Page 195 - Annual Report 2020

9 Trade and other payables

2020 2019
US$M US$M Strategic Report
Trade payables 4,396 5,162
Other payables 1,372 1,560
Total 5,768 6,722
Comprising:
Current 5,767 6,717
Non-current 1 5
10 Inventories

2020 2019 Governance at BHP
US$M US$M Definitions
Raw materials and consumables 1,797 1,406 Spares, consumables and other supplies yet to be utilised in the production
process or in the rendering of services.
Work in progress 2,814 2,515 Commodities currently in the production process that require further
processing by the Group to a saleable form.
Finished goods 711 687 Commodities held-for-sale and not requiring further processing by the Group.
Total (1) 5,322 4,608
Comprising: Inventories classified as non-current are not expected to be utilised
Current 4,101 3,840 or sold within 12 months after the reporting date or within the operating
Non-current 1,221 768 cycle of the business. Remuneration Report
(1) Inventory write-downs of US$37 million were recognised during the year (2019: US$16 million; 2018: US$18 million). Inventory write-downs of US$13 million made
in previous periods were reversed during the year (2019: US$21 million; 2018: US$2 million).
Recognition and measurement
Regardless of the type of inventory and its stage in the production process, inventories are valued at the lower of cost and net realisable value.
Cost is determined primarily on the basis of average costs. For processed inventories, cost is derived on an absorption costing basis. Cost
comprises costs of purchasing raw materials and costs of production, including attributable mining and manufacturing overheads taking
into consideration normal operating capacity.
Minerals inventory quantities are assessed primarily through surveys and assays, while petroleum inventory quantities are derived through
flow rate or tank volume measurement and the composition is derived via sample analysis. Directors’ Report

Key estimates
Accounting for inventory involves the use of estimates, particularly related to the measurement and valuation of inventory on hand
within the production process. Critical estimates, including expected metal recoveries and work in progress volumes, are calculated
by engineers using available industry, engineering and scientific data. Estimates used are periodically reassessed by the Group
taking into account technical analysis and historical performance. Changes in estimates are adjusted for on a prospective basis. 5

Financial Statements

Additional information

BHP Annual Report 2020 193 Shareholder information