BHP Billiton S Africa : BAML SmartMine conference London 26 June 2019

BAML SmartMine conference: London, 26 June 2019
Diane Jurgens, Chief Technology Officer

Slide 1: Transforming BHP: technology unlocking value from pit to port
Good morning, I am Diane Jurgens, BHP's Chief Technology Officer.

It is a pleasure to be here with you in London, and amongst friends and colleagues.

From the energy in the conversation already this morning, I know this is going to be a fascinating day.

Slide 2: Disclaimer

Before I begin, please take note of the disclaimer relevant to this presentation.

Slide 3: Our strategy to maximise value and returns

At BHP, we seek to grow long-term shareholder value and cash returns.

Our strategy is to have the best assets in the best commodities, with the best culture and capabilities. Just one of these elements alone is not enough.

It is the combination of all three that sets us apart and delivers sustainable value and returns.

Our assets are world class, and in attractive commodities.

We also hold exploration licences and development options in some of the world's premier copper, oil and potash basins.

But to fully realise our ambitions, we must constantly work on developing and maintaining industry-leading capabilities that will take our Company's unique portfolio to the next level.

Technology and innovation are among the most critical of those capabilities.

And we must be ready to adapt quickly to take advantage of the opportunities that technology offers.

That is a big part of what led us to establish a Transformation program - which is designed to unlock the next wave of safety, productivity and value at our assets, over the near, medium and long term.

Slide 4: Unlocking value for BHP through transformation

Technology is one of the major drivers of our Transformation program.

Applied well, it will further strengthen our safety performance, make our operations more stable, predictable and efficient, and unlock resources - all critical to delivering and enhancing value and returns.

We live in a world where the pace and quantum of change continues to disrupt every aspect of the way we live.

Given the size of our portfolio and the pace of change, we have a lot of choices.

So we have a deliberate approach - taking the view that introducing improvements to the value chain in increments is the surest way to create a system with the precision and stability of a manufacturing organisation.

The BHP approach has been to quickly choose, trial and then replicate technologies - leveraging the scale of the portfolio.

And to do this selectively - investing where we see the highest value.

We are focused on disciplined, sustainable investments that can compete under our Capital Allocation Framework.

What I want to share with you today are some of our most noteworthy achievements and some insight into what we are planning for the future.

A future that I think is very exciting.

Technology has helped drive transformation across our portfolio.

I will touch on a few examples now and I will go into these in more detail later on in the presentation.

• We have established Integrated Remote Operating Centres across the majority of our bulk and base metals operations (I'm heading to Santiago next month to officially open our new Copper Integrated Operations centre there).

• Each centre monitors and directs operations across the entire supply chain, with all operators working in concert from the same control room, to solve problems faster and improve throughput.

• You may already be familiar with some of the more well-known examples of our technology program at work - the deployment of autonomous trucks at Jimblebar, the deployment of autonomous blast hole drills across the Pilbara, and Train Load Out automation have improved safety and reduced operating costs.

• Perhaps you'll be less familiar with the application of advanced imaging and machine learning to historical drill data - which gave us reason to take a closer look at Oak Dam, the early stage copper discovery in South Australia.

• In our Petroleum exploration and appraisal program the use of advanced seismic imaging is also helping to accelerate exploration success and open up future development opportunities.

Slide 5: Our vision is to be fully integrated and highly automated

My previous roles were in the Aerospace and Automotive industries where I experienced and directed the transformative power of technology.

Think for a moment about the automotive industry, and the impact of technology on the way cars are designed and manufactured.

With processes, equipment and people working in concert across a production value chain - an entire industry has been transformed.

I remember my first impression - the first manufacturing plant I visited as we had implemented automation … it was chaos.

Robots welding, sparks flying, people interwoven on the production line. I couldn't discern any order, anything guiding the activity.

However, slowly, as I stepped back… I began to see the orchestrated and interdependent movements of people and machines.

While on a different scale, this is similar to how we will transform our BHP value chain, from pit to port.

Our value chain, is in many ways more challenging than an assembly line.

It is thousands of miles long and in some of the most remote areas of the world.

However, that also means there are opportunities to unlock value at every step.

Opportunities to learn from adjacent industries including those such as aerospace and automotive, to replicate their stable and predictable operations.

Today, our technology connects and supports 13 assets, 7 seaports, and a 1,350 kilometre rail network - about the distance from London to Warsaw.

And, more importantly, our technology connects and supports the ideas, abilities and ambitions of over 60,000 of our employees and contractors globally - from Brisbane to Santiago, London to Moranbah, Perth to Houston.

That means any idea that makes us safer, more efficient or more stable can be replicated quickly and easily.

This is the foundation of our vision to be fully integrated and highly automated across the entire value chain.

You'll note that I say highly automated (not fully).

This is because we automate equipment and processes where it provides the highest value.

Let me assure you that investment in technology competes against all of the other great projects in our portfolio, and alternative uses of cash, under BHP's Capital Allocation Framework.

Let me explain more about this vision, and how we are delivering it.

Slide 6: The transformative power of Technology

At BHP, Value Chain Automation seeks to deliver a fully integrated system of automated processes, decisions and equipment.

Value Chain Automation is developing and proving technologies that redefine how we mine.

Think of it as a very long production line that starts with finding the ore body and ends with the customer - and every step is made more efficient through technology.

To do this, we have built proving grounds at two active mine sites (Eastern Ridge in Australia and Escondida in Chile) to test new innovations in geology, extraction and processes, and develop workforce capability so that our people are equipped for the rapid pace of change that lies ahead.

But as I said earlier, technology projects compete for the investment. So it's not just about painting an exciting picture of the future… we must deliver value and returns.

And we are.

I'd now like to take you through some of the progress we are making across the value-chain to illustrate how technology will transform our business, making us safer and more efficient.

Slide 7: VCA: Explore and Plan

To extract resources efficiently, and to maximise value, we need better information on the geology of the ore we are extracting… in a form that can enable better, earlier and faster decision making.

Exploration is rapidly evolving from a space where remote drilling, sampling, and core analysis programs are being augmented with aerial and seismic surveys.

It was a new approach to interpreting exploration data that led, in November last year, to the Oak Dam copper discovery, near our existing Olympic Dam operations in South Australia.

We used advanced geophysics modelling to reanalyse existing drilling data.

With improved data acquisition technology, we were able to obtain a set of much more granular data across a more targeted area.

Imagine searching for a needle in a haystack but with the help of a strong magnet.

We are currently running a second round of drilling to further define the mineralisation of the area, where we have encountered copper grade intersections as high as about 6 per cent along with gold, uranium and silver.

In oil exploration, OBN - or Ocean Bottom Nodes - are helping us navigate the technically challenging and underexplored Western Gulf of Mexico, where we see significant potential.

Immense salt structures make it very difficult to use seismic imaging to get an accurate idea of where hydrocarbons might be present below the sea's surface.

It is a bit like sitting in an airplane at 30,000 feet on a cloudy day, looking down and hoping for a clear view.

This is where Ocean Bottom Nodes come in - we put them on the sea floor to act as receivers and collect data - it's similar to doing a land survey but underwater.

We expect this to deliver us high quality seismic data that reveals any mature hydrocarbon potential.

In planning, a live, four-dimensional visualization of our assets, with TIME being the fourth dimension, is helping us to build more sophisticated models, which, when combined with real-time operational and financial data, gives us more accurate picture of the future than ever before.

Slide 8: VCA: Extract

Equipment automation is creating more efficient, standardised and safer operations:

• Autonomous blast hole drills across our Western Australia Iron Ore assets have increased drill rates by 25 per cent, and reduced monthly drill maintenance costs by over 40 per cent.

• Haulage Automation at our Jimblebar operation in the Pilbara has reduced heavy vehicle safety incidents by 80 per cent. We are currently considering opportunities to accelerate truck autonomy across our Australian sites, and Minerals Americas has a similar plan.

• Decision Automation will link autonomous processes and data from different sources together to create near instantaneous, optimised decision making. Machine learning is being applied to maintenance on trucks in iron ore and coal - to analyse component failure history.

• By automating the maintenance-related data from a variety of sources we are creating analytics better predict failures and plan maintenance further in advance, with a greater degree of accuracy.

• At Yandi, haul truck maintenance analytics increased truck availability to above 90 per cent and generated recurrent cost savings. Replicating these strategies to our trucks in energy coal in the Hunter Valley, we have also seen an increase in truck availability.

• Leveraging the data and systems, the Maintenance Centre of Excellence will replicate these early wins across our operations to reduce cost, cut unplanned downtime, improve production and ensure our equipment is safe and reliable for our people.

Slide 9: VCA: Extract

Sophisticated sensors combined with detailed analytics inform extraction decisions, using dimensions that we can measure in pixels, rather than metres

Recently, sensors were installed at our Escondida proving grounds or 'test track' where we are prototyping the use of real time data to analyse the quality and grade of ores and inform destination decisions, for example - whether to divert unprocessed ore for leaching … to concentrators … or to waste.

The key to achieving this is using data collected through the sensors and combining it with proprietary algorithms.

We then apply our knowledge of the ore body to optimise the processing methods. Once in production, we expect these to improve throughput performance.

And that's just the start.

Slide 10: VCA: Process

With access to more detailed data on extracted material, machine algorithms automate decisions to identify and divert waste, which increases plant performance and reduces processing costs.

New patented leaching technologies have increased metal recoveries by 10 to 12 per cent and shortened the processing time by 50 per cent.

At Spence in Chile we increased copper recoveries by about 10 per cent and helped offset grade decline through implementing the low-cost Spence Recovery Optimisation project.

The initiative improved heap leach kinetics which meant we could maximise utilisation of the leach pads and therefore use the full 200 thousand tonnes of tankhouse capacity.

This breakthrough also informed the heap leach trial at our Olympic Dam copper resource, which we have just completed, confirming the viability of the technology.

So why is this compelling at Olympic Dam, well it has the potential for:

• lower capital and operating costs;

• a simpler process;

• more flexibility to process a wider range of ores; and

• the ability to use saline water - reducing potable water use.

Slide 11: VCA: Logistics

Automating key components of our rail network is supporting increased capacity, more reliable dispatch and improved maintenance outcomes.

In Western Australia, material density scanning and laser precision have delivered an additional 2.4 tonnes of iron ore per car while reducing safety risks of overloading.

Our automated rail network scheduling system, which controls over 10,000 ore cars and transports about 270 million tonnes of iron ore each year, is becoming more effective through the use of powerful self-learning algorithms, ensuring trains arrive at port, on-time.

And at the end of our line, the third image from the left shows LIDAR, or Light Detection and Ranging, technologies being used to automate the loading of ships that transport our product to customers around the world.

Rather than sitting up on the ship loader at port, this operation is now supervised by an expert controller a thousands of kilometres away in our Perth operating centre.

Slide 12: Social value

While the opportunity ahead is great, we must be prepared for the inevitable change it will bring.

Our people are central to everything we do and we must have the right capabilities and skill sets to both leverage the technology and innovate further.

In Queensland we have partnered with the Resources Council, TAFE and the State Government to deliver training programs to enhance foundational digital skills.

The training will reach hundreds of mining employees.

To stay ahead, we must prepare and train our workforces to make sure they have the right skills while we streamline processes and redesign the way we work.

We are looking, listening and learning beyond our organisation and the industry.

And, we are committed to doing all we can to address this challenge.

We know that what we do today will determine how our workforce and communities are prepared for the decades ahead.

Technology and innovation will also help us create social value, which is increasingly a precondition to shareholder value.

To that end, we invest in technologies to reduce emissions, such as:

• carbon capture and storage,

• trialling of electric light vehicles at our mines, and

• reduce our reliance on fresh water from ground aquifers.

We know we have a role to play in solving some of the biggest issues of our generation and in making a contribution to society more broadly.

Slide 13: Close

I trust that, like me, you see the compelling opportunity that technology presents.

This slide shows you what our vision for the future looks like - our vision to be fully integrated and highly automated across the entire value chain.

At BHP, the integration of technology with our commitment to operational, functional and technical excellence is accelerating the transformation of our business to create more stable and predictable operations.

Transformation has the potential to unlock value worth tens of billions of dollars.

And while mining has not traditionally been at the forefront of the advancement in technology, we think the future will tell a different story.

We are standing at a pivotal moment in mining history and I truly believe technology is a huge lever we can pull to make mining:

• safer for our people,

• more sustainable for our environment,

• more economical for our customers and

• as a result deliver more value and returns for our shareholders.

Thank you.

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