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Impairment of non-current assets (Tables) | 12 Months Ended
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Jun. 30, 2021
Text block [abstract] |
Schedule of Impairment of Non-current Assets for Cash Generating Unit by Class of Assets and by Reportable Segment |
|  |  |  | 2021 |
Cash generating unit |  | Segment |  | Property, plant and equipment |  |  | Goodwill and other intangibles |  |  | Equity- accounted investment |  |  | Total |
|  |  |  | US$M |  |  | US$M |  |  | US$M |  |  | US$M |
New South Wales Energy Coal |  | Coal |  |  | 1,025 |  |  |  | 32 |  |  |  | – |  |  |  | 1,057 |
Cerrejón |  | Coal |  |  | – |  |  |  | – |  |  |  | 466 |  |  |  | 466 |
Potash |  | G&U |  |  | 1,314 |  |  |  | – |  |  |  | – |  |  |  | 1,314 |
Other |  | Various |  |  | 244 |  |  |  | 20 |  |  |  | – |  |  |  | 264 |
Total impairment of non-current assets |  |  |  |  | 2,583 |  |  |  | 52 |  |  |  | 466 |  |  |  | 3,101 |
Reversal of impairment |  |  |  |  | – |  |  |  | – |  |  |  | – |  |  |  | – |
Net impairment of non-current assets |  |  |  |  | 2,583 |  |  |  | 52 |  |  |  | 466 |  |  |  | 3,101 |
|  |  |  | 2020 |
Cash generating unit |  | Segment |  | Property, plant and equipment |  |  | Goodwill and other intangibles |  |  | Equity- accounted investment |  |  | Total |
|  |  |  | US$M |  |  | US$M |  |  | US$M |  |  | US$M |
Cerro Colorado |  | Copper |  |  | 409 |  |  |  | – |  |  |  | – |  |  |  | 409 |
Other |  | Various |  |  | 85 |  |  |  | – |  |  |  | – |  |  |  | 85 |
Total impairment of non-current assets |  |  |  |  | 494 |  |  |  | – |  |  |  | – |  |  |  | 494 |
Reversal of impairment |  |  |  |  | – |  |  |  | – |  |  |  | – |  |  |  | – |
Net impairment of non-current assets |  |  |  |  | 494 |  |  |  | – |  |  |  | – |  |  |  | 494 |
Summary of Impairment of Non-current Assets Excluding Goodwill | The Group recognised the following impairments to non-current assets during the year:
Year ended 30 June 2021 |  | NSWEC |  | Cerrejón |  | Potash
What has been recognised? |  | At 30 June 2021, the Group determined the overall recoverable amount of the CGU to be negative US$300 million, resulting in an aggregate impairment to property, plant and equipment and intangibles of US$1,057 million for FY2021. |  | At 30 June 2021, the Group determined the recoverable amount to be US$284 million, being the agreed sale proceeds of US$294 million adjusted for transaction costs, resulting in an aggregate impairment of US$466 million for FY2021. |  | At 30 June 2021, the Group determined the recoverable amount to be US$3.3 billion, resulting in an impairment charge of US$1.3 billion against property, plant and equipment.
What were the drivers of impairment? |  | The impairment charges reflect the status of the divestment process and the forecast market conditions for Australian thermal coal, the strengthening Australian dollar and changes to the mine plan. |  | On 28 June 2021, the Group announced that it had signed a Sale and Purchase Agreement with Glencore to divest its interest in Cerrejón. |  | The impairment charge against the Group’s Potash assets reflects an analysis of recent market perspectives and the value that the Group would now expect a market participant to attribute to the Group’s investments to date.
How were the valuations calculated? |  | The 30 June 2021 valuation represents VIU, applying discounted cash flow (DCF) techniques (1) . |  | The 30 June 2021 valuation represents a FVLCD based on the expected net sale proceeds of US$284 million (1) . |  | The 30 June 2021 valuation was determined using FVLCD methodology, applying DCF techniques (1) .
What were the significant assumptions and estimates used in the valuations? |  | The valuation for NSWEC is most sensitive to changes in energy coal prices, estimated future production volumes and discount rates. The valuation applied a post-tax real discount rate of 6.5 per cent. The post-impairment carrying value of NSWEC’s property, plant and equipment is not material, therefore any changes to key estimates will not give rise to a further material impairment. The valuation for Potash is most sensitive to changes in the long-term potash price outlook and the risking applied to the future development phases of the potash resource. The valuation applied a post-tax real discount rate of 6.5 per cent. In August 2021, the Group sanctioned the ongoing development of Potash following a comprehensive review of the future prospects and development opportunities. In light of this investment approval and the risking applied in the current valuation, management does not consider there to be a significant risk of a further material impairment in the next financial reporting period. Key judgements and estimates that have been applied in the valuations using DCF techniques are disclosed further below.
(1) | Valuations are based primarily on Level 3 inputs as defined in note 23 ‘Financial risk management’.
Summary of Goodwill Allocated to Cash Generating Units | The carrying amount of goodwill has been allocated to the CGUs, or groups of CGUs, as follows:
|  | 2021 |  |  | 2020 |
Cash generating unit |  | US$M |  |  | US$M Restated |
Olympic Dam (1) |  |  | 1,010 |  |  |  | 1,010 |
Other |  |  | 187 |  |  |  | 187 |
Total goodwill |  |  | 1,197 |  |  |  | 1,197 |
(1) | Goodwill has been restated to reflect changes to the Group’s accounting policy following a decision by the IFRS Interpretations Committee on IAS 12 ‘Income Taxes’, resulting in the retrospective recognition of US$950 million of Goodwill at Olympic Dam. Refer to note 39 ‘New and amended accounting standards and interpretations and changes to accounting policies’ for further information.

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