Page 106 - Annual Report 2020

1.11.2 Copper continued
Financial results Outlook
Copper revenue decreased by US$0.2 billion to US$10.7 billion Total Copper production of between 1,480 and 1,645 kt is expected
in FY2020. Escondida revenue decreased by US$0.2 billion in FY2021. Escondida production of between 940 and 1,030 kt is
to US$6.7 billion. expected in FY2021, as a result of COVID-19 impacts and a decline
Underlying EBITDA for Copper decreased by US$0.2 billion to in copper concentrator feed grade of approximately 4 per cent.
US$4.3 billion. Price impacts, net of price-linked costs, decreased Production at Pampa Norte is expected to be between 240 and
270 kt in FY2021, reflecting the reduced operational workforce
Underlying EBITDA by US$0.3 billion. Higher volumes increased
Underlying EBITDA by US$112 million mainly driven by record due to COVID-19, the start-up of the Spence Growth Option project
and expected grade decline of approximately 7 per cent.
concentrator throughput at Escondida, offset by expected lower
concentrator head grade and lower by-product volumes. Higher At Olympic Dam, production is expected to be between 180
and 205 kt in FY2021.
copper volumes at Olympic Dam were supported by solid
underground mine performance, record grade and the prior period Escondida unit costs are expected to be between US$1.00
acid plant outage. Increased volumes at Spence reflecting greater and US$1.25 per pound (based on an average exchange rate
operating stability partially offset by expected grade decline. of USD/CLP 769) in FY2021 reflecting lower volumes partially
Controllable cash costs decreased by US$221 million, due to strong offset by lower stripping costs. In the medium term, unit costs have
cost performance driven by consumption efficiencies at Escondida, been revised to less than US$1.10 per pound reflecting updated
and end-of-negotiation bonus payments at Escondida and Cerro guidance exchange rates (based on an average exchange rate of
Colorado in the prior year. A favourable inventory movement at USD/CLP 769), with expected higher power and water costs offset
Escondida due to higher ore movement in line with planned by further operational efficiency improvements and optimised
development phase of the mines was partially offset by a higher maintenance strategies.
inventory drawdown at Spence and a lower build of inventory at
Olympic Dam due to the prior period outages, and the Olympic
Dam acid plant outage self-insurance recoveries in the prior period.
Non-cash costs increased by US$451 million due to increased
deferred stripping depletion at Escondida in line with planned
development phase of the mines. Other items such as exchange
rate and net of inflation, positively impacted Underlying EBITDA
by US$210 million.
Unit costs at Escondida decreased by 11 per cent to US$1.01 per
pound, reflecting record concentrator throughput, strong cost
management and favourable inventory and exchange rate
movements. This decrease was achieved despite the impact
of a 3 per cent decline in copper grade, lower by-product credits,
higher desalinated water costs and higher deferred stripping costs.
Escondida unit costs
US$M FY2020 FY2019
Revenue 6,719 6,876
Underlying EBITDA 3,535 3,384
Gross costs 3,184 3,492
Less: by-product credits 407 490
Less: freight 178 149
Net costs 2,599 2,853
Sales (kt) 1,164 1,131
Sales (Mlb) 2,567 2,493
Cost per pound (US$) (1) (2) 1.01 1.14
(1) FY2020 based on average exchange rates of USD/CLP 771.
(2) FY2020 excludes COVID-19 related costs of US$0.01 per pound that are
reported as exceptional items.

104 BHP Annual Report 2020