BHP Billiton : IMARC 2018 Edgar Basto

[Check against delivery]

Balancing innovation and culture

Today I've been asked to present to you on a very interesting and complex topic: 'Innovation as more than technology: - it's a cultural and behavioural shift'.

At BHP, we've got a big story to tell when it comes to embracing innovation and technology, and how that's making a big difference to our productivity and competitiveness in the ever changing global mining market.

The story is not about how our industry has been adapting and evolving for many decades now, driven by step changes in both innovation and technology.

It's also not about automating trucks and remote controlled drill blasting, and how that's making our industry safer and more productive and efficient than ever.

The really important story here is about the thousands of people we employ across our Australian sites, from drillers and operators to business planners and technicians - and how their culture and behaviours are impacting on our technology investment success.

Our employees are starting to understand why technology innovation is important, not just to us as a company, but to their development and future career paths.

But it is natural for people to fear change and that's certainly happening too. The introduction of new technologies is a big change and some people are worried about what the flow on effects of those changes might be.

When I first moved to Australia I was driving around with one of those big street directories - I'm sure most people here had one stowed away in the glove box of their cars.

But I am an early adopter of technology and when GPS became available in personal navigation devices I went out and paid $1000 for a TomTom GPS for my car.

My wife said, 'What are you doing?' - that machine was never going to replace the hard copy bible of navigation.

But then just a few years later the iphone was invented. And then Google Maps allowed us to navigate our way around via our smart phones.

And now just over 10 years after that our world has changed. I can't imagine having to pull over to the side of the road and get out my street directory to find my way around Melbourne.

GPS navigation has made our world and our lives smarter, safer, more productive and more efficient. And while some people may have been sceptical of the technology 10 years ago, 99.9 per cent of us in this room couldn't live without it today.

It's all about changing perceptions and opening ourselves up to opportunities that technology and innovation can bring.

In our iron ore business, we have made some progress in shifting attitudes and many people are also well down the path of embracing innovation and technology because they understand the bright future it offers their working lives.

Our goal is quite clear - and that's also what I'm going to be talking about this morning: we need to build positive cultural and behavioural mindsets (within our Company, the community and our business partners) because this will allow us to deliver the incremental operational efficiencies and financial benefits to return to our shareholders and, in turn, to the economy.

The WAIO business

Before I share our story on innovation, technology and culture at BHP, for the benefit of those who don't know our Western Australian Iron Ore business - or WAIO as we call it, please let me explain.

WA iron ore is an integrated system of four processing hubs and five mines, connected by more than 1000 kilometres of rail infrastructure and port facilities in the Pilbara region of Western Australia.

At each mining hub - Newman, Yandi, Mining Area C and Jimblebar - ore from mines is crushed, beneficiated (where necessary) and blended to create high-grade hematite lump and fines products.

In FY2018, WAIO met guidance and achieved record production of 275 million tonnes (on a 100 per cent basis) - through strong operations at Jimblebar and Mining Area C as well as improved rail reliability.

At WAIO we directly employ thousands of people, and we place a strong emphasis on sourcing goods and services from the Western Australian and local communities in which we operate, with around 1,000 Western Australian businesses currently supplying and supporting our operations.

The newest part of our business is our South Flank development near our Mining Area C mine site. In June, the Board approved the $US3.6 billion South Flank project in the central Pilbara, Western Australia.

BHP has a strongly articulated strategy… to own and operate large, long-life, low-cost assets. Our plan is to grow the value of our business by, among other things, developing major projects that fit with the Capital Allocation Framework at opportune moments.

And an expression of this strategy is very much illustrated by South Flank… our major new project in the central Pilbara.

The project is important because it replaces production from the 80 million tonne per annum (100 per cent basis) Yandi mine which is reaching the end of its economic life.

South Flank will enhance the average quality of our Western Australia Iron Ore production and allow BHP to benefit from price premiums for higher-quality lump and fines products.

The first ore from South Flank is targeted for the 2021 calendar year, with the project expected to produce ore for more than 25 years.

It's certainly a significant project… not just for BHP… but also for Western Australia and the nation.

And as South Flank sets us up for an exciting future, it's a future that will require our organisation to continue making an investment in technology if we are to successfully participate in increasingly competitive, global markets.

Innovation and technology at BHP
So what does innovation and technology look like at BHP? What have we done so far, and where are we headed?

Over the past 50 years, mining has, by and large, focused on efficiency through increased scale and speed - bigger and faster equipment and infrastructure, and learning to operate and maintain them more effectively and safely.

And while this has created value, at BHP we are convinced that the next phase in innovation, including increased automation and integration across the value chain, will enable our operations to be safer and more productive. At Jimblebar, we have already improved safety interactions in the pit by more than 90 per cent.

Technology, innovation and automation are a big part of the future of global mining and as I said earlier, to remain competitive, we must drive, change and evolve.

Combined with artificial intelligence and advanced equipment control systems which drive smarter and faster decisions, automation is essential to unlocking asset availability and utilisation giving us greater return on our investment.

But not everyone is so positive about automating our industry or the rapid introduction of technology. Many people fear that automation will lead to massive job losses, not future career opportunities.

And herein lies the challenge - to create an industry culture and behaviour that embraces innovation and technology rather than fear and loathing - and one that feels rewarded and supported and excited at the opportunities that lie ahead.

WAIO's innovation

I believe there is no better place than WAIO to look for leading industry examples on how we are meeting the challenge of embracing technology and innovation while creating rewarding and exciting career opportunities for our people.

Over recent years we've initiated a number of highly successful technology -related initiatives including;

Autonomous drills at WAIO operations - we have one of the largest autonomous blast hole drill fleets in the world across our iron ore operation, which has driven major improvements in fleet utilisation and drill capacity and cut repair costs by up to 48 per cent. It's created safer operations, and development opportunities for planners, maintenance, technology and engineering teams.

Autonomous trucks at Jimblebar- Jimblebar is one of the safest operations in our portfolio and is reaching production records, all through the implementation of this fully autonomous fleet.

This project has created new career opportunities, re-skilled many of our people and enhanced our infield coaching to implement new maintenance routines.

While no decision has yet been made, opportunities exist to embed autonomous vehicles across our entire WA Iron ore asset portfolio, further minimising our team's exposure to hazards and making our operations safer, more efficient and more predictable.

Automated iron ore train scheduling - our new artificial intelligence system is delivering a better rail timetable, and more tonnes to port through smarter and faster decisions

Automation at Mooka Ore Car Repair Shop near Port Hedland - this has again improved safety and delivered a significant cultural and behavioural shift among employees.

Integrated Remote Operation Centres - Last but by no means least, these have helped us quickly replicate best practice in remote operations across BHP.

Each and every one of these initiatives has added significant safety and productivity benefits to BHP, and with positive cultural and behavioural changes, we've also enabled our people to develop new skills and opportunities across the business.

I'd now briefly like to share with you some other people focused changes we are working on at BHP to really unlock the value of these technological advancements.

Collaboration and creative thinking

Where roles in mining may have traditionally been fairly independent and involve repetitive tasks, in the new world of mining, behavioural skills, creativity and relationships are crucial.

Success is dependent on teams working together - sharing information, solving problems and working across departments and functions to get the best out of the equipment and systems they are operating.

Mastery and lifelong learning

We know our people will need to continually upskill and adapt as technology and processes evolve. To unlock the value of these new technologies we need to support our people to achieve mastery - the system is only as good as the people who run it.

Autonomy also brings greater requirement for cross-skill capabilities within teams. By providing opportunities for our team members to develop new skillsets, placing them at the forefront of emerging technology, we can drive a culture of learning.

Standardised Work

Through the standardised work program at BHP, we are promoting a culture of empowerment from the frontline.

It's about empowering our people to drive innovation and continuous improvement in everyday business processes. After all, it is our people on the frontline who know our operations more intimately than anyone else.

We are deploying this philosophy at each of our sites over the next five years in the pursuit of operational excellence, to make everyone safer, and, to enable greater productivity. This has had immediate success - and there's one example I can briefly share with you.

In early 2017 we standardised work involving truck radiator overhauls at our Perth Repair Centre, to reduce workshop costs and increase competiveness.

As a result of the changes we made, we achieved a massive 85 per cent reduction in recordable injuries, and reduced the duration of tasks by 50 per cent - this was a big result.

Flexible work

By now you will have heard much about how we have also embraced flexible work at BHP. You might not think of this as an innovation but in fact it has driven remarkable results in culture, behaviours and performance across our business.

These are just a very small number of ways we are driving these cultural and behavioural shifts and how they are creating new and exciting opportunities for our people, and value to our business.

But getting back to the key point of this discussion: Innovations such as robotics, new business systems or data driven decision-making won't happen… won't create real value for the organisation unless they're developed, implemented and managed by talented, engaged and passionate people.

Organisational culture

Assuring our future workforce is a key challenge for the business.

One of our goals at BHP is to create a balanced, diverse workplace… one in which the employee population is reflective of the communities where we operate.

And I should point out that when I speak about diversity, I'm talking about a context that's wider than just gender. It might be female participation in the work force, or simply being accepting or respectful of different cultures and ways of life.

Shifting WAIO's culture and behaviours

And this brings me to share my firm view that strong leadership helps establish culture and a healthy, strong work culture drives performance.

In recent months, our WAIO Asset Leadership Team has spent considerable time and effort thinking about how to further shape our culture and prepare our people and our business for the future.

We've closely assessed how other high-profile global companies have shaped their culture and performance and how they operate, either as innovators, adopters, renovators and outperformers.

And we're very clear about the result we want to achieve for WAIO - to be the employer of choice, for everyone to have pride in the company, and help deliver a safer and more productive workplace.

Ultimately, our plan seeks to encourage all employees no matter where they work - either out on our mine sites or in our Perth headquarters - to bring their full hearts and minds to work.

We want all of our people to feel empowered, trusted, connected and successful because if this happens, we will achieve more as a team. We want a highly inclusive and diverse workplace which offers real flexibility, where everyone brings a core skill or great idea to the table, and shares in both success and learnings.

As I mentioned about earlier, our recent successes at Jimblebar and Mooka have shown us that the continued introduction of technology and increased automation is making us even more reliant on having the right people and culture in our business.

And we've been very fortunate that our team members at Jimblebar and Mooka have embraced this change.

They feel safer at work, they're more satisfied because they are doing new tasks and upskilling in areas they never imagined, and many have openly stated they would never choose to go back to a non-autonomous operation.

But introducing further innovation and technology across the company does not necessarily excite everyone - and that's why we remain focused on building our culture and behaviours across all of our operations, down to each and every team member at the frontline.

I'm sure that many of us in this room have experienced the need to adapt to an evolving economic and technological landscape throughout our careers.

And for me as a leader, one of the most important tasks I have in today's rapidly evolving, techno-driven world is to ensure I create a strong, positive team culture that embraces and not fears change.

We've acknowledged we need to:
Be transparent about our plans to help people understand that technological advancements will keep us competitive;
Communicate the opportunity for upskilling and for new business; and
Look at how we can support our people through things like retraining and new career opportunities that will ensure the long-term viability of our industry.

Conclusion
In closing, and going back to my original point, what I really hope our workforce at BHP, and the wider mining and resources industry, understands - and embraces - is that new technologies and innovations of today are the drivers of opportunities tomorrow.

New technology brings new problems that need to be solved, and different skills and jobs that need to be created to solve them.

Innovation and growth feeds development and opportunity.

Through the digitisation of maps and the invention of the smart phone we now have the likes of Uber and Uber eats. Can you imagine a life without Uber Eats?

Uber as an industry now employs more than 16,000 people across the globe. That's 16,000 jobs that didn't exist 10 years ago.

We need to be open to change and we need to create a culture that embraces innovation rather than fears it.

At BHP we are building a foundation for future growth, lifting both safety and productivity, and creating new and exciting skills and career opportunities for our current employees, and future generations.

We know that people are our most important asset and will remain at the centre of everything we do.

We are developing our people with the skills our industry needs to maintain its global competitiveness into the future, and supporting them through change by building a strong, resilient, performance-driven culture.

But we also recognise that technology is driving continued growth across our industry, and it is the culture and behaviours within our organisation that will have the greatest impact on the success of our technology investments.

And our workforce, our industry, needs to be open to what the Uber Eats of Mining could look like - what opportunities it could bring, what jobs and skills it could create and what further industries it could open up.

Thank you