Name: Godwin Oshioramhe EKHAYEME Module Title: Business Simulation with Professional Development Module Code: UEL-SG-7003-89315 Assessment Point: Assessment point 1 (week 6) TABLE OF CONTENTS Introduction Methods Discussion 3.1. Business description 3.2. Vision and Strategy 3.3. Value Proposition 3.4. Mission 3.5. Human Resources and Culture 3.6. Competitive Analysis Key Competitors Industry Trends Read More
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Name: Godwin Oshioramhe EKHAYEME
Module Title: Business Simulation with Professional Development
Module Code: UEL-SG-7003-89315
Assessment Point: Assessment point 1 (week 6)
TABLE OF CONTENTS
3.1. Business description
3.2. Vision and Strategy
3.3. Value Proposition
3.4. Mission
3.5. Human Resources and Culture
3.6. Competitive Analysis
3.7. Value Chain Analysis
3.8. Strategic Acquisitions
3.9. Success of Strategy Compared to Industry Conditions and Competitors
3.10. Evaluation of Strategy
3.11. Evaluation of Strategic Decisions
3.12. Performance Review
3.13. Simulation Performance Results
3.14. Artificial Intelligence in Simulation Models
3.15. Future Plans and Recommendations (2025-2030)
APPENDIX
REFERENCES
The path of the world’s largest diversified miner, BHP Group Limited, over the last five years has transformed: a shifting strategic focus, operational improvements, and changing macroeconomic conditions. The purpose of this report is to formalise with shareholders the analysis of BHP’s five-year business strategy regarding simulation activities, key performance metrics, and alignment with long-term objectives. It will also analyse how BHP has responded to changing industry dynamics, focusing on future-facing commodities and sustainability initiatives. In the period reviewed, BHP encountered various challenges and opportunities during a significant tenure for the company. BHP has continued to deliver robust operational performance, which is underpinned by strong copper and iron ore production growth and beating earnings estimates. In its latest operational review, the company posted a 4% uplift in copper production in Q1 FY25 based on better grades and recoveries from its Escondida mine in Chile. Meanwhile, iron ore production grew 3% year-on-year, supported by the successful commissioning of the Port Debottlenecking Project (PDP1) and the ramp-up of the South Flank mine. Alongside operational successes, BHP has made moves that position the company for long-term growth. The company has reaffirmed its focus on future-facing commodities such as potash, nickel, and copper, which are pivotal to the global energy transition and digital infrastructure buildout. This strategic transition is evident with BHP’s continued plans to spin off its iron ore and coal divisions — one of the most significant restructuring efforts in its 139-year history. An essential focus of this period has also been BHP’s financial performance. After a rough year (2024) when its price dropped by 21,54 %, lately the company has proved recovery, and in January, it announced a dividend yield of 5,56 % for the trailing period in 2025. As reported by The Motley Fool, the company’s half-year earnings release on 18 February 2025 is anticipated to yield further information regarding BHP’s dividend prospects. Additionally, BHP has submitted its second Climate Transition Action Plan (CTAP), demonstrating the company’s continued commitment to long-term greenhouse gas emissions targets and its progress toward minimising its environmental footprint. This is part of the broader company strategy to become a “greener” miner by focusing on commodities needed for a low-carbon future. Addressing these developments, this five-year strategic review will explore BHP’s business simulation activities and strategic decisions while offering shareholders insight into future plans and approaches. The report delves into key milestones, examines market trends, and assesses operational performance to provide insights into BHP’s journey and readiness to leverage upcoming opportunities in the mining industry.
The research method employed involved using the ProQuest library, especially the business journals, and the Sage and Google Scholar search engines, using the following keywords: BHP business description, BHP strategy and vision, BHP five-year performance review, and BHP future plans and recommendations. I also used the BHP annual report, which is accessible from the company’s website, www.bhp.com.
3.1. BUSINESS DESCRIPTION
BHP Group Ltd, headquartered in Australia, is an international mining, metals, and petroleum company. For the fiscal year 2024, the company was executed in its three integral business segments, which house its primary revenue-generating segments: iron ore, copper and coal. These correspond to the commodities BHP extracts from the ground and sells worldwide—inputs that underpin everything from construction to energy to manufacturing. All segments are essential to the company’s financial performance and strategic direction.
BHP’s biggest revenue-producing division is iron ore, which reflects the group’s leadership in the global production of the steelmaking ingredient. Iron ore is the key ingredient used in the manufacturing of steel, which in turn is used in the construction, automobile, and heavy machinery industries. Most of BHP’s iron ore mining operations are in Western Australia, home to some of the richest iron ore deposits in the world. The iron ore segment generated 27,952 million US dollars in the fiscal year 2024 and was the main factor for the Group’s revenue. Consequently, iron ore witnessed skyrocketing demand in the construction sector as developing economies like India and China were booming with industrial production projects. That means BHP’s iron ore business should be set for a few years of strong returns.
The copper division is a core component of BHP’s portfolio and is one of the most significant contributors to the group’s revenue. Copper is a versatile metal used in large quantities for commercial purposes, such as electrical wires, renewable energy systems, and structural components. This division also produces uranium, gold, zinc, molybdenum, and silver as by-products to copper. For the fiscal year 2024, the copper segment alone generated 18,566 million US dollars in revenue. BHP is one of the largest copper mine producers in South America, Australia, and North America. With the world increasingly gravitating towards greener energy solutions and infrastructure development, copper demand is also likely to rise, and this segment will continue to be an essential part of BHP’s success.
Coal is another central area of BHP’s business: the mining and marketing of steelmaking coal and energy coal. Steelmaking coal, also known as metallurgical coal, is essential for steel production. Energy coal is, on the other hand, primarily used for power generation. The company’s coal operations are tailored to fulfil the needs of the global steel industry and energy markets. The coal segment provided revenue of 7,666 million US dollars in FY2024. The company’s coal mining operations are also located mainly in Australia, home to one of the largest coal mines in BHP’s portfolio. Steelmaking coal is necessary for building infrastructure and industrial equipment, meaning BHP’s coal segment will still play an ongoing role in driving the global economy.
Despite the iron ore, copper and coal segments accounting for most of BHP’s revenue generation, the Group still has multiple items unrelated to its primary business. This encompasses unallocated operations, with the addition of Potash and Western Australia Nickel, encompassing the West Musgrave project, acquired through the purchase of OZ Minerals Ltd in May 2023. These unallocated items yielded 1,474 million US dollars of the aggregated revenue of the company in the fiscal year 2024. These activities involve, among other things, the sale of freight and fuel to third parties and various other operations. Although these aggregated items do not comprise an official segment, they indicate the extent of BHP’s high-level diversification strategy to capitalise on new market opportunities that support future technologies such as electric vehicles and agricultural advancements.
BHP has a vision of generating long-term value by discovering, extracting, and selling natural resources. BHP focuses on sustainability and operational excellence and is now positioned as the world’s lowest-cost major iron ore producer (Australian Resources & Investment, 2025).
Its strategy revolves around:
(i) Operational Excellence: BHP aims to enhance efficiency and quality within its Western Australian Iron Ore (WAIO) operations.
(ii)Environmental Conservation: The company aims to reduce its environmental impact and promote sustainability initiatives (PitchGrade, 2024).
(iii)Best-in-class cost position: BHP will continue to be the lowest-cost producer in iron ore with high-quality products.
(iv)Market Responsiveness: The company tracks market conditions, especially demand in major markets such as China, to adapt its production and strategy (Australian Resources & Investment, 2025).
The company’s value proposition concerns safety, efficiency, innovation, and sustainability. BHP provides higher returns, lower operational risk, and ESG-driven best practices and new technology.
BHP is committed to sustainably developing and processing natural resources while creating long-term shareholder value and reducing its environmental footprint. The company aims to deliver sustained positive economic impact through a cycle of improvement, innovation, and investment.
BHP invests in people through training and leadership development to create a high-performance culture, drive innovation and operations efficiency by advocating diversity, equity, and inclusion, boost employee engagement and retention with competitive pay and benefits, and train for workplace safety.
BHP’s main competitors include Rio Tinto, Vale S.A., Glencore, and Anglo American. These companies operate in similar markets and compete on cost, quality, and sustainability. BHP’s focus on maintaining the lowest cost and delivering high-grade products gives it a competitive edge (PitchGrade, 2024).
| Company Name | Company Type | Exchange Ticker Symbol | Country | Revenue LCU(mn)
(FY24) |
| Vale SA
|
Public | BVMF: VALE3 | Brazil | 208,066 |
| BHP Group Ltd | Public | XASX: BHP | Australia
|
56,027 |
| Rio Tinto Ltd | Public | XASX: RIO | United Kingdom | 54,041 |
| Anglo American Plc | Public | XLON: AAL | United Kingdom | 30,652 |
| Antofagasta Plc | Public | XLON: ANTO | United Kingdom | 6,613 |
| Aluminium Corp of China Ltd | Public | XSHG:601600 | China | 29,460 |
| Fortescue Metal Group | Public | XASX: FMG | Australia | 18,220 |
| PPS Industries Inc | Public | NYSE: PPG | United States | 18,246 |
Table 1 – BHP and its competitors
The global mining industry is influenced by factors such as:
(i)Demand from China: China’s infrastructure and construction activities drive the demand for iron ore.
(ii)Sustainability: Increasing environmental regulations and stakeholder expectations require mining companies to adopt sustainable practices.
(iii)Technological Advancements: Automation and digitalisation are transforming mining operations, enhancing efficiency and safety.
(i)Threat of new entrants – Significant capital investment and regulatory obstacles mean high entry barriers in this industry. BHP enjoys a competitive edge due to its established infrastructure and cost leadership.
(ii)Bargaining Power of Suppliers—BHP’s global presence reduces supplier dependence due to economies of scale, allowing input cost stability.
(iii)Buyers’ Bargaining Power – Despite having a major player like China as a buyer with considerable power, BHP’s high quality and cost efficiency ensure less buyer power.
(iv)Threat of Substitutes – Few substitutes for iron ore exist, so there will be ongoing demand for BHP’s products.
(v)Industry Rivalry – BHP competes with Vale S.A., Rio Tinto and others. However, it is favourably positioned due to its diversified portfolio and operational efficiency (PitchGrade, 2024).
(i)Political – China removed its official ban on Australian coal imports; the global supply chain disruption due to the Ukraine-Russia war, and Chile intends to nationalise its leviathan lithium industry.
(ii)Economic—Interest rate risks on borrowings and investment; inflation is causing commodity prices to surge, and future-facing metals demand is booming.
(iii)Social – Increase in population; urbanisation; new demand centres; and greater focus on diversity, equity, and inclusion within the mining sector.
(iv)Technological –Innovation is a competitive advantage, and the Internet of Things (IoT) is leading innovation in mining.
(v)Legal–(a)Regulatory uncertainties and new work and health and safety regulations in Western Australia
(vi)Environmental – (a)conservation and biodiversity management; industry sustainability collaboration, and societal requisition for decarbonisation
3.7 Value Chain Analysis
A value chain refers to the order of business functions where processes are sequenced to produce products or services with added value. It comprises primary activities (Inbound logistics, operations, outbound logistics, marketing and sales, and service) and support activities (firm infrastructure, human resource management, technology development, and procurement). The margin is the total value of organisational products/services minus the total primary and support activities cost. The optimisation and efficiencies gained by BHP through these activities help reduce cost and deliver value to its customers and stakeholders, resulting in a competitive advantage.
Here is a highlight of BHP’s value chain:
(i) Exploration and Resource Acquisition
(ii)Development and Mine operations
(iii)Processing and Refining
(iv)Logistics and Distribution
(v)Sales, Marketing and Stakeholders’ Engagement
(vi)Innovation and Technology Integration
(vii)Environmental Stewardship and Sustainability
Overall, BHP’s value chain activities focus on innovation, sustainability, and stakeholder
engagement. These initiatives are made possible through integrating emerging
technologies and a network of strategic alliances, which will ultimately translate into long-term value for its shareholders, customers, and communities by helping to tackle the challenges of a rapidly shifting global landscape.
(i)May 2, 2023 – BHP acquired OZ Minerals for US$6.5 billion. The objective was to boost its energy assets and bolster its presence in the raw materials essential for electric vehicles and clean energy production. This enhanced BHP’s standing as a premier copper producer, a crucial resource forecast to surge in demand as the world turns to cleaner energy sources and moves away from fossil fuels. Another offering presented by the deal was BHP’s access to OZ Minerals’ West Musgrave greenfield project in Western Australia.
(ii)October 6, 2020 – BHP acquired Hess’s stake in the Shenzi oil field for US$505 million. With this deal, BHP increased its ownership in the oil platform to 72%, with Repsol SA of Spain holding the remaining share. This resulted in 11000 additional barrels of oil equivalent per day to its production capacity, yielding a growth of high-margin barrels in its portfolio.
(i)BHP’s strategic acquisition of OZ Minerals in May 2023 followed Rio Tinto’s acquisition of Canada’s Turquoise Hill Resources. This was ostensibly because the copper market size is projected to surge to more than 50%, reaching US$446.7 billion by 2030, up from US$291 billion in the previous year (Acumen Research and Consulting,2023).
(ii) BHP’s production capacity was increased by 11,000 barrels of oil equivalent per day.
Key Achievements include:
(a)Established a market presence with strategic partnerships and initial investments.
(b)Developed cost leadership and differentiation strategies.
(c)Increased operational efficiency through technology integration.
Key Achievements include:
(a)Increased market share through acquisitions and supply chain optimisation.
(b)Strengthened brand reputation with sustainable mining initiatives.
(c)Enhanced internet capabilities for digital transformation.
Key Achievements include:
(a) AI-driven predictive maintenance was introduced to reduce operational downtime.
(b)Expanded into emerging markets with favourable mining regulations.
(c)Strengthened environmental compliance to meet international standards.
Key Achievements include:
(a) Cost leadership was achieved through process automation.
(b)Increased customer retention through value-added services.
(c)Improved digital infrastructure for supply chain resilience.
Key Achievements include:
(a)Increased profitability through diversified revenue streams.
(b)Strengthened investor confidence through consistent dividend payouts.
(c)Reinforced ESG commitments for long-term sustainability.
3.11. Evaluation of Strategic Decisions
BHP’s South Flank mine, within the Central Pilbara Hub, has represented the cornerstone of the company’s iron ore strategy. The mine has also increased to full production since BHP’s investment decision in 2017 and added to record volumes in the first half (H1) of the 2024–25 financial year (FY25). South Flank achieved a 9% improvement in productive movement (Australian Resources & Investment, 2025). Record volumes were achieved in H1 FY25 from the Central Pilbara Hub comprising South Flank and Mining Area C. Intriguingly, this performance reflects BHP’s consistent ability to optimise its operations and capture value from its ample resource base.
South Flank improves BHP’s suite of products with a more significant lump fraction and higher average iron ore grade. This has enabled the company to continue achieving premium prices whilst retaining its cost-leadership position” (Australian Resources & Investment, 2025).
BHP’s bottom line has been buoyed by a continuing demand for the key steel-making ingredient from China, the world’s largest commodity buyer.
Shannon (1975) has defined simulation as “the process of designing a model of a real system and conducting experiments with this model for the purpose, either of understanding the behaviour of the system or of evaluating various strategies (within the limits imposed by a criterion or set of criteria) for the operation of the system”. This report delves into the performance results of BHP simulations, exploring their applications, benefits, and the transformative impact they have on industrial operations. Below is an overview of BHP’s simulation applications in the mining industry.
BHP has leveraged its simulation technologies to change how it does mine planning and design work, which is about optimising the extraction of its assets and operational efficiency. BHP uses simulation tools to model various mine layouts and test their performance based on the variability in ore grade, equipment availability, and environmental constraints. By simulating these scenarios, BHP can pinpoint the most cost-effective and sustainable mine designs.
Simulation has been vital in optimising equipment utilisation and maintenance scheduling across BHP’s operations. BHP can monitor equipment performance and predict when maintenance will be needed by combining simulation models with real-time data from sensors and IoT devices. This predictive maintenance strategy minimises downtime caused by unforeseen technical failures while increasing the longevity of vital engine components.
Safety training and risk mitigation are among the most significant use cases for simulation at BHP. It uses Vortex’s virtual environments to simulate hazardous scenarios, helping workers practice responding without exposing them to real-life dangers. These scenarios include equipment failures, mine collapses and chemical spills.
In the case of BHP, the company utilises simulation to maximise output around production scheduling and logistics to support the best use of resources throughout its systems. BHP can pinpoint bottlenecks, make changes, and improve throughput by simulating production workflows. This is essential in the indeterminate ecosystem of a mine site with multiple interdependent processes.
BHP uses simulation tools to evaluate the environmental impact of its mining operations and determine sustainability plans. Data projections on local ecosystems may allow BHP to examine the potential impact of mining operations on local systems through modelling and, therefore, potential mitigation strategies. These simulations consider water use, emissions, and land disturbance factors.
BHP relies on simulation to solve workforce issues ranging from training to scheduling to remote operations. Using simulations based on real-time demand and workforce requirements for different operational scenarios, BHP can efficiently adjust staffing levels according to production targets. These simulations also assist in planning the transition to more automated operations by identifying roles that technology can replace or augment.
BHP uses simulation to conduct dynamic scenario analysis, allowing the organisation to assess the possible impacts of strategic decisions. These simulations consider market demand, commodity prices, and regulatory changes. Analysing these scenarios helps BHP make rational choices consistent with its long-term goals.
BHP is paving the way for the mining industry to adapt to the digital age by exploring simulation technologies in diverse applications. These initiatives help improve the company’s operational efficiency, sustainability, and innovation.
BHP has started using artificial intelligence (AI) tools to improve decision-making and operational efficiencies in its simulation models. AI algorithms can mine massive data from simulations, yielding insights never before possible. AI-based simulations, for instance, optimise ore extraction processes for maximum yield with minimal waste.
At the Jimblebar mine, simulations leverage AI to forecast equipment performance and maintenance requirements to increase the reliability of operations. Simulations of mineral deposits aid in exploring new deposits by assessing geological data and save time and costs by streamlining the search process. Using AI in simulation models is a significant step forward in BHP’s digital transformation journey (source).
BHP plans to increase WAIO production to 305 million tonnes per annum (Mtpa) in the medium term, potentially reaching 330 Mtpa if market conditions warrant. The company is conducting studies on optimal mine and infrastructure configurations and ore beneficiation to support this growth (Australian Resources & Investment, 2025).
BHP should continue investing in sustainable practices, such as reducing carbon emissions and enhancing resource efficiency. These initiatives align with global sustainability goals and strengthen the company’s reputation.
While iron ore remains a core focus, BHP should explore opportunities in other commodities like copper, nickel, and potash. Diversification reduces dependency on a single market and enhances resilience to market fluctuations (PitchGrade, 2024).
BHP should leverage automation, artificial intelligence, and data analytics advancements to optimise operations and improve safety. These technologies can enhance productivity and reduce costs.
Collaborating with technology providers, research institutions, and industry peers can accelerate innovation and address common challenges. Partnerships also enable knowledge sharing and resource pooling.
BHP’s strategic discussions about spinning off its iron ore and coal businesses reflect the broader industry’s transition to future-facing commodities, like copper and potash. The newly separate spin-off unit enables BHP to more effectively target its capital spend on new growth projects, such as the Escondida copper mine in Chile and the Jansen potash project in Canada. These projects remain key to BHP’s long-term growth plans. If BHP were to exit from iron ore and coal generation, which currently account for about 60% of the company’s profit, it would lower its carbon footprint and align its portfolio with investor expectations for sustainable business practices (Mining Feeds). It would be a substantial financial benefit for BHP and its shareholders if these iron ore and coal assets were spun off. According to analysts, provided the separation will free up billions in previously trapped franking credits, it can present significant tax benefits to Australian investors through the dividend imputation system (Discovery Alert). Such financial engineering could also bolster BHP’s valuation by pivoting its portfolio toward high-growth commodities, which generally command higher valuation multiples.
BHP’s five-year strategy review underscores the company’s strategic pivot toward portfolio diversification and its focus on future-facing commodities like copper and potash. This approach aligns with global megatrends such as electrification, urbanisation, and the clean energy transition, positioning BHP for long-term growth while mitigating risks associated with volatile commodity markets. Key achievements include a 10% increase in copper production in the first half of 2025, supported by advancements in projects like Escondida, which achieved a 54% EBITDA margin. Similarly, the Jansen potash project in Canada highlights BHP’s commitment to sustainable agriculture solutions, further solidifying its role in emerging markets (MiningFeeds).
Financially, BHP demonstrated resilience with an underlying EBITDA of $12.4 billion and a robust margin of 51% in the first half of 2025, despite external challenges such as fluctuating commodity prices and geopolitical uncertainties. The company’s disciplined capital allocation and cost management
BHP’s operational excellence has been reinforced by its strategies, including a 4% reduction in unit costs across significant assets. Additionally, BHP’s dividend policy, with a 50% payout ratio, reflects its commitment to delivering stable shareholder returns, even amidst market volatility (Yahoo Finance).
Looking ahead, BHP’s potential spin-off of its iron ore and coal divisions represents a transformative step in aligning its portfolio with the global energy transition. This move would enable the company to concentrate resources on high-growth commodities like copper and potash while advancing its environmental, social, and governance (ESG) goals, including a 30% reduction in operational emissions by 2030 (Discovery Alert). However, the success of this strategy will depend on effective execution, clear communication with stakeholders, and addressing challenges such as Scope 3 emissions and geopolitical risks. By leveraging its operational excellence, sustainability initiatives, and strategic investments, BHP is well-positioned to navigate the complexities of the energy transition and deliver long-term value to shareholders.
APPENDIX
Definitions
SWOT Analysis
The acronym SWOT stands for Strengths, Weaknesses, Opportunities, and Threats. The primary objective of a SWOT analysis is to help organisations develop a full awareness of all the factors involved in making a business decision. A SWOT analysis is a framework used to evaluate a company’s competitive position and to develop strategic planning. It assesses internal and external factors and current and future potential to provide a realistic, fact-based, data-driven look at the strengths and weaknesses of an organisation, initiatives, or within its industry.
PESTLE Analysis
The acronym PESTLE stands for Political, Economic, Social, Technological, Environmental and Legal. It helps organisations examine external factors that could influence their opportunities and threats.
Value Chain Analysis
Identifies all the activities involved in creating a product or performing a service, from start to finish. This includes primary activities such as design, production, marketing, and distribution and support activities such as finance, planning, IT, and legal.
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BHP Group Ltd – Company Profile and SWOT Analysis 2023, TIP Knowledge Services LLC, New York.
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MiningFeeds. https://www.miigfeeeds.com
Ogrean, C. & Herciu, M. 2020, “Business Models Addressing Sustainability Challenges—Towards a New Research Agenda”, Sustainability, vol. 12, no. 9, pp. 3534.
PitchGrade. (2024, May 24). BHP: Business Model, SWOT Analysis, and Competitors 2024. PitchGrade. https://pitchgrade.com/companies/bhp
Tigkiropoulos, K., Kyratsis, P. & Dinopoulou, V. 2009, “BUSINESS PROCESS REENGINEERING THROUGH BUSINESS PROCESS SIMULATION: A CASE STUDY”, The Cyprus Journal of Sciences, vol. 7, pp. 73-91.
Yahoo Finance. https://finance.yahoo.com
SG 7003 Assessment Point 1 Week 6
Evan John