XML 208 R34.htm IDEA: XBRL DOCUMENT v3.20.2
Investments accounted for using the equity method
 12 Months Ended
Jun. 30, 2020
Text block [abstract]  
Investments accounted for using the equity method
30    Investments accounted for using the equity method
Significant interests in equity accounted investments of the Group are thos
e
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
 
 
2020

%
  2019
%		 
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:
 
Year ended 30 June 2020
US$M
  
Investment in
associates
  
Investment in
joint ventures
  
Total equity
accounted
investments
 
At the beginning of the financial year
  
 
2,569
 
 
 
–
 
 
 
2,569
 
(Loss)/profit from equity accounted investments, related impairments and expenses
(1)
  
 
(4
) 
 
 
(508
) 
 
 
(512
) 
Investment in equity accounted investments
  
 
147
 
 
 
95
 
 
 
242
 
Dividends received from equity accounted investments
  
 
(126
) 
 
 
–
 
 
 
(126
) 
Other
  
 
(1
) 
 
 
413
 
 
 
412
 
  
 
 
  
 
 
  
 
 
 
At the end of the financial year
  
 
2,585
 
 
 
–
 
 
 
2,585
 
  
 
 
  
 
 
  
 
 
 
 
(1)
 
US$(508) million represents US$(95) million impairment relating to US$(95) million funding provided during the period, US$(459) million movement in the Samarco dam failure provision including US$(916) million change in estimate and US$457 million exchange translation and US$46 million movement in provisions related to the Samarco Germano dam decommissioning provision including US$(37) million change in estimate and US$83 million exchange translation. Refer to note 4 ‘Significant events – Samarco dam failure’ for further information.
 
 
Key judgements and estimates
Estimates:
An indicator of impairment was identified for the Group’s net investment in Cerrejón at 30 June 2020 as a result of reductions in the Group’s forecast prices for Colombian thermal coal and the reduced production volumes in Cerrejón’s latest mine plan. Accordingly the Group assessed the recoverable amount of Cerrejón in line with the impairment of
non-current
assets principles (including key judgements and estimates) detailed in note 11 ‘Property, Plant and Equipment’. The recoverable amount was assessed using the FVLCD methodology including a market participant’s perspective of the net present value of future
post-tax
cash flows and other market-based indicators of fair value. The Cerrejón carrying amount of US$776 million is supported by the recoverable amount determination and as such, no impairment has been recognised.
The recoverable amount assessment is most susceptible to assumptions regarding the long term forecasts of Colombian thermal coal prices and discount rates:
 
 
•
 
Colombian thermal coal prices: At 30 June 2020 the price assumptions used in determining the recoverable amount considered the Group’s latest internal price forecasts, taking into account expected demand and supply for Colombian thermal coal, and price forecasts available from external sources (including consensus pricing). The short to long term range of prices used in the valuations were consistent with those published by market commentators of approximately US$45 to US$65 per tonne;
 
 
 
•
 
Discount rate: the discount rate is derived using the weighted average cost of capital methodology adjusted for any risks that are not reflected in the underlying cash flows, including where appropriate a country risk premium. A real
post-tax
discount rate of 9.5 per cent was applied to
post-tax
cash flows.
 
Changes in circumstances may affect the assumptions used to determine recoverable amount at future reporting dates.
 
The following table summarises the financial information relating to each of the Group’s significant equity accounted investments. BHP Brasil’s 50 per cent portion of Samarco’s commitments, for which BHP Brasil has no funding obligation, is US$200 million (2019: US$250 million).
 
 
 
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 operating 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)
 
 
   
 
   
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
(Loss)/profit from equity accounted investments, related impairments and expenses
 
 
212
 
 
 
(68
) 
 
 
(148
) 
 
 
(508
) 
 
 
–
 
 
 
(512
) 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Comprehensive income – 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
 (1)
 
 
Samarco
 (2)
 
 
Individually
immaterial
 
  
Total
 
Current assets
  
 
1,065
 
 
 
845
 
 
   
 
 
290
 (3)
 
 
   
  
   
Non-current
assets
  
 
4,495
 
 
 
2,664
 
 
   
 
 
6,103
 
 
   
  
   
Current liabilities
  
 
(498
) 
 
 
(344
) 
 
   
 
 
(6,704
)
 (4)
 
 
   
  
   
Non-current
liabilities
  
 
(1,076
) 
 
 
(801
) 
 
   
 
 
(5,830
) 
 
   
  
   
 
  
 
 
 
 
 
 
 
 
   
 
 
 
 
 
   
  
   
Net assets/(liabilities) – 100%
  
 
3,986
 
 
 
2,364
 
 
   
 
 
(6,141
) 
 
   
  
   
 
  
 
 
 
 
 
 
 
 
   
 
 
 
 
 
   
  
   
Net assets/(liabilities) – Group share
  
 
1,345
 
 
 
788
 
 
   
 
 
(3,071
) 
 
   
  
   
Adjustments to net assets related to accounting policy adjustments
  
 
–
 
 
 
65
 
 
   
 
 
366 
(5)
 
 
   
  
   
Investment in Samarco
  
 
–
 
 
 
–
 
 
   
 
 
310 
(6)
 
 
   
  
   
Impairment of the carrying value of the investment in Samarco
  
 
–
 
 
 
–
 
 
   
 
 
(835
)
 (7)
 
 
   
  
   
Additional share of Samarco losses
  
 
–
 
 
 
–
 
 
   
 
 
2,835
 (8)
 
 
   
  
   
Unrecognised losses
  
 
–
 
 
 
–
 
 
   
 
 
395 
(9)
 
 
   
  
   
 
  
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
  
 
 
 
Carrying amount of investments accounted for using the equity method
  
 
1,345
 
 
 
853
 
 
 
371
 
 
 
–
 
 
 
–
 
  
 
2,569
 
 
  
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
  
 
 
 
Revenue – 100%
  
 
3,203
 
 
 
2,094
 
 
   
 
 
24
 
 
   
  
   
Profit/(loss) from Continuing operations – 100%
  
 
1,168
 
 
 
309
 
 
   
 
 
(2,166
)
 (10)
 
 
   
  
   
 
  
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
  
 
 
 
Share of operating 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)
 
 
   
  
   
 
  
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
  
 
 
 
(Loss)/profit 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
 
 
  
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
  
 
 
 
 
 
  
Associates
 
 
Joint ventures
 
  
 
 
2018
US$M
  
Antamina
 
  
Cerrejón
 
  
Individually
immaterial
 
 
Samarco
 (2)
 
 
Individually
immaterial
 
  
Total
 
Revenue – 100%
  
 
3,866
 
  
 
2,453
 
  
   
 
 
30
 
 
   
  
   
Profit/(loss) from Continuing operations – 100%
  
 
1,613
 
  
 
576
 
  
   
 
 
(1,558
)
 (10)
 
 
   
  
   
 
  
 
 
 
  
 
 
 
  
   
 
 
 
 
 
   
  
   
Share of operating profit/(loss) of equity accounted investments
  
 
544
 
  
 
192
 
  
   
 
 
(823
) 
(11)
 
 
   
  
   
Impairment of the carrying value of the investment in Samarco
  
 
–
 
  
 
–
 
  
   
 
 
(80
) 
(7)
 
 
   
  
   
Additional share of Samarco losses
  
 
–
 
  
 
–
 
  
   
 
 
117
 
 
   
  
   
Unrecognised losses
  
 
–
 
  
 
–
 
  
   
 
 
277
 (9)
 
 
   
  
   
 
  
 
 
 
  
 
 
 
  
 
 
 
 
 
 
 
 
 
 
 
  
 
 
 
Profit/(loss) from equity accounted investments, related impairments and expenses
  
 
544
 
  
 
192
 
  
 
(80
) 
 
 
(509
) 
 
 
–
 
  
 
147
 
 
  
 
 
 
  
 
 
 
  
 
 
 
 
 
 
 
 
 
 
 
  
 
 
 
Comprehensive income/(loss) – 100%
  
 
1,613
 
  
 
576
 
  
   
 
 
(1,558
) 
 
   
  
   
 
  
 
 
 
  
 
 
 
  
 
 
 
 
 
 
 
 
 
 
 
  
 
 
 
Share of comprehensive income/(loss) – Group share in equity accounted investments
  
 
544
 
  
 
192
 
  
 
(80
) 
 
 
(509
) 
 
 
–
 
  
 
147
 
 
  
 
 
 
  
 
 
 
  
 
 
 
 
 
 
 
 
 
 
 
  
 
 
 
Dividends received from equity accounted investments
  
 
496
 
  
 
181
 
  
 
16
 
 
 
–
 
 
 
–
 
  
 
693
 
 
  
 
 
 
  
 
 
 
  
 
 
 
 
 
 
 
 
 
 
 
  
 
 
 
 
(1)
 
The unrecognised share of loss for the period was US$12 million (2019: unrecognised share of profit for the period was US$15 million), which increased the cumulative losses to US$193 million (2019: decrease to US$181 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$15 million (2019: US$246 million).
 
(4)
 
Includes current financial liabilities (excluding trade and other payables and provisions) of US$6,023 million (2019: US$5,510 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 is capitalised as part of the Group’s investments in joint ventures. Following a change to IAS 28 the Group no longer recognises an additional share of Samarco’s losses related to working capital funding provided during the period. This is now disclosed as an impairment included within the Samarco impairment expense line item. Comparative periods, including the impact on unrecognised losses have been restated to reflect the change.
 
(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$(405) million have also been recognised.
 
(8)
 
BHP Brasil has recognised accumulated additional share of Samarco losses of US$(3,341) million resulting from US$(2,929) million provisions relating to the Samarco dam failure, including US$(412) 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$84 million (2019: US$85 million; 2018: US$73 million), interest income of US$16 million (2019: US$22 million; 2018: US$31 million), interest expense of US$588 million (2019: US$342 million; 2018: US$385 million) and income tax benefit/(expense) of US$(256) million (2019: US$52 million; 2018: US$(154) million).
 
(11)
 
Includes accounting policy adjustments mainly related to the removal of foreign exchange gains on excluded dividends payable.