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BMA, Australia
A tier 1 diversified growth portfolioA tier 1 diversified growth portfolio
Marius Kloppers Chief Executive Officer10 May 201110 May 2011
Disclaimer
Reliance on Third Party InformationThe views expressed herein contain information that has been derived from publicly available sources that have not been independently verified. No representation or warranty is made as to the accuracy, completeness or reliability of the information. This presentation should not be relied p y y, p y pupon as a recommendation or forecast by BHP Billiton.
Forward Looking StatementsThis presentation includes forward-looking statements within the meaning of the U.S. Securities Litigation Reform Act of 1995 regarding future events and the future financial performance of BHP Billiton. These forward-looking statements are not guarantees or predictions of future performance and involve known and unknown risks uncertainties and other factors many of which are beyond our control and which may causeperformance, and involve known and unknown risks, uncertainties and other factors, many of which are beyond our control, and which may cause actual results to differ materially from those expressed in the statements contained in this presentation. For more detail on those risks, you should refer to the sections of our annual report on Form 20-F for the year ended 30 June 2010 entitled “Risk factors”, “Forward looking statements” and “Operating and financial review and prospects” filed with the U.S. Securities and Exchange Commission.
Exploration Results, Mineral Resources and Ore ReservesThis presentation includes information on Exploration Results, Mineral Resources and Ore Reserves, which is based on information prepared by the relevant Competent Persons as named in the 2010 Annual Report, and reported under the ‘Australasian Code for Reporting of Exploration Results, Mineral Resources and Ore Reserves’ (the JORC Code). The Competent Persons verify that this presentation is based on and fairly reflects the information in the supporting documentation and agree with the form and context of the Exploration Results, Mineral Resources and Ore Reserves presented. The Competent Persons are full time employees of BHP Billiton and have the required qualifications and experience to estimate and report Exploration Results, Mineral Resources and Ore Reserves under the JORC Code. The relevant details of the Competentestimate and report Exploration Results, Mineral Resources and Ore Reserves under the JORC Code. The relevant details of the Competent Persons for Mineral Resources and Ore Reserves can be found at: www.bhpbilliton.com. The Competent Persons for Exploration Results are J. Knight (Western Australia Iron Ore – MAIG), A. Paul (Queensland Coal – MAusIMM), D. Dunn (Queensland Coal – MAusIMM), S. O’Connell (Olympic Dam – MAusIMM), J. Des Rivieres (Escondida - FAusIMM) and John McElroy (Potash – MAusIMM).
No Offer of SecuritiesNothing in this presentation should be construed as either an offer to sell or a solicitation of an offer to buy or sell BHP Billiton securities in anyNothing in this presentation should be construed as either an offer to sell or a solicitation of an offer to buy or sell BHP Billiton securities in any jurisdiction.
Non-GAAP Financial InformationBHP Billiton results are reported under International Financial Reporting Standards (IFRS). References to Underlying EBIT and EBITDA exclude any exceptional items. A reconciliation to statutory EBIT is contained within the profit announcement, available at our website www.bhpbilliton.com.
Slide 2Bank of America Merrill Lynch Global Metals & Mining Conference, May 2011
Agenda
Supportive long term market fundamentals
Well positioned for diversified, tier 1 growth
Concluding remarks
Slide 3Bank of America Merrill Lynch Global Metals & Mining Conference, May 2011
Supportive long term market fundamentals, but volatility to continue in the near termy
Longer term, global GDP growth to Global GDP growth rate (% per annum)remain robust
Strong emerging market growth continues
(% per annum)
5
6Developed economies
Developing economiescontinues
Developed market data has improved
4
5
However, economic risks remain
Emerging market inflation 2
3
Emerging market inflation
Sovereign debt issues1
2
01900-1920
1920-1930
1930-1940
1940-1950
1950-1960
1960-1970
1970-1980
1980-1990
1990-2000
2000-2010
2010-2020
2020-2025
Source: 1900 to 1980 – J. Bradford De Long (“Estimates of World GDP”, 1998); 1980 to 2010 –IMF World Economic Outlook Database; 2010 to 2025 Forecast – Global Insight.
Slide 4Bank of America Merrill Lynch Global Metals & Mining Conference, May 2011
Chinese GDP is set to grow substantially to 2030
World GDP per capita1
(US$’000 real 2005 PPP)
US
50Bubble size = GDP of US$5 trillion (real 2005 PPP)
(US$ 000, real 2005 PPP)
US
Eurozone
Japan
Australia Canada
30
40
South Korea
China 2030
US 1980 Japan
198020
China
India
Brazil
Chile Russia
South Africa
India 203010
00 200 400 600 800 1,000 1,200 1,400 1,600
PopulationSource: Global Insight; BHP Billiton analysis.1. All figures for 2009 unless mentioned otherwise.
Bank of America Merrill Lynch Global Metals & Mining Conference, May 2011 Slide 5
p(million persons)
Commodity intensity trends evolve with economic developmentp
USA(Intensity index)(Intensity index)
160
180
ElectricityEmerging economies
Developed economies
120
140
100
120
Copper
60
80
Steel
400 5 10 15 20 25 30 35 40 45 50
GDP per capita $
Slide 6Bank of America Merrill Lynch Global Metals & Mining Conference, May 2011
Source: World Bank; Brook Hunt; CRU; IISI; Global Insight; CISA; worldsteel; JBS; IEA; BHP Billiton analysis.
(US$’000, real 2005 PPP)
Commodity prices supported by under delivery of the supply sidepp y
Seaborne traded iron ore supply growthhas failed to meet expectations Against a strong demand
600
has failed to meet expectations (mtpa)
g gbackdrop, supply growth has fallen short of expectations
A d li i i d t id
400
500
~ 55% supply
A decline in industry wide capital expenditure through the global financial crisis has dampened the supply
300
growth not delivered
p pp yresponse
Tight labour markets and l i fl ti
100
200 general inflationary pressure ensures the environment for project development is as challenging as ever
0Aspirational growth for
2008 to 2010Realised growth by
Q3 CY10
challenging as ever
Note: Aspirational iron ore supply based on BHP Billiton analysis as of early 2008.Source: BHP Billiton analysis.
Slide 7Bank of America Merrill Lynch Global Metals & Mining Conference, May 2011
What makes a tier 1 resource
Mineral Inventory
Mi l Ron
Mineral Resource
Range of Potential xplo
ratio
n
Min
eral
isat
io
Mineralisation
(Based on Exploration Results) Ore Reserve
Adva
nced
Ex
scov
ered
M
A
Und
i
Increasing geological knowledge and confidence
The range of Potential Mineralisation is estimated from geological information including boreholes, outcrops and geophysical information. The potential quantity is conceptual in nature, there has been insufficient exploration to define a Mineral Resource and it is uncertain if further exploration will result in the determination of a Mineral Resource.
Slide 8Bank of America Merrill Lynch Global Metals & Mining Conference, May 2011
Large mineral inventory creates significant options for growthp g
15 10
15
P t ti l Mi li ti
Legend(bt)
5
10
0
5
S k t h
Potential Mineralisation
Resource
Reserve
Ratio(Years)
Minimum Inventory Life at FY10 Production Rate
40
60
30
40
500
Olympic DamCopper/Uranium
SaskatchewanPotash
15
20
25
Production Rate
100+
0
20
0
10
20
30
0
5
10
15
100+
Western Australia Iron Ore
QueenslandCoal
Escondida Copper
200+ 100+ 100+
Potential Mineralisation, Mineral Resources and Ore Reserves are stated on a 100% basis. The detailed breakdown of Mineral Resources and Ore Reserves are shown in the FY10 Annual Report. The range of Potential Mineralisation (Exploration Targets) is estimated from geological information including boreholes, outcrops and geophysical information, and is shown as a range (black bars). The potential quantity is conceptual in nature, there has been insufficient exploration to define a Mineral Resource and it is uncertain if further
200 100 100
Bank of America Merrill Lynch Global Metals & Mining Conference, May 2011 Slide 9
exploration will result in the determination of a Mineral Resource. It should not be expected that the quality of the Potential Mineralisation is equivalent to that of the Mineral Resource. The ratio in years is the inventory divided by the FY10 production rate (for Potash this is the expected FY20 production rate) and does not imply that any mine planning has been completed. In Mineral Provinces (e.g. Pilbara, Bowen) the inventory life of individual mines may be more or less than the number stated above.
Significant investment underpins our tier 1 growth strategyg gy
Strong pipeline of investment(US$ billion)
80
90
(US$ billion)
Energy Coal
60
70
Potash
PetroleumEnergy
Aluminium
Stainless Steel Materials
30
40
50
Metallurgical Coal
Copper
Non-ferrous
Manganese
10
20
30 Metallurgical Coal
Iron Ore
Ferrous
0Future options Pre-feasibility Feasibility Execution Other growth
capexTotal spend
FY11 to FY15Commodity split
Note: Excluding sustaining capital and exploration expenditure and future investment associated with the acquisition of the Fayetteville Shale.
Slide 10Bank of America Merrill Lynch Global Metals & Mining Conference, May 2011
Development activities clustered around our key hubsy
Underlying EBIT(H1 FY11)
Execution: Daunia
Hay Point Stage 3 ExpansionF ibilit
Queensland CoalExecution:
DauniaHay Point Stage 3 Expansion
F ibilit
Queensland CoalWestern Australia Iron OreOther
Feasibility:Jansen Stage 1
Saskatchewan PotashFeasibility:
Jansen Stage 1
Saskatchewan Potash
Feasibility:Caval Ridge
Pre-feasibility:BMC Wards Well
Goonyella ExpansionP t d R il E i
Feasibility:Caval Ridge
Pre-feasibility:BMC Wards Well
Goonyella ExpansionP t d R il E i
Olympic Dam
EscondidaQueensland Coal
gPre-feasibility:
Jansen Stages 2 & 3 Potash Port Vancouver WA
gPre-feasibility:
Jansen Stages 2 & 3 Potash Port Vancouver WA
Port and Rail ExpansionPort and Rail Expansion
Execution:
Western Australia Iron OreExecution:
Western Australia Iron Ore
Execution:E did O A
Escondida CopperExecution:
E did O A
Escondida Copper
Execution: WAIO Expansion to +220mtpa
Pre-feasibility: Port Hedland Outer Harbour
Central Pilbara Mines
Execution: WAIO Expansion to +220mtpa
Pre-feasibility: Port Hedland Outer Harbour
Central Pilbara Mines
Escondida Ore AccessFeasibility:
Escondida Organic Growth Project 1Escondida Oxide Leach Area Project
Pre-feasibility: Escondida Bioleach Pad Extension IV
Escondida Ore AccessFeasibility:
Escondida Organic Growth Project 1Escondida Oxide Leach Area Project
Pre-feasibility: Escondida Bioleach Pad Extension IV
Feasibility:Olympic Dam Project 1
Pre-feasibility:
Olympic Dam Copper/UraniumFeasibility:
Olympic Dam Project 1Pre-feasibility:
Olympic Dam Copper/Uranium
Escondida Bioleach Pad Extension IVEscondida Bioleach Pad Extension IV Pre feasibility: Olympic Dam Project 2
Pre feasibility: Olympic Dam Project 2
Slide 11Bank of America Merrill Lynch Global Metals & Mining Conference, May 2011
Note: All projects remain under review until such time as they are sanctioned for execution.
Delivering volume growth across key commodities
WA Iron Ore production profile(mtpa 100%)
Metallurgical Coal production profile(mtpa BHP Billiton share1)
Petroleum production profile (mmboe BHP Billiton share)(mtpa, 100%)
300
350
(mtpa, BHP Billiton share )
60
70 250
(mmboe, BHP Billiton share)
200
250
40
50
150
200
150
200
30
40
100
50
100
10
20
50
0
FY07
FY08
FY09
FY10
~FY1
1
~FY1
2
~FY1
5
~FY2
0
0
FY07
FY08
FY09
FY10
~FY1
1
~FY1
2
~FY1
5
~FY2
0
0
FY07
FY08
FY09
FY10
~FY1
1
~FY1
2
~FY1
5
~FY2
0
Note: Production profile for future periods remains subject to approval of projects into execution.Source: BHP Billiton analysis.1. Includes 100% of production from BHP Mitsui Coal. BHP Billiton interest in saleable production is 80%. Excludes weather related impact in FY11.
Slide 12Bank of America Merrill Lynch Global Metals & Mining Conference, May 2011
BHP Billiton is not immune from industry wide capital cost pressuresp p
Western Australia Iron Ore project conveyor belt Capital intensity (US$/t)
Component escalation rateIndex (2000 = 100)
250
300
Capital intensity (US$/t)
350
400 Oil ConcreteStructural steel fabricationPrefabricated buildings
Index (2000 = 100)
200
250
Expansion to 240mtpa1
2 0
300
Prefabricated buildingsMechanical & construction equipmentUS$ to A$
100
150
RGP3 RGP4
200
250
50
100 RGP3RGP2
RGP4
100
150
02002 2004 2006 2008 2010 2012 2014
Source: BHP Billiton announcements.
502000 2002 2004 2006 2008 2010
Note: Size of bubble represents annual production capacity (100% basis).1. Includes debottlenecking for incremental capital investment (of ~US$1 billion)
in addition to already approved capital expenditure.Source: Australian Bureau of Statistics; Energy Information Administration;
Datastream; BHP Billiton analysis.
Slide 13Bank of America Merrill Lynch Global Metals & Mining Conference, May 2011
Input costs have also increased and steepened cost curves
Iron ore cost curve(US$/t 62-63% Fe CIF China equivalent basis)
The cost curve has steepened dramatically over time (US$/t, 62-63% Fe, CIF China equivalent basis)
140
160 2001
2005
2010
Long term price estimates have grown at a similar rate, reflecting the shift in shape of the cost curve and development costs
Our low cost position has been strengthened rather
Western Australia Iron Ore cash costs100
120Long term price forecast - 2001
Long term price forecast - 2005
Long term price forecast - 2010
Our low cost position has been strengthened, rather than weakened over the decade
Cash costs
Royalties
(US$/t)
60
80
20
40
FY02 FY03 FY04 FY05 FY06 FY07 FY08 FY09 FY10 1H110
0 350 700 1,050 1,400Cumulative capacity
(mt)(mt)Source: Macquarie Research.Note: Includes seaborne and China domestic.
Source: BHP Billiton analysis.Note: Cash costs exclude freight.
Slide 14Bank of America Merrill Lynch Global Metals & Mining Conference, May 2011
The value of a diversified tier 1 portfolio
High return tier 1 assets The stability of a diversified portfolio
50
Return on capital(%)
EBIT margin1
(%)
100Petroleum AluminiumB M t l D&SP
40
50
75
100 Base Metals D&SPSSM Iron OreManganese Metallurgical CoalEnergy Coal Total
20
30
25
50
0
10
FY06 FY07 FY08 FY09 FY10 H1 FY110
25
FY02² FY03 FY04 FY05 FY06 FY07 FY08 FY09² FY10 H1
1. Calculated on the basis of UKGAAP for periods prior to FY05, except for the exclusion of PRRT from Petroleum's and BHP Billiton Group's results for all periods. All periods exclude third party trading activities. The Exploration and Technology business has been included in BHP Billiton Group's results from
FY02 FY03 FY04 FY05 FY06 FY07 FY08 FY09 FY10 H1 FY11
Peer groupBHP Billiton
Note: Peer group includes Rio Tinto, Vale, Anglo American and Xstrata.Source: Annual Reports, interim press releases and BHP Billiton analysis.
FY02 to FY05 and excluded from Diamonds and Specialty Products (D&SP).2. Negative margins are not shown as the y-axis is set at zero. Stainless Steel
Materials (SSM) had a negative EBIT margin in FY02 and FY09.
Slide 15Bank of America Merrill Lynch Global Metals & Mining Conference, May 2011
A tier 1 diversified growth portfolio
Long term demand growth i b tremains robust
Supply likely to lag in the near term but supply will catch up withterm, but supply will catch up with demand
Capital intensity is increasing asCapital intensity is increasing as new infrastructure is required
Our very large scale resourceOur very large scale resource positions provide for decades of low risk growth and attractive investment returns across a diversified portfolio
Escondida, Chile
Slide 16Bank of America Merrill Lynch Global Metals & Mining Conference, May 2011