“We had a very strong financial year,” said Andrew Mackenzie, CEO, BHP. “Free cash flow was $12.6 billion, our second highest on record. We used this cash to reduce net debt by nearly $10 billion and return $4.4 billion to shareholders. Productivity gains across our simpler portfolio of tier one assets increased our return on capital to 10%.”

Mackenzie expects the momentum to continue through the 2018 financial year, with volume growth of 7% and further productivity gains. “Our relentless focus on cash flow, capital discipline and value creation should allow us to significantly increase our return on capital by the 2022 financial year,” Mackenzie said.

BHP reported a 4% decline in copper equivalent costs compared to the 2016 financial year. Escondida and Western Australia iron ore (WAIO) unit cash costs decreased by 17% and 3%, respectively. Queensland coal costs increased by 8%.

“Escondida unit costs were lower as a result of continued productivity improvements and favorable inventory movements,” Mackenzie said. “If costs related to the industrial action were included, Escondida unit costs would have been $1.13/lb.”

WAIO unit costs declined due to reductions in labor and contractor costs and productivity improvements. Queensland coal unit costs were higher as sales volumes were impacted by Cyclone Debbie. During the 2017 financial year, the Escondida water supply projects were completed. A new desalination facility will ensure a steady water supply for the operation.

At the Jansen potash project, BHP reported that excavation and lining of the shafts are steadily progressing. Both shafts have been safely excavated and lined through the Blairmore aquifer. “With a later market window now anticipated, the Jansen project will not be brought to the board in the 2018 calendar year,” Mackenzie said. “In the meantime, we are considering multiple options to maximize the value of the Jansen project, including further improvements to capital efficiency, further optimization of design and diluting our interest by bringing in a partner. Board approval will be sought for the project only if it passes our strict capital allocation framework tests.”