BHP Group (NYSE:BBL) Q4 2016 Earnings Conference Call - Final Transcript

Aug 16, 2016 • 08:00 am ET


BHP Group (NYSE:BBL) Q4 2016 Earnings Conference Call - Final Transcript


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Q & A
Rene Kleyweg

Morning. Thank you, Andrew. At Smarco, just moving out and focusing on the financial side, I appreciate the humanitarian element related to it, but away from the framework agreement, can you give us a little more visibility on the current cash burn from on a monthly basis in terms of the operating costs? How long you can continue to sell energy back to the grid? And what sort of working capital requirements would be needed to restart operations, plus any capital commitments?

And then Peter mentioned the fact that any future cash injection would be subject to the normal discipline within the Group. So, that suggests that things are coming to a head at some point over the next six months in terms of how you are thinking about this and what your potential strategic options are. Is that a reasonable timeframe?

Andrew Mackenzie

Well, that is a very complicated question. And when I prepare for these results, I kind of bone up as if I am studying for my finals, but we may not be able to give you all the details right now, Rene, otherwise we might get it wrong. But I am going to be a bit nasty here and kind of pass the ball over to Peter and see how well he can do and then if there's anything else that I can add. And then subsequent to that, we will also get Investor Relations to talk to you on the details. And we also have Vandita Pant here, our Treasurer, and she may have even more details than she has told her boss. So, on you go Peter.

Peter Beaven

Look, I'd say Rene, what I would say is that we have provided -- us and Vale provided $250 million of short-term facility financing assistance to Samarco. That is in part $134 million goes to the foundation agreement, the balance essentially goes to Samarco to support the repair of the dams and so on, as well as ongoing working capital. Now, we haven't said anything beyond sort of we are not putting timeframes on that or anything else like that, and so I am afraid I am not really going to necessarily going to be able to provide an answer to the level of detail you are looking for.

But I think that what is important here is that, that does preserve the value. This is a valuable asset. It should restart. It can restart we believe so for BHP and everybody's interests to do so. So, we should support this for this option value, if you like. Now in the event that we get ourselves to the place where we have got the community support, the licenses and so on, then of course that is Samarco itself is a -- it's a capital allocation decision -- it's an investment decision. We have an asset that is currently not started. We have to invest some money in that. Again, we are not providing guidance at this point in time as