Page 224 - Annual Report 2020

30 Investments accounted for using the equity method

Significant interests in equity accounted investments of the Group are those with the most significant contribution to the Group’s net profit
or net assets. The Group’s ownership interest in equity accounted investments results are listed in the table below. For a complete list of the
Group’s associates and joint ventures, refer to note 13 ‘Related undertakings of the Group’ in section 5.2.
Ownership interest

Significant associates and Country of incorporation/ Associate or 2020 2019
joint ventures principal place of business joint venture Principal activity Reporting date % %
Cerrejón Anguilla/Colombia/Ireland Associate Coal mining in Colombia 31 December 33.33 33.33
Compañía Minera Antamina
S.A. (Antamina) Peru Associate Copper and zinc mining 31 December 33.75 33.75
Samarco Mineração S.A. Brazil Joint venture Iron ore mining 31 December 50.00 50.00
(Samarco)
Voting in relation to relevant activities in Antamina and Cerrejón, determined to be the approval of the operating and capital budgets, does
not require unanimous consent of all participants to the arrangement, therefore joint control does not exist. Instead, because the Group
has the power to participate in the financial and operating policies of the investee, these investments are accounted for as associates.
Samarco is jointly owned by BHP Billiton Brasil Ltda (BHP Brasil) and Vale S.A. (Vale). As the Samarco entity has the rights to the assets and
obligations to the liabilities relating to the joint arrangement and not its owners, this investment is accounted for as a joint venture.
The Group is restricted in its ability to make dividend payments from its investments in associates and joint ventures as any such payments
require the approval of all investors in the associates and joint ventures. The ownership interest at the Group’s and the associates’ or joint
ventures’ reporting dates are the same. When the annual financial reporting date is different to the Group’s, financial information is obtained
as at 30 June in order to report on an annual basis consistent with the Group’s reporting date.
The movement for the year in the Group’s investments accounted for using the equity method is as follows:
Total equity
Year ended 30 June 2020 Investment in Investment in accounted
US$M associates joint ventures investments
At the beginning of the financial year 2,569 − 2,569
(Loss)/profit from equity accounted investments, related impairments and expenses (1) (4) (508) (512)
Investment in equity accounted investments 147 95 242
Dividends received from equity accounted investments (126) − (126)
Other (1) 413 412
At the end of the financial year 2,585 − 2,585
(1) US$(508) million represents US$(95) million impairment relating to US$(95) million funding provided during the period, US$(459) million movement in the Samarco
dam failure provision including US$(916) million change in estimate and US$457 million exchange translation and US$46 million movement in provisions related to the
Samarco Germano dam decommissioning provision including US$(37) million change in estimate and US$83 million exchange translation. Refer to note 4 ‘Significant
events – Samarco dam failure’ for further information.

Key judgements and estimates
Estimates: An indicator of impairment was identified for the The recoverable amount assessment is most susceptible to
Group’s net investment in Cerrejón at 30 June 2020 as a result of assumptions regarding the long term forecasts of Colombian
reductions in the Group’s forecast prices for Colombian thermal thermal coal prices and discount rates:
coal and the reduced production volumes in Cerrejón’s latest • Colombian thermal coal prices: At 30 June 2020 the price
mine plan. Accordingly the Group assessed the recoverable assumptions used in determining the recoverable amount
amount of Cerrejón in line with the impairment of non-current considered the Group’s latest internal price forecasts, taking
assets principles (including key judgements and estimates) into account expected demand and supply for Colombian
detailed in note 11 ‘Property, Plant and Equipment’. The thermal coal, and price forecasts available from external
recoverable amount was assessed using the FVLCD methodology sources (including consensus pricing). The short to long term
including a market participant’s perspective of the net present range of prices used in the valuations were consistent with
value of future post-tax cash flows and other market-based those published by market commentators of approximately
indicators of fair value. The Cerrejón carrying amount of US$45 to US$65 per tonne;
US$776 million is supported by the recoverable amount
determination and as such, no impairment has been recognised. • Discount rate: the discount rate is derived using the weighted
average cost of capital methodology adjusted for any risks that
are not reflected in the underlying cash flows, including where
appropriate a country risk premium. A real post-tax discount
rate of 9.5 per cent was applied to post-tax cash flows.
Changes in circumstances may affect the assumptions used
to determine recoverable amount at future reporting dates.

222 BHP Annual Report 2020