1	Refer to note 4 ‘Significant events – Samarco dam failure’ for further information.

Impairment of US deferred tax assets

The Group recognised an impairment charge of US$423 million (after tax) in relation to deferred tax assets where the recoverability has historically been reliant on Petroleum earnings in the same tax group. While these tax assets remained with the Group following the merger of the Group’s oil and gas portfolio with Woodside, the impairment charge reflects the extent of other currently forecast future earnings against which the assets can be recovered.

Corporate structure unification costs

The Group incurred transaction costs associated with the unification of the Group corporate structure under its existing Australian parent company, BHP Group Limited, which was completed on 31 January 2022. Refer note 16 ‘Share capital’ for further information.

BHP Mitsui Coal (BMC) gain on disposal

On 3 May 2022 the Group sold it

s 80

per cent interest in BHP Mitsui Coal Pty Ltd (BMC) to Stanmore SMC Holdings Pty Ltd, a wholly owned subsidiary of Stanmore Resources Limited (Stanmore Resources).

Stanmore Resources paid

US$1.1

billion cash consideration at completion plus a preliminary completion adjustment

US$218

million for working capital

. US$100

million in cash remains payable in

six months

on 3 November 2022 with potential for an additional amount of up to

US$150

million (US$122 million discounted) in a price-linked earnout payable in the 2024 calendar year.

Details of the gain on disposal is as follows:


	US$M
Assets
Cash and cash equivalents		63
Trade and other receivables		360
Other financial assets		26
Inventories		92
Property, plant and equipment		1,214
Total assets		1,755

Liabilities
Trade and other payables		253
Interest bearing liabilities		249
Tax payable s		9
Provisions		425
Deferred tax liabilities		31

Total liabilities		967

Net assets disposed		788

Less non-controlling interest share of net assets disposed		157

BHP share of net assets disposed		631

Gross consideration		1,318
Transaction and other directly applicable costs		(69	)
Income tax expense		–
Deferred consideration		222

Gain on disposal		840

The exceptional items relating to the year ended 30 June 2021 and the year ended 30 June 2020 are detailed below.

30 June 2021


Year ended 30 June 2021 Restated	Gross			Tax			Net
	US$M			US$M			US$M
Exceptional items by category
Samarco dam failure		(1,087	)		(71	)		(1,158	)
COVID-19 related costs		(499	)		138			(361	)
Impairment of Energy coal assets		(1,523	)		(651	)		(2,174	)
Impairment of Potash assets		(1,314	)		(473	)		(1,787	)

Total		(4,423	)		(1,057	)		(5,480	)

Attributable to non-controlling interests		(34	)		10			(24	)
Attributable to BHP shareholders		(4,389	)		(1,067	)		(5,456	)

Samarco Mineração S.A. (Samarco) dam failure

The FY2021 exceptional loss of US$1,158 million related to the Samarco dam failure in November 2015 comprises the following:


Year ended 30 June 2021	US$M
Other income		34
Expenses excluding net finance costs:
Costs incurred directly by BHP Brasil and other BHP entities in relation to the Samarco dam failure		(46	)
Loss from equity accounted investments, related impairments and expenses:
Samarco impairment expense		(111	)
Samarco Germano dam decommissioning		(15	)
Samarco dam failure provision		(1,000	)
Fair value change on forward exchange derivatives		136
Net finance costs		(85	)
Income tax expense		(71	)

Total 1		(1,158	)

1	Refer to note 4 ‘Significant events – Samarco dam failure’ for further information.

COVID-19 related costs

The exceptional item reflects the directly attributable COVID-19 pandemic related additional costs for the Group for FY2021, including costs associated with the increased provision of health and hygiene services, the impacts of maintaining social distancing requirements and demurrage and other standby charges related to delays caused by COVID-19. At the time, COVID-19 was considered a single protracted globally pervasive event.

However, as the pandemic has continued to evolve, certain impacts that were initially considered to be potentially short-term in nature are now expected to continue over a number of reporting periods. These activities are now considered to be part of business as usual operations and, as such, for FY2022, the incremental costs have not been classified as an exceptional item.

Impairment of Energy coal assets

The Group recognised an impairment charge of US$1,704 million (after tax) in relation to New South Wales Energy Coal (NSWEC) reflecting the status of the divestment process and current market conditions for thermal coal, the strengthening Australian dollar and changes to the mine plan. In addition, the Group recognised an impairment charge of US$470 million (after tax) for Cerrejón, reflecting the expected net sales proceeds.

Impairment of Potash assets

The Group recognised an impairment charge of US$1,787 million (after tax) in relation to Potash. The impairment charge reflect

an analysis of

market perspectives and the value that we

expected

a market participant to attribute to our investments to date.

30 June 2020


Year ended 30 June 2020 Restated	Gross			Tax			Net
	US$M			US$M			US$M
Exceptional items by category
Samarco dam failure		(176	)		–			(176	)
Cancellation of power contracts		(778	)		271			(507	)
COVID-19 related costs		(177	)		51			(126	)
Cerro Colorado impairment		(409	)		(83	)		(492	)

Total		(1,540	)		239			(1,301	)

Attributable to non-controlling interests		(291	)		90			(201	)
Attributable to BHP shareholders		(1,249	)		149			(1,100	)

Samarco Mineração S.A. (Samarco) dam failure

The FY2020 exceptional loss of US$176 million related to the Samarco dam failure in November 2015 comprises the following:


Year ended 30 June 2020	US$M
Other income		489
Expenses excluding net finance costs:
Costs incurred directly by BHP Brasil and other BHP entities in relation to the Samarco dam failure		(64	)
Loss from equity accounted investments, related impairments and expenses:
Samarco impairment expense		(95	)
Samarco Germano dam decommissioning		46
Samarco dam failure provision		(459	)
Net finance costs		(93	)

Total 1		(176	)

1	Refer to note 4 ‘Significant events – Samarco dam failure’ for further information.

Cancellation of power contracts

Reflects an onerous contract provision in relation to the cancellation of power contracts at the Group’s Escondida and Spence operations, as part of the shift towards 100 per cent renewable energy supply contracts.

COVID-19 related costs

The exceptional item reflects the directly attributable COVID-19 pandemic related additional costs for the Group for FY2020, including costs associated with the increased provision of health and hygiene services, the impacts of maintaining social distancing requirements and other standby charges related to delays caused by COVID-19. At the time, COVID-19 was considered a single protracted globally pervasive event.

Cerro Colorado impairment

The Group recognised an impairment charge of US$492 million (after tax) in relation to Cerro Colorado. This reflects the decision taken by the Group to reduce Cerro Colorado’s throughput for the remaining period of its current environmental licence, which expires at the end of CY2023.