Newman Safely growing production while lowering costs Jimmy Wilson President Iron Ore 6 October 2014
Key themes Iron Ore will remain a key pillar of a simplified BHP Billiton Growth in low-cost iron ore supply will continue to outpace demand We have the strongest resource position in the Pilbara We value safe and sustainable…
A simpler and more productive organisation BHP Billiton core portfolio1 Under review Operated Non-operated Minerals Western Australia Olympic Dam Escondida Pampa Norte Samarco Antamina Nickel West Iron Ore Queensland Coal2…
Iron Ore a key pillar of BHP Billiton Our Iron Ore business, comprising Western A major contributor to production Australia Iron Ore (WAIO) and Samarco, has (% of BHP Billiton production1) delivered exceptional returns over the last…
WAIO our flagship Iron Ore asset WAIO generated US53 billion of Underlying A leading low cost supplier of iron ore EBIT over the last five years at an average (CIF China equivalent basis, US/t, nominal) Underlying EBIT margin1 of…
Samarco a world class pellet operation QF (Iron Quadrangle) Illustrative. Not to scale. Railway 50:50 joint venture with Vale Brazil A long-life, high-margin operation located in Brazil Tubaro Vitria Its high-quality pellets add…
Growth in low-cost iron ore supply will continue to outpace demand Iron ore is abundant in the Earths crust Additional seaborne supply will outweigh demand (2013-2016, Mt, dry, 62% Fe) The availability of capital is the primary 400…
We have the strongest resource position in the Pilbara Our Pilbara Mineral Resource has tripled1 in size over the last seven years Port Hedland The scale and quality of our ore bodies and Finucane Island Nelson Point their…
Our plan will maximise shareholder value Create options for the future Deliver benchmark projects Relentless pursuit of the basics Relentless pursuit of the basics Deliver benchmark projects Create options for the future…
An experienced management team Michiel Hovers Brett Swayn Andrew Carey Randal Barker Julius Matthys Ricardo Escobar Vice President Vice President HSE Vice President Vice President Vice President Vice President Marketing Human…
Safe and sustainable operations above all else Total Recordable Injury Frequency (TRIF) (WAIO, number of recordable injuries per million hours worked) 25 20 15 10 5 0 FY05 FY06 FY07 FY08 FY09 FY10 FY11 FY12…
Our integrated supply chain Mines Rail Port Pits Ore handling Yards Train load-outs Rail Car dumpers Stockyards Shiploaders & plants berths Current system constraint Moving to port Key productivity levers at mines: Key…
Targeting FOB unit cash costs of less than US20 per tonne As production grows we will maintain a A significant reduction in WAIO unit costs1 relentless focus on costs (US/t) 30 strong early momentum as we reduced unit cash costs1 by…
Technology is a key productivity enabler Our technology agenda underpins the path to 290 Mtpa1 and beyond disciplined and value-based approach to technology driven by the business strategy Key technology enablers our fully…
A proven track record of project delivery Over the last decade we invested Outstanding project delivery capability2 US25 billion in the Pilbara (production1, Mtpa) Jimblebar commissioned 250 ahead of schedule As a result we have…
We plan to grow WAIO production by 65 Mtpa at a capital intensity of US30 per annual tonne Delivering value from our installed infrastructure1 (Mtpa, 100% basis) Debottleneck Fully utilise inner harbour 1 2 capacity inner…
Step 1 to 290 Mtpa raising the capacity of our mines without fixed plant investment WAIO production is expected to increase by Re-rating our hub capacity1 20 Mt to 245 Mt1 in FY15 (FY15 baseline, Mtpa) 30 Beyond FY15 our relentless…
Step 2 to 290 Mtpa investing in IHD1 and Jimblebar Phase 2 The two key components to the second step of growth to 290 Mtpa1 have a low capital cost and offer attractive investment returns Inner Harbour Debottlenecking 1 will…
Key messages Iron Ore will remain a key pillar of a simplified BHP Billiton Growth in low-cost iron ore supply will continue to outpace demand We have the strongest resource position in the Pilbara We value safe and sustainable…
Mainline rail Iron ore market outlook Michiel Hovers Vice President Marketing Iron Ore 6 October 2014
Key themes Chinas steel production growth remains robust despite a rebalancing of the economy The construction and machinery sectors will underpin medium-term growth in Chinese steel demand Increasing scrap availability in China…
The rebalancing of Chinas economy is underway Chinas GDP grew by 7.5% in Q2 CY14 Transitioning to consumption-led growth (contribution to Chinese GDP growth, %) the government is committed to a growth 16 rate above 7.0% in the near…
Chinas steel production growth has moderated Growth in net exports has underpinned Production growth increasingly reliant on exports (Chinese crude steel production, Mt) momentum in Chinese steel production in CY14 net steel exports…
Chinas steel stock per capita is expected to double Despite an expected moderation in the rate Substantial growth in Chinese steel stock (finished steel per capita1, t) of Chinese steel production growth, the absolute increase in…
Chinas steel demand is led by the construction and machinery sectors The construction sector accounts for 40% of Machinery-led growth in Chinese steel demand (%) current Chinese steel consumption 100 continued urbanisation will…
Higher steel intensity of construction and increased mechanisation will support demand 250 million people in to modern, taller buildings with larger basements (floor space to land area ratio1 in Chinese cities) (basement to floor space…
An increase in scrap availability in China will impact long-term demand for pig iron Chinas scrap usage ratio of 15% is the Chinas scrap availability to increase significantly1 (%) lowest among key steel-making countries and reflects…
Emerging Asia has significant growth potential Emerging Asian countries are currently in the Steel intensity per capita (crude steel/capital, kg) initial development phase, with significant potential for further growth in steel…
The long-term outlook for global steel production remains robust Global crude steel production to grow at a Global crude steel production by region (Mt) CAGR between 2.5% and 3.0% to CY30 2,500 Global crude steel production to…
Growth in seaborne iron ore supply will outweigh growth in demand in 2014 Chinas iron ore demand from pig iron Growth in seaborne supply will exceed demand growth (annualised, Mt, wet, natural grade) production remains at record highs…
High-cost iron ore supply is price elastic Private Chinese mines have responded to a Chinese private mines are price sensitive1 (operating rate, %) sharp reduction in prices despite a 10% reduction in local taxes and fees in some…
The iron ore cost curve will flatten over time Global contestable iron ore demand growth is Growth in low-cost supply will outpace demand (62% Fe, Mtpa, dry) expected to moderate Supply growth demand 9% CAGR between 2000 and 2010…
A value-adding, marketing model Commercial Maximise price realisation Front office execution Customer-specific product placement Technical Value-in-use Optimising product placement based on customer needs Marketing maximisation…
Fleet optimisation has increased port throughput Our freight scheduling has been enhanced to Greater productivity at Port Hedland (% of total vessels) increase throughput at Port Hedland 100 we have optimised the CFR:FOB split to…
The quality of our ore is a competitive advantage China is following the global trend towards China is modernising its blast furnace capacity (%) larger and more efficient blast furnaces 100 economies of scale and increasing…
Adding another long-life source to our 62% fines product suite We deliver low variability products into the High-quality suite of fines and lump products (iron content, %) 62% Fe and 58% Fe high-grade quality segments that form the…
Not all Fe units are created equal We produce high-quality value-in-use ores Metal Bulletin 58% Fe high-grade quality premium (US/dmtu) The value of our resources is elevated by low 0.16 impurity levels and the production of lump…
BHP Billiton continues to lead market innovation All of BHP Billitons contracted iron ore Our contracts are achieving the price of the day (contract quotation periods, %) production is sold on a floating price basis 100 our…
Physical transaction platforms are well accepted Physical transaction platforms are well Spot transactions via globalORE accepted by the market and provide an and China Iron Ore Spot Trading Platform1 (kt) efficient spot trading…
Key themes Chinas steel production growth remains robust despite a rebalancing of the economy The construction and machinery sectors will underpin medium-term growth in Chinese steel demand Increasing scrap availability in China…
Integrated Remote Operations Centre, Perth Pyrenees Western Australia Integrated Remote Operations Centre, Perth Western Australia Iron Ore financial performance Margaret Beck Vice President Finance 6 October 2014
WAIO has delivered exceptional returns Western Australia Iron Ore has delivered WAIO a key pillar exceptional returns over the last five years (Underlying EBIT, US billion) (%) 40 80 20% of total BHP Billiton production1 average…
Successfully managing the factors we control WAIO achieved a fourteenth consecutive annual production record of 225 Mt1 and exported 223 Mt1 of high-quality product Volume efficiencies reflect an increase in the utilisation of…
Taking a hard line on costs Our relentless focus on productivity delivered Breakdown of WAIO costs in FY141 a 12% reduction in unit cash costs1 in H2 12% FY14 to US25.89/t Labour 35% We have plans in place that will enable us to…
Our plans are built from the bottom up We are systematically targeting cost savings The pathway to unit cash costs below US20/t1 across the supply chain (split of cost reduction, %) 100 equipment productivity is reducing demand for…
Lower sustaining capital expenditure is a function of our superior resource base Our depreciation rate has increased with WAIO depreciation the completion of major projects and the (US billion) (US/t) growth of our business 2.0 12…
A meaningful contribution to the economy and our communities We contribute to the communities in which we operate by providing skilled employment opportunities, wages, taxes, royalties and community development programs For FY14 we…
Jimblebar Rail mainline Nelson Point Relentless pursuit of the basics Eduard Haegel Vice President Production Mines Rag Udd Vice President Production Logistics & Infrastructure 6 October 2014
Key themes We operate a world-class fully integrated supply chain We safely deliver high-quality product while pursuing the lowest possible unit costs Our move to owner-operator at all mines is complete We have standardised the…
Mine operations overview Our world-class resource supports four large hubs averaging over 60 Mtpa with capacity to Port Hedland grow Finucane Island Nelson Point Introduction of a single lump product has Yarrie unlocked greater…
Jimblebar hub First ore in September 2013 700 employees Four mining pits feed two primary crushers linked to the ore handling plant (OHP) by overland conveyor Jimblebar is running an autonomous haulage project Jimblebar coarse…
Mining Area C hub First ore in 2003 1,050 employees Eight mining pits feed into two fixed OHPs and a relocatable crusher High-grade Marra Mamba and Brockman ore Infrastructure summary Mining Area C mining pit two OHPs one…
Yandi hub First ore in 1991 850 employees Eight mining pits feed five primary crushers Yandi is trialing an autonomous drilling program Largest mining hub in the Pilbara1 Channel iron deposit Yandi stockyards Infrastructure…
Newman hub First ore in 1969 1,200 employees Six mining pits feed into the Newman hub Primary crushed ore from Orebodies 18 and Include picture 24 delivered to Newman hub utilising shuttle trains and a car dumper facility…
Rail infrastructure Mainline over 1,300 km of track which connects all mining hub train load-outs to the Port Port Hedland Hedland inner harbour dual tracked between Yandi junction and Yarrie the port Mooka staging facility was…
Port infrastructure Five car dumpers, two with the ability to feed Port Hedland through an underground tunnel from Nelson Point to Finucane Island optimised throughput potential of 5560 Mtpa per dumper Eight shiploaders (12,500…
We value safe and sustainable operations above all else Field leadership activities (Mine and Logistics & Infrastructure, observations) 20,000 15,000 11 10,000 5,000 0 Jun 13 Jul 13 Aug 13 Sep 13 Oct 13 Nov 13 Dec 13 Jan 14 Feb 14…
We operate a fully integrated supply chain from mine to rail to port Integrated Remote Operations Centre Synchron- Flow Balance isation Focus at Mines Focus at Rail Focus at Port Enable SL1 utilisation Target the Enable SL1…
Transition to owner-operator has unlocked under-utilised mine capacity WAIO started the move to owner-operator in Ore For Rail (OFR) from WAIO operations1 September 2011 with the acquisition of HWE (Mtpa) Mining subsidiaries 300 HWE…
Relentless focus on availability, utilisation and rate has raised OHP and TLO performance Availability of mine reclaimers and train WAIO OHP processing rate1 load-outs has increased, improving supply (hourly production rate3, tonnes)…
We have standardised the key components of our mining operations We have standardised systems, processes Standardisation of excavators and equipment across our mining operations (%) simplified organisational design 9400 uniform…
Standardisation has facilitated a step change in performance of mining operations The standardisation of our mining equipment WAIO 996 production performance and management systems provides (annualised tonnes2) consistent and…
Relentless pursuit of the basics has delivered a significant reduction in mining unit costs Improving safety performance, increasing A substantial reduction in mining unit costs volumes and a focus on costs are delivering (3 month…
Productivity is unlocking significant capacity We can increase mine output to 275 Mtpa1 Tier 1 portfolio provides optionality1 (Mtpa) with no additional fixed plant investment 300 No fixed Low Jimblebar Phase 1 will now achieve 45…
Rail will never be the bottleneck Existing double track Never be the bottleneck Optimise & automate Productivity improvements Above rail investment Port Hedland Fleet and maintenance Communications based standardisation signalling…
Focus on availability, utilisation and rate has raised rail performance Availability of rail has increased Train departures per day are increasing (index, June 2013 = 100) completion of track ballast remediation 130 project has…
Longer, heavier trains will underpin an increase in railing capacity to 290 Mtpa and beyond Modest above rail investment is required to lift overall rail capacity to 290 Mtpa1 A combination of standardisation, longer trains and…
Optimising the flow of ore through the port Inflow Inter-port ore movements Outflow Trains arrive at the right time, with the right product and at the right weight Only one Direct To Ship (DTS) vessel sailing per terminal per…
Focus on availability, utilisation and rate has raised port capability Availability of car dumpers and shiploaders Total car dumper utilisation has increased following changes to our (index, June 2013 = 100) maintenance strategy 130…
Replacement of Shiploaders 1 and 2 at Nelson Point further increases port capacity We are replacing two shiploaders at Old Shiploader 1 Nelson Point at a cost of US300 million1 loading rates increase by 25% to 12,500 tph improves…
IHD1 will lift inner harbour capacity from 270 Mtpa to 290 Mtpa Upgrades to 12 conveyor route system West Yard SL8 components including drives and belts CD4 Replacement of Bucket Wheel Reclaimer 6 STK 9 BWR 7 SL7 STK 10 BWR 10…
Key themes We operate a world-class fully integrated supply chain We safely deliver high-quality product while pursuing the lowest possible unit costs Our move to owner-operator at all mines is complete We have standardised the…
Newman Leveraging our superior resources through productivity Tony Ottaviano Vice President Strategy, Development & Planning 6 October 2014
Key themes The scale and close proximity of our high-quality resources to our major mining hubs underpins our competitive advantage We have capital-efficient options to sustain and grow these hubs for decades to come Our ore bodies…
We have the strongest resource position in the Pilbara Our Pilbara Mineral Resource has tripled1 in WAIO mineral inventory2,3,4 (billion wet tonnes, 100% basis) size during the last seven years 80 Resources of 23 Bt inclusive of…
High resource intensity and proximity to our infrastructure is a competitive advantage We operate four large mining hubs within a highly concentrated footprint of 7,752 Port Hedland kilometres squared Finucane Island almost 3 Mt of…
The characteristics of our ore bodies support low-cost operations Our world-class ore bodies should enable us WAIOs reserve quality is world class (% Fe) to become the lowest-cost supplier of iron RTIO2 ore to China 65 RTIO CID…
The characteristics of our ore bodies support low-cost operations Our strip ratio is expected to remain stable at WAIO material moved and strip ratio (Mt, 100% basis) (strip ratio) an average of 1.3x over the next five years 750 3 A…
Excellence in project delivery Over the last decade we completed a series A strong track record of project delivery (% of target, A 100% basis) of major investments at WAIO and developed a strong track record of project delivery…
Capital savings through Standardisation, Modularisation and Replication Conveyor components Optimised designs for transfer chutes, take-up, 30% shuttle, high and low level sections selected for all saving sustaining and debottlenecking…
Modularisation underpinned the successful delivery of the Jimblebar project Jimblebar delivered first production six months ahead of schedule Employed modular approach with major items fabricated in China and delivered to site for…
We plan to grow WAIO production by 65 Mtpa at a capital intensity of US30 per annual tonne Delivering value from our installed infrastructure1 (Mtpa, 100% basis) Debottleneck Fully utilise inner harbour 1 2 capacity inner…
Releasing more volume from our installed mine infrastructure Low-cost volume growth will be underpinned by Tier 1 portfolio provides optionality1 (Mtpa) unlocking latent capacity No fixed Low 300 plant investment capital…
We can sustain our existing hubs for at least 30 years 5km Mining Area C Rail Existing OHP Conveyor Existing crusher South Flank Eastern Ridge Mining Area C expandable up to 120 Mtpa Newman Whaleback Current or…
Rail will never be the bottleneck Existing double track Never be the bottleneck Optimise & automate Productivity improvements Above rail investment Port Hedland Fleet and maintenance Communications based standardisation signalling…
The port will support our capital-efficient growth plans We have 240 Mtpa1 of A and B class capacity allocated at Port Hedland Able to utilise latent D class capacity capacity has been accessed on a number of occasions The port has…
Debottlenecking initiatives that could unlock additional capacity are under study 0 SL8 Identified further CD4 debottlenecking BWR 7 STK 9 SL7 opportunities STK 10 BWR 10 LRP 2 West Yard SL3 CD5 STK 11 SL4 Mooka rail BWR 8…
Integrated approach to technology focused on maximising value First wave of productivity improvement High driven by process refinements and control Size = NPV underpinned by 1SAP and the Mining haul trains BHP Billiton…
Key themes The scale and close proximity of our high-quality resources to our major mining hubs underpins our competitive advantage We have capital-efficient options to sustain and grow these hubs for decades to come Our ore bodies…