estimate and US$(158) million exchange translation, US$(15) million movement in provisions related to the Samarco Germano dam decommissioning provision including US$6 million change in estimate and US$(21) million exchange translation and US$136 million fair value change on forward exchange derivatives. Refer to note 4 ‘Significant events – Samarco dam failure’ for further information.
 
(2)
 
On 28 June 2021, the Group announced the divestment of its 33.3 per cent interest in Cerrejón to Glencore, for US$294 million cash consideration. The transaction has an effective economic date of 31 December 2020. The purchase price is subject to adjustments at transaction completion which may include an adjustment for the dividends paid by Cerrejón to the Group during the period from signing to completion. An impairment charge of US$466 million (before tax) was recognised in the year ended 30 June 2021 reducing the carrying value of the Group’s investment in Cerrejón at 30 June 2021 to US$284 million, being the agreed sale proceeds of US$
294
million adjusted for expected transaction costs. Refer to note 13 ‘Impairment of non-current assets’ for details.
At 30 June 2021, the Group’s investment of US$284 million in Cerrejón along with a loan due from Cerrejón of US$40 million, has been classified as ‘Assets held for sale’. Payables owed to Cerrejón of US$17 million have been classified as ‘Liabilities directly associated with the assets held for sale’. Subject to the satisfaction of customary competition and regulatory requirements, the transaction is expected to be completed within 12 months from the balance sheet date.
 
The following table summarises the financial information relating to each of the Group’s significant equity accounted investments. Information of the Group’s investment in Cerrejón has not been included for FY2021 following its classification as ‘Assets held for sale’. BHP Brasil’s 50 per cent portion of Samarco’s commitments, for which BHP Brasil has no funding obligation, is US$350 million (2020: US$200 million).
 
    
Associates
    
Joint ventures
         
2021
US$M
   
Antamina
    
Cerrejón
    
Individually
immaterial
(1)
    
Samarco
(2)
    
Individually
immaterial
     
Total
  
Current assets
   
 
1,499
 
  
 
–
 
          
 
509
 (3)
 
                 
Non-current
assets
   
 
4,885
 
  
 
–
 
          
 
4,380
 
                 
Current liabilities
   
 
(1,285
) 
  
 
–
 
          
 
(9,222
)
 (4)
 
                 
Non-current
liabilities
   
 
(1,062
) 
  
 
–
 
          
 
(7,627
) 
                 
    
 
 
    
 
 
    
 
 
    
 
 
    
 
 
     
 
 
  
Net assets/(liabilities) – 100%
   
 
4,037
 
  
 
–
 
          
 
(11,960
) 
                 
    
 
 
    
 
 
    
 
 
    
 
 
    
 
 
     
 
 
  
Net assets/(liabilities) – Group share
   
 
1,362
 
  
 
–
 
          
 
(5,980
) 
                 
Adjustments to net assets related to accounting policy adjustments
   
 
–
 
  
 
–
 
          
 
280
 (5)
 
                 
Investment in Samarco
   
 
–
 
  
 
–
 
          
 
516
 (6)
 
                 
Impairment of the carrying value of the investment in Samarco
   
 
–
 
  
 
–
 
          
 
(1,041
)
 (7)
 
                 
Additional share of Samarco losses
   
 
–
 
  
 
–
 
          
 
4,442
 (8)
 
                 
Unrecognised losses
   
 
–
 
  
 
–
 
          
 
1,783
 (9)
 
                 
    
 
 
    
 
 
    
 
 
    
 
 
    
 
 
     
 
 
  
Carrying amount of investments accounted for using the equity method
   
 
1,362
 
  
 
–
 
  
 
380
 
  
 
–
 
  
 
–
 
   
 
1,742
 
    
 
 
    
 
 
    
 
 
    
 
 
    
 
 
     
 
 
  
Revenue – 100%
   
 
4,822
 
  
 
844
 
          
 
814
 
                 
Profit/(loss) from Continuing operations – 100%
   
 
1,847
 
  
 
(43
) 
          
 
(2,202
)
 (10)
 
                 
    
 
 
    
 
 
    
 
 
    
 
 
    
 
 
     
 
 
  
Share of profit/(loss) of equity accounted investments
   
 
623
 
  
 
(14
) 
          
 
(1,076
)
 (11)
 
                 
Impairment of the carrying value of the investment in Cerrejón
   
 
–
 
  
 
(466
) 
          
 
–
 
                 
Impairment of the carrying value of the investment in Samarco
   
 
–
 
  
 
–
 
          
 
(111
)
 (7)
 
                 
Additional share of Samarco losses
   
 
–
 
  
 
–
 
          
 
85
 
                 
Fair value change on forward exchange
derivatives
   
 
–
 
  
 
–
 
          
 
136
 
                 
Unrecognised losses
   
 
–
 
  
 
–
 
          
 
(24
)
 (9)
 
                 
    
 
 
    
 
 
    
 
 
    
 
 
    
 
 
     
 
 
  
Profit/(loss) from equity accounted investments, related impairments and expenses
   
 
623
 
  
 
(480
) 
  
 
(74
) 
  
 
(990
) 
  
 
–
 
   
 
(921
) 
    
 
 
    
 
 
    
 
 
    
 
 
    
 
 
     
 
 
  
Comprehensive income – 100%
   
 
1,847
 
  
 
(43
) 
          
 
(2,202
) 
                 
    
 
 
    
 
 
    
 
 
    
 
 
    
 
 
     
 
 
  
Share of comprehensive income/(loss) – Group share in equity accounted investments
   
 
623
 
  
 
(480
) 
  
 
(74
) 
  
 
(990
) 
  
 
–
 
   
 
(921
) 
    
 
 
    
 
 
    
 
 
    
 
 
    
 
 
     
 
 
  
Dividends received from equity accounted investments
   
 
714
 
  
 
13
 
  
 
10
 
  
 
–
 
  
 
–
 
   
 
737
 
    
 
 
    
 
 
    
 
 
    
 
 
    
 
 
     
 
 
  
 
     Associates     Joint ventures         
2020
US$M
    Antamina     Cerrejón     Individually
immaterial
 
(1)
     Samarco
 
(2)
     Individually
immaterial		      Total  
Current assets
      974       712               49
 (3)
 		                        
Non-current
assets
      4,743       2,462               3,601                   
Current liabilities
      (239 )      (170 )              (7,961 )
 (4)
 		                 
Non-current
liabilities
      (1,173 )      (854 )              (5,447 )                  
    
 
 
    
 
 
    
 
 
    
 
 
    
 
 
     
 
 
  
Net assets/(liabilities) – 100%
      4,305       2,150               (9,758 )                  
    
 
 
    
 
 
    
 
 
    
 
 
    
 
 
     
 
 
  
Net assets/(liabilities) – Group share
      1,453       717               (4,879 )                  
Adjustments to net assets related to accounting policy adjustments
      –       59               256
 (5)
 		                 
Investment in Samarco
      –       –               405
 (6)
 		                 
Impairment of the carrying value of the investment in Samarco
      –       –               (930 )
 (7)
 		                 
Additional share of Samarco losses
      –       –               3,341
 (8)
 		                 
Unrecognised losses
      –       –               1,807
 (9)
 		                 
    
 
 
    
 
 
    
 
 
    
 
 
    
 
 
     
 
 
  
Carrying amount of investments accounted for using the equity method
      1,453       776       356       –       –        2,585  
    
 
 
    
 
 
    
 
 
    
 
 
    
 
 
     
 
 
  
Revenue – 100%
      2,464       1,091               26                   
Profit/(loss) from Continuing operations – 100%
      629       (182 )              (3,617 )
 (10)
 		                 
    
 
 
    
 
 
    
 
 
    
 
 
    
 
 
     
 
 
  
Share of profit/(loss) of equity accounted investments
      212       (68 )              (1,918 )
 (11)
 		                 
Impairment of the carrying value of the investment in Samarco
      –       –               (95 )
 (7)
 		                 
Additional share of Samarco losses
      –       –               93                   
Unrecognised losses
      –       –               1,412
 (9)
 		                 
    
 
 
    
 
 
    
 
 
    
 
 
    
 
 
     
 
 
  
Profit/(loss) from equity accounted investments, related impairments and expenses
      212       (68 )      (148 )      (508 )      –        (512 ) 
    
 
 
    
 
 
    
 
 
    
 
 
    
 
 
     
 
 
  
Comprehensive income/(loss) – 100%
      629       (182 )              (3,617 )                  
    
 
 
    
 
 
    
 
 
    
 
 
    
 
 
     
 
 
  
Share of comprehensive income/(loss) – Group share in equity accounted investments
      212       (68 )      (148 )      (508 )      –        (512 ) 
    
 
 
    
 
 
    
 
 
    
 
 
    
 
 
     
 
 
  
Dividends received from equity accounted investments
      105       9       12       –       –        126  
    
 
 
    
 
 
    
 
 
    
 
 
    
 
 
     
 
 
  
 
     Associates     Joint ventures         
2019
US$M
    Antamina      Cerrejón      Individually
immaterial		     Samarco
(2)
     Individually
immaterial		      Total  
Revenue – 100%
            3,203        2,094                24                          
Profit/(loss) from Continuing operations – 100%
      1,168        309                (2,166 )
 (10)
 		                 
    
 
 
     
 
 
     
 
 
    
 
 
    
 
 
     
 
 
  
Share of profit/(loss) of equity accounted investments
      394        103                (1,075 )
 (11)
 		                 
Impairment of the carrying value of the investment in Samarco
      –        –                (96 )
 (7)
 		                 
Additional share of Samarco losses
      –        –                108                   
Unrecognised losses
      –        –                118
 (9)
 		                 
    
 
 
     
 
 
     
 
 
    
 
 
    
 
 
     
 
 
  
Profit/(loss) from equity accounted investments, related impairments and expenses
      394        103        (98 )      (945 )      –        (546 ) 
    
 
 
     
 
 
     
 
 
    
 
 
    
 
 
     
 
 
  
Comprehensive income/(loss) – 100%
      1,168        309                (2,166 )                  
    
 
 
     
 
 
     
 
 
    
 
 
    
 
 
     
 
 
  
Share of comprehensive income/(loss) – Group share in equity accounted investments
      394        103        (98 )      (945 )      –        (546 ) 
    
 
 
     
 
 
     
 
 
    
 
 
    
 
 
     
 
 
  
Dividends received from equity accounted investments
      361        134        15       –       –        510  
    
 
 
     
 
 
     
 
 
    
 
 
    
 
 
     
 
 
  
 
(1)
The unrecognised share of loss for the period was US$40 million (2020: unrecognised share of loss for the period was US$12 million), which increased the cumulative losses to US$233 million (2020: increase to US$193 million).
 
(2)
 
Refer to note 4 ‘Significant events – Samarco dam failure’ for further information regarding the financial impact of the Samarco dam failure in November 2015 on BHP Brasil’s share of Samarco’s losses.
 
(3
)
 
Includes cash and cash equivalents of US$134 million (2020: US$15 million).
 
(4)
 
Includes current financial liabilities (excluding trade and other payables and provisions) of US$6,567 million (2020: US$6,023 million).
 
(5)
 
Relates mainly to dividends declared by Samarco that remain unpaid at balance date and which, in accordance with the Group’s accounting policy, are recognised when received not receivable.
 
(6)
Working capital funding provided to Samarco during the period is capitalised as part of the Group’s investments in joint ventures and disclosed as an impairment included within the Samarco impairment expense line item.
 
(7)
In the year ended 30 June 2016 BHP Brasil adjusted its investment in Samarco to US$ nil (resulting from US$(655) million share of loss from Samarco and US$(525) million impairment). Additional cumulative impairment losses relating to working capital funding of US$(516) million have also been recognised.
 
(8)
BHP Brasil has recognised accumulated additional share of Samarco losses of US$(4,442) million resulting from US$(3,945) million provisions relating to the Samarco dam failure, including US$(497) million recognised as net finance costs.
 
(9)
 
Share of Samarco’s losses for which BHP Brasil does not have an obligation to fund.
 
(10)
Includes depreciation and amortisation of US$154 million (2020: US$84 million; 2019: US$85 million), interest income of US$1 million
(2020: US$16 million; 2019: US$22 million), interest expense of US$492 million (2020: US$588 million; 2019: US$342 million) and income
 
tax
(expense)/
benefit of US$(303) million (2020: US$(256) million; 2019: US$52 million).
 
(11)
 
Includes accounting policy adjustments mainly related to the removal of foreign exchange gains on excluded dividends payable.