Jimblebar Maximising value and shareholder returns 24 November 2014
Agenda Maximising value and shareholder returns Andrew Mackenzie Chief Executive Officer Marketing: Uniquely placed to resource the future Mike Henry President HSE, Marketing and Technology Question time Break Coal: Improving…
Eagle Ford Maximising value and shareholder returns Andrew Mackenzie Chief Executive Officer 24 November 2014
Key themes We are delivering on our commitments A simplified portfolio will maximise value for our shareholders Now targeting at least another US4.0 billion of productivity-led gains from our core portfolio Safety is paramount…
We are delivering on our commitments Our FY14 scorecard Portfolio simplification Announced proposed demerger having completed more than US6.5 billion in divestments over the last two years at attractive valuations Record low…
We pursue simplification when it maximises value for shareholders We have been progressively simplifying our A track record of maximising value and returns portfolio for more than a decade (cumulative transaction proceeds1, US…
A simpler and more productive organisation BHP Billiton core portfolio1 Non core Operated Non-operated Minerals Western Australia Olympic Dam Escondida Pampa Norte Samarco Antamina Nickel West Iron Ore Queensland Coal2 NSW…
Our existing structure has worked well Functions Our existing organisational design has enabled us to develop and operate a Petroleum 5 Businesses Copper Iron Ore Coal AM&N complex, diversified portfolio of substantial & Potash…
The demerger will enable us to fundamentally redesign the business Functions The proposed demerger will provide the opportunity to make a step-change Petroleum 4 Businesses Copper Iron Ore Coal improvement in performance while…
Now targeting at least US4.0 billion of productivity-led gains from our core portfolio Our simplified portfolio with substantial scale Productivity-led volume and cost efficiencies1 concentrated in four pillars will enable faster (US…
The creation of a new high-quality global metals and mining company NewCo The portfolio selected for NewCo includes 11 operated assets primarily in Australia and Southern Africa and a joint venture interest in Brazil By tailoring…
A dedicated board and management team will bring renewed focus to this portfolio Board1 David Crawford (Chairman) Xolani Mkhwanazi Keith Rumble Chief Executive Officer2 Graham Kerr Chief Legal Officer Chief Operating…
The proposed demerger It is intended that NewCo would be an Australian incorporated company listed on the Australian Securities Exchange (ASX) have an inward secondary listing on the Johannesburg Stock Exchange (JSE) pursue a…
Safety is paramount Total Recordable Injury Frequency (TRIF) (number of recordable injuries per million hours worked) 10 8 down 51% 6 4 2 0 FY05 FY06 FY07 FY08 FY09 FY10 FY11 FY12 FY13 FY14 FY15 YTD Andrew…
Managing our assets in a sustainable way for the benefit of all stakeholders We aim to minimise our environmental impacts Minimising our greenhouse gas emissions2 and deliver enduring benefits to biodiversity, (Mt CO2-e) ecosystems…
Managing our assets in a sustainable way for the benefit of all stakeholders We engage regularly and openly with those interested in and affected by our operations We support partnerships that promote social and economic development…
Delivering more volume from existing infrastructure and our growth projects ahead of schedule Our core portfolio is on track to deliver production1 Production1 growth from our core portfolio growth of 23% over the two years to the end…
Cost efficiencies of US1.9 billion delivered in FY14 with more to come Our commitment to further improve the Further reduction in unit costs expected in FY15 competitive position of our assets underpinned a (% change, FY15 versus…
Our framework to maximise shareholder returns Our purpose when allocating capital is to maximise total shareholder returns Our strategy is to own and operate large, long-life, low-cost, expandable, upstream assets diversified by…
Our strong balance sheet ensures we have access to capital at a consistently lower cost Return excess Strong balance We remain committed to our solid A credit to shareholders sheet & solid A rating credit rating we manage to a single…
An unbroken dividend with a higher growth rate Strong balance Return excess By having a strong balance sheet and to shareholders sheet & solid A credit rating investing in our best businesses we have delivered superior growth in…
Disciplined investment process to maximise value and returns Strong balance Return excess Our rigorous process considers all to shareholders sheet & solid A credit rating alternatives for capital continued investment in our…
Improving capital productivity Our opportunity-rich portfolio remains a key point of differentiation By operating within a disciplined framework Maximise and by testing all investment decisions shareholder against challenging…
Our strategy and strong balance sheet have delivered superior returns for our shareholders Strong balance Key enablers for total shareholder returns Return excess sheet & solid A to shareholders credit rating BHP Metrics over 10…
Key themes We are delivering on our commitments A simplified portfolio will maximise value for our shareholders Now targeting at least another US4.0 billion of productivity-led gains from our core portfolio Safety is paramount…
Key themes Virtuous cycle of industrialisation, urbanisation and consumption in emerging economies is expected to continue to underpin long-term commodities demand growth We retain a margin advantage for our steelmaking raw materials…
We consider divergent yet plausible scenarios in our portfolio decisions Our corporate planning process is Scenario analysis underpinned by scenario analysis encompasses a spectrum of potential outcomes for key global uncertainties…
Emerging economies will continue to drive global growth and commodities demand Demand for our commodities continues to be Continued momentum in the emerging economies strong, underpinning the long-term outlook (GDP, US trillions, 2010…
The urbanisation and industrialisation of the developing world is far from complete Urbanisation and industrialisation in the Urbanisation rates 2015-50 UN projected increase in developing world continues to underpin (%) urban…
We retain a margin advantage for our steelmaking raw materials Iron ore The iron ore cost curve is flattening (CIF China equivalent basis, US/t, nominal) Growth in low-cost seaborne supply will continue to outpace demand and the cost…
Copper will remain supply constrained and a deficit is expected beyond 2018 The outlook for copper demand remains Strong consumption growth from Asia (ex-Japan) compelling as emerging economies (copper semis, Mt) transition to…
Energy demand growth will remain positive Increasing energy demand is projected under a The global energy complex will remain diverse variety of scenarios, with electrification and (growth in primary energy supply, index, 2010=100)…
although the shape of future energy demand is difficult to predict Asia is expected to account for two thirds Energy balances by region of energy demand growth to 2030 growth in China and India will be CIS equivalent to current US…
Population growth and the shift towards higher protein diets will require more productive crops The long-term demand fundamentals for People fed per hectare of arable land agricultural products remain attractive (number of people)…
A diversified portfolio resourcing the future Our core portfolio1 reflects our differentiated Diversified by commodity, geography and market strategy (core portfolio, FY14 % contribution) 100 RoW Coal North large, long-life,…
Key themes Virtuous cycle of industrialisation, urbanisation and consumption in emerging economies is expected to continue to underpin long-term commodities demand growth We retain a margin advantage for our steelmaking raw materials…
Statement of JORC resources Coal Resources This presentation includes information on Coal Resources (inclusive of Coal Reserves). Coal Resources are compiled by J Field (MAusIMM). J Field is a full time employee of BHP Billiton, has…
Key themes Driving ongoing improvement in our health, safety, environment and community performance Our business is underpinned by a large, high-quality resource base We have re-established our competitive advantage by closing…
We value safe and sustainable operations above all else We continue to improve TRIF1 as an indicator Improving our safety performance of our safety leadership (12 month rolling average TRIF per million hours worked) 12 Our focus is…
Coal a key pillar of BHP Billiton Strong performance over the last five years Share of BHP Billiton production1 reflects the underlying quality of our coal (%) assets 20 17% of total BHP Billiton production1 15 over US10 billion…
Our business is underpinned by a high-quality resource base Coal resources1,2 (Bt, 100% basis) 40 +11% 30 20 10 0 FY10 FY14 New Mexico Coal Energy coal Metallurgical coal Cerrejn Coal IndoMet Coal project Queensland…
We have re-established our competitive advantage by sustainably reducing costs Our Coal business has embedded Significant reduction in unit cash costs US2.4 billion of cost and volume (US/t) efficiencies1, representing over one third…
Leveraging our marketing expertise to maximise margins Our marketing team is a major contributor to Spot PLV price realisation vs Platts PLV index1 Coals productivity agenda (index, Platts PLV=100) transparent pricing to enable full…
Our people are becoming more productive People productivity is a key value driver Breakdown of FY14 costs2 (QCoal) (NSWEC) labour and contractors represent 8% 8% approximately half our operating costs 21% 27% 14% 14% we reduced…
We will continue to improve our equipment utilisation Our initiatives continue to deliver more Improving QCoal ultra class haul truck performance volume from existing equipment at lower unit (hours, 12 month moving average, index, July…
Peak Downs: delivering benchmark productivity Peak Downs increased production by 8% Maximising Peak Downs production from existing infrastructure and reduced (Mtpa, 100% basis) operating costs by 18% in FY14 10.0 nearing wash-plant…
Poitrel: optimising mine plans to lower costs A significant improvement in coal recovery at Progression through the mine plan Poitrel was underpinned by an 11% reduction (September 2013 to August 2014) in overburden during FY14…
NSWEC: improved equipment utilisation and mine planning delivering tangible benefits Equipment productivity will deliver further cost Excavator dig rates are increasing savings (bcm/hour, rolling 14 day average) 1,800 increasing…
Systematically targeting our external spend Our supply expenditure has reduced by Annualised supply savings relative to FY12 US400 million relative to FY12 with (US million) additional savings to come 800 We continue to focus on…
Our plans will deliver significant cost reductions We expect further cost reductions across our Targeting further reductions in QCoal unit costs1 operations (US/t) 200 targeting a 10% reduction in unit costs in FY151 at Queensland…
Maximising the utilisation of installed capacity Record metallurgical coal volumes of 47 Mt Targeting 4% growth in metallurgical coal production1 anticipated in FY15 (Mtpa) 55 Caval Ridge operating at full capacity continued…
Our major growth projects are nearing completion Two major capital projects delivered first Coal capital and exploration expenditure1 production in FY14 (US billion) 4.0 5.5 Mtpa Caval Ridge hard coking coal project delivered three…
Simplification of the portfolio will provide additional opportunity The proposed demerger will further simplify the South Walker Creek Coal Business and accelerate productivity gains enhanced focus on fewer large, long-life assets…
Key themes Driving ongoing improvement in our health, safety, environment and community performance Our business is underpinned by a large, high-quality resource base We have re-established our competitive advantage by closing…
Mineral Inventory classifications Mineral Resources Table 1 Table 1 FY14 ROM Measured Resource Indicated Resource Inferred Resource Resource Life3 BHP Billiton interest Deposit Ore Type production (Mt) (Mt) (Mt) (Years) (%) (Mt)…
Key themes We value safe and sustainable operations above all else We have a unique portfolio of four large, long-life, low-cost, expandable assets concentrated in Chile, Peru and Australia Our proactive approach to address…
We value safe and sustainable operations above all else Operating safely and in control A strong and stable safety performance (12 month rolling average TRIF1 per million hours worked) We have a strong and stable safety performance 8…
Copper a key pillar of BHP Billiton Our Copper business has delivered A major contributor to production1 exceptional returns over the last five years (% of BHP Billiton production) 25 21% of total BHP Billiton production1 20…
A simple portfolio of unrivalled quality A portfolio of some of the largest long-life, expandable low-cost assets in the industry (FY14 attributable production, Mt) (net equity ownership resources, Mt) (CY14 C1 cash costs, US/lb) 2 30…
Industry-wide challenges As copper porphyries mature, a significant Copper grade decline will lead to a deficit market1 deficit is expected to emerge beyond 2018 (Mt) (% Cu in the mill) 4 1.10 grade decline, higher strip ratios and…
Maximising the utilisation of installed capacity We are leveraging our common systems and Improving mill performance at Escondida processes to drive continuous performance (ktpd, index, FY12=100) +1% improvement 160 +9% (YTD) +13%…
We remain cost competitive despite grade decline We are preserving our competitive cost Moving more tonnes at lower cost position despite declining grades across the (index, total Copper business, FY12=100) Copper business 120 FY15…
Addressing grade variability at Escondida Following three years of strong production growth Grade decline will impact volumes in the short term at Escondida, expected year on year grade (Mt, Escondida) (% Cu in the mill) decline of…
Our three concentrator strategy will offset grade decline at Escondida We are considering extending the life of the We will retain access to higher grade ore Los Colorados concentrator to FY30 enables utilisation of three…
Our water and power solutions are key enablers Water availability is the bottleneck at Escondida Water Supply (EWS) project Escondida until FY18 Our US3.4 billion (100% basis) desalination facility at Escondida is on schedule for…
Debottlenecking Olympic Dam capacity to 235 ktpa We plan to increase copper production capacity Expanding our mining footprint at Olympic Dam at Olympic Dam by 50 ktpa1 from FY18 Northern Mining Area expanding mine footprint into the…
Low-cost recovery optimisation at Spence Our Spence Recovery Optimisation project has Accelerating heap leach performance at Spence the potential to increase copper recoveries by (%, copper recoveries) 14% from FY16 100 75…
A compelling suite of longer-term growth projects Spence Growth Option Current mine footprint We are studying the development of the hypogene 1,670 m resource at Spence accesses ore beneath the current mine 3,950 m 230 m Spence…
A compelling suite of longer-term growth projects Olympic Dam 21 Mtpa Underground Expansion We are evaluating a low-risk, capital-efficient underground expansion at Olympic Dam supported by current stope mining method with…
Deep optionality within our high-quality resource base We have a strong pipeline of longer-term We have a focused greenfield exploration program development options further organic growth options at Escondida (additional…
Key themes We value safe and sustainable operations above all else We have a unique portfolio of four large, long-life, low-cost, expandable assets concentrated in Chile, Peru and Australia Our proactive approach to address…
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