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Strategic Report Governance at BHP Remuneration Report Directors’ Report Financial Statements Additional information Shareholder information

1.1 Chairman’s Review

‘After several years of considered
and deliberate effort, BHP is stronger,
simpler and more productive.’

Ken MacKenzie
Chairman

Dear Shareholder,
It is an honour and a privilege to be able to write this letter as the new Chairman of BHP. At the outset, I want
to acknowledge the contribution of my predecessor, Jac Nasser, who has led the Board for the past seven years.
I thank Jac for his outstanding service to the Board and the Group during his tenure. While we will miss his
strong leadership and wise counsel, he leaves a lasting legacy at BHP.
As incoming Chairman, I spent much of the past three months engaging with shareholders and other stakeholders
around the world in order to better understand their perspectives. I plan to engage with investors on a regular basis.
Since I joined the Board in September last year, I have also taken the opportunity to visit many of our locations
around the world to gain a better understanding of BHP from the front line. I have visited Western Australia Iron
Ore in the Pilbara, coal operations in Queensland, the Jansen Potash Project in Canada, Onshore and Offshore
petroleum operations in the United States and copper assets in Chile. This has been a rewarding experience
and has reinforced to me the strength and potential of BHP to create long-term value for our shareholders.
BHP’s first-class assets generate significant amounts of cash in almost all phases of the commodity cycle, and
the way we allocate that cash going forward is going to be an important determinant of how much shareholder
value is created. The Board strongly supports the capital allocation framework that your CEO, Andrew Mackenzie,
established at the beginning of 2016. It is however a framework, and since its inception, the Board and management
team have been working together to strengthen its application. This work is ongoing.
Your Board recognises the importance of cash returns to shareholders. The dividend policy provides for a minimum
50 per cent payout of Underlying attributable profit at every reporting period. For FY2017, the Board determined
a final dividend of 43 US cents per share, which is covered by free cash flow generated in the current period.
The final dividend comprises the minimum payout per share plus an additional amount of 10 US cents per share.
Strict adherence to our capital allocation framework balances value creation through capital investment, cash
returns to shareholders and balance sheet strength in a transparent and consistent manner.
The Board has continued to focus on responding to the tragedy at Samarco. A review of the non-operated
minerals joint ventures was conducted in FY2017 and we have implemented a number of actions identified as
part of that review. We have developed a global standard which defines the requirements for managing BHP’s
interest in our non-operated minerals joint ventures. These minimum requirements include a framework for
identification and management of risks to BHP from the non-operated joint ventures, which is consistent
with the risk management framework for identifying and managing risks across BHP. More information can
be found in section 1.7.
We take a structured and rigorous approach to Board succession planning, having regard to the skills, experience
and attributes required to effectively govern and manage risk within BHP, so that we have the right balance on the
Board and the Board continues to be fit-for-purpose.
During the year, John Schubert and Pat Davies retired from the Board. In addition, Malcolm Brinded and Grant
King have decided that they will not stand for election at the 2017 Annual General Meetings. I thank all of these
retiring Directors for their service to BHP and wish them the very best.
In line with our planned approach to Board succession, Terry Bowen and John Mogford were appointed to the
Board as Non-executive Directors with effect from 1 October 2017. Both have extensive executive experience
which will enable them to make significant contributions to the BHP Board.
After several years of considered and deliberate effort, BHP is stronger, simpler and more productive. BHP has
a world class management team, led by Andrew Mackenzie, and I look forward to supporting them in our pursuit
of long-term value creation for all our shareholders.
Thank you for your continued support of BHP.

Ken MacKenzie
Chairman

4 BHP Annual Report 2017