Page 109 - Annual Report 2020

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Financial results Queensland Coal, as record annual production at Caval Ridge
Coal revenue decreased by US$2.9 billion to US$6.2 billion and Poitrel was offset by planned major wash plant shutdowns
in FY2020. in the first half of the year and significantly higher rainfall across Strategic Report
our operations in January and February 2020.
Underlying EBITDA for Coal decreased by US$2.4 billion to
US$1.6 billion including lower price impacts, net of price-linked Queensland Coal unit costs decreased by 3 per cent to
costs, of US$2.1 billion. Controllable cash costs decreased US$68 per tonne, due to a build in inventory, as a result of solid
Underlying EBITDA by US$124 million driven by increased dragline performance across the majority of operations, and
maintenance costs at Queensland Coal due to major planned favourable impacts from exchange rate movements and the
wash plant shutdowns and higher contractor costs due to the application of IFRS 16 Leases. This was partially offset by lower
mobilisation of additional equipment to address increased strip volumes due to significant wet weather during the March 2020
ratio at South Walker Creek and increased contractor stripping quarter and planned maintenance. NSWEC unit costs increased
at NSWEC. This was partially offset by favourable inventory by 13 per cent to US$57 per tonne, reflecting lower volumes from Governance at BHP
movements as a result of good dragline performance. Lower the change in product strategy to focus on higher-quality products
volumes decreased Underlying EBITDA by US$374 million as and unfavourable weather impacts, and higher stripping costs.
a result of the change in NSWEC product strategy to focus on The calculation of Queensland Coal’s and NSWEC’s unit costs
higher-quality products and unfavourable weather impacts from is set out in the table below.
December 2019 to February 2020. There were lower volumes at

Queensland Coal unit costs NSWEC unit costs
US$M FY2020 FY2019 FY2020 FY2019
Revenue 5,357 7,679 886 1,421
Underlying EBITDA 1,935 3,722 (79) 353 Remuneration Report
Gross costs 3,422 3,957 965 1,068
Less: freight 147 156 − −
Less: royalties 498 805 68 114
Net costs 2,777 2,996 897 954
Sales (kt, equity share) 41,086 43,145 15,868 19,070
Cost per tonne (US$) (1) (2) 67.59 69.44 56.53 50.03
(1) FY2020 based on an average exchange rate of AUD/USD 0.67.
(2) FY2020 excludes COVID-19 related costs of US$0.37 per tonne and US$0.06 per tonne that are reported as exceptional items relating to Queensland Coal Directors’ Report
and NSWEC respectively.
Outlook
Metallurgical coal production is expected to be between 40 and improved productivity. In the medium term, we expect to lower
44 Mt, or 71 and 77 Mt on a 100 per cent basis, in FY2021, a similar our unit costs to between US$58 and US$66 per tonne (based on
level to the prior year as it reflects an expected deterioration in an exchange rate of AUD/USD 0.70). This reflects reduced volumes
market outlook due to the impact of COVID-19. With Blackwater due to a focus on higher quality coals and a market responsive
returning to full capacity towards the end of the September 2020 approach to bringing new tonnes into the markets.
quarter after flooding in the March 2020 quarter, volumes will be NSWEC unit costs are expected to be between US$55 and US$59
weighted to the second half of the year. Energy coal production per tonne (based on an average exchange rate of AUD/USD 0.70)
is expected to be between 22 and 24 Mt in FY2021. in FY2021. Work is underway at NSWEC to review mine planning Financial Statements
Queensland Coal unit costs are expected to be between and operating alternatives to structurally reduce costs in the near
US$69 and US$75 per tonne (based on an average exchange rate term and ensure a viable mining operation which is resilient during
of AUD/USD 0.70) in FY2021, as a result of higher strip ratios and low price cycles.
contractor stripping costs partially offset by higher volumes and Additional information

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