Bhp Group Ltd · ASX:BHP
Bhp — BHP Billiton — Investor Presentation (October 2002)
49 slides from Bhp's investor presentation, October 2002
Slide 1: Base Metals
Base Metals Brad Mills Ken Pickering John Crofts
Slide 2: BHP Billiton Base Metals – Key Differentiators
BHP Billiton Base Metals – Key Differentiators Best in class HSEC management Clear strategy Low cost, high quality operations Exceptional resource base Unrivalled growth opportunities Centralised Marketing Model Leaching technology Experienced, value focused management team and workforce
Slide 3: Base Metals – A Foundation of BHP Billiton’s Strength and Diversity
Base Metals – A Foundation of BHP Billiton’s Strength and Diversity Brian Brian Gilbertson Gilbertson Chief Chief Executive Executive Chief Senior Senior Minerals Minerals Chief Financial Financial Chief ChiefDevelopment Development President President Chief Chief Legal Legal Officer Officer Executi
Slide 4: HSEC Management
HSEC Management Brad Mills
Slide 5: Base Metals aims high in Health, Safety, Environment & Community
Base Metals aims high in Health, Safety, Environment & Community (HSEC) • Our HSEC performance is a strength that will assure our ability to outperform our peers • Foundation elements: BHP Billiton Charter and HSEC Policy • Company-built HSEC Management System and commitment to certification to ISO
Slide 6: Stanleigh before and after
After Before dl bhpbilliton
Slide 7: Base Metals Safety Culture
Base Metals Safety Culture We are aiming for no fatalities or serious injuries and are Comparable LTIR Alcoa Anglo-American determined to achieve our goal by 8 7.5 BHP Billiton Base Metals BHP Billiton Petroleum a cultural shift that will change the 7 BHP Billiton Steel way people will view safety b
Slide 8: HSEC
HSEC •Working with local communities •Escondida Foundation •Tintaya Mesa de Dialogo •Antamina – Ankach Foundation •Spence •La Granja – Restoration Project •San Manuel Community
Slide 9: Overview
Brad Mills bhpbilliton
Slide 10: Base Metals World Wide
Base Metals World Wide Canada The Hague Statistics Statistics Selbaie Base Metals Marketing Hub 88 Countries Countries Highland Valley 33.6% 10 10 Operations Operations 33 Non Nonoperated operatedJoint JointVentures Ventures 7,000 7,000 Employees EmployeesandandContractors Contractors United States
Slide 11: Base Metals Management Team
Base Metals Management Team President – Base Metals Brad Mills Houston President Escondida Chief Operating Officer Joint Ventures Bruce Turner John Lill Ian Ashby Santiago Houston Houston Chief Development Officer Chief Financial Officer Marketing Director Ken Pickering Philippe Monier John Crofts H
Slide 12: Base Metals – 2001 Global Ranking by Mine Output
Base Metals – 2001 Global Ranking by Mine Output Copper Lead Codelco RENCO Phelps Dodge Pasminco BHP Billiton BHP Billiton Rio Tinto MIM Holdings Anglo American Teck Cominco Grupo Mexico Boliden KGHM Noranda Freeport McMoran Western Metals Norilsk Industrias Penoles Kazakhmys Minera Volcan 0 500 100
Slide 13: Base Metals Financial Performance FY 2002
Base Metals Financial Performance FY 2002 (US$M) 2002 2001 % Change (US$M) 2002 2001 % Change Turnover 1,821 1,719 +6 Profit from Operations 299 481 -38 EBIT Escondida 141 311 -55 Overheads (40) (19) Cannington 104 85 +23 Development (18) - Cerro Colorado 30 37 -20 Write off of La (41) - 22 +44 Gran
Slide 14: Business Strategy
Business Strategy Brad Mills
Slide 15: Strategic Context
Strategic Context BHP Billiton Base Metals Outstanding Assets Industry Leadership Growth from Deep Inventory of Projects Positioning in the value chain Customer Centric Marketing Portfolio Optimisation The Portfolio Effect New Projects The Petroleum CSG Marketing Innovation Technology Employees Maxi
Slide 16: Industry Leadership
Industry Leadership • Following the merger in July 2001, rising stocks and falling Stock/Consumption Ratio (Weeks' 18 160 demand indicated potential risks lay ahead for the industry. Quarterly Copper Price (USc/lb) 16 140 Demand - at Quarter End) 14 120 12 100 • On November 8, 2001 BHP Billiton anno
Slide 17: Production Cuts
Production Cuts 900 • From Nov 2001 through Dec 2002, 16 800 98 Contained Cu Production (kts) 700 144 30 Escondida will produce 150,000 t of 600 copper in conc less than originally 500 810 794 400 666 666 764 forecast 300 200 • Can only be measured over the year, 100 0 not month to month 2F e IV al
Slide 18: Outstanding Assets
Outstanding Assets Brad Mills
Slide 19: Escondida – Chile (BHP Billiton 57.5%)
Escondida – Chile (BHPBilliton 57.5%) • Largest copper mine in the world – capacity in excess of 1 Mt payable copper • 1 Mt of material (ore and waste) moved each day • Mill capacities existing 130ktpd, Phase Four 110ktpd • Current SX/EW capacity of 150,000 tpa of cathode • Current mineable reserves
Slide 20: Escondida Phase 4
Escondida Phase 4 Project Scope •World class safety performance during execution • $1045m capex and 22 month construction duration •World class copper concentrator and infrastructure •110ktpd capacity •Laguna Seca tailings and water reclaim facility •In pit ore crushing and conveying •Expanded mine
Slide 21: Escondida Phase 4 Video
Escondida Phase 4 Video
Slide 22: Cerro Colorado – Chile (BHP Billiton 100%)
Cerro Colorado – Chile (BHP Billiton 100%) • Commenced production in 1994 at 40 ktpa Cu • Low cost SX/EW operation • Leader in bacterial leaching of copper sulphide ores • History of continuous improvement • Total Ore Reserve sufficient for at least 15 years of mining with geological targets still t
Slide 23: Tintaya Peru (BHP Billiton 99.5%)
Tintaya Peru (BHP Billiton 99.5%) • Closed sulphide operations (+60c/lb) on Nuevo Tintaya January 1, 2002 in response to market • Excellent success in proving additional reserves demand. (to be updated in 2003) • Tintaya Oxide (34 ktpa cathode) project • Potentially extends sulphide open cut mine li
Slide 24: Cannington (BHP Billiton 100%)
Cannington (BHP Billiton 100%) • Hard rock underground mine • Largest silver and lead mine in the world (Ag 26 Moz, Pb 230,000 tpa) • Following commissioning in 1997 with a nameplate capacity of 1.5 mtpa of ore, continuous improvement has pushed production to 2.1 mtpa • Currently evaluating increase
Slide 25: Antamina – Peru (BHP Billiton 33.75%)
Antamina – Peru (BHP Billiton 33.75%) • 70 ktpd processing plant • Cu and Zn concentrates pumped 300kms to the port of Huarmey • Mechanical completion of project facilities May 15 • Commercial production October 1, 2001 ahead of schedule and budget • Largest ever project financing for a green fields
Slide 26: Growth from Deep Inventory of Projects
Growth from Deep Inventory of Projects Ken Pickering The following projects are in various stages of analysis -from resource drilling through final feasibility. None have yet been given final Board approval.
Slide 27: Escondida Norte
Escondida Norte Open Pit Premine 250 MT Sulphide Ore •584 MT @ 1.3 % TCu Oxide Ore •97 MT @ 0.82 % SCu Sulphide Low grade •442 MT @ 0.6 % TCu 5 Electric Shovel 39 Haul Trucks 1 Semi Mobil Crusher 6 Km Land Conveyors Maintenance Shop Capital – Order of magnitude US$400m (100%) including US$170 pre-st
Slide 28: Escondida Sulphide Leach Outline
Escondida Sulphide Leach Outline Sulphide Leach Circuit • 2.3 Billion tonnes sulphide ore at 0.55%TCu Approx 50 Mtpa @0.5% TCu • Current stockpile 86Mt Acid solution • Copper recovery by: Run of Mine Dump Pregnant – ROM leaching – Solvent extraction Solution Solvent Extraction Rich Electrolyte – Ele
Slide 29: Escondida – Amazing flexibility
Escondida – Amazing flexibility Escondida Base No Limits Development Projects Copper Production Limited at 1,400 ktpa Escondida Base Development Projects 1,600 1,600 1,400 1,400 Escondida Escondida + Development Projects 1,200 1,200 1,000 1,000 Copper - kt Copper - kt 1,800 800 800 600 600 1,600 400
Slide 30: Spence (BHP Billiton 100%)
Spence (BHP Billiton 100%) • World class deposit discovered by Rio Algom in 1996 • Pit reserves of 257 Mt @ 1.23% TCu with a strip ratio of 3.08:1 • Currently completing feasibility study for cathode leach project – 190,000+ tpa (for the first 10 years) • Low technical risk (similar to Cerro Colorad
Slide 31: Base Metals Marketing
Base Metals Marketing John Crofts
Slide 32: Base Metals’ End Uses
Base Metals’ End Uses COPPER LEAD Other Other Transport Cable 4% 7% 7% sheathing Rolled/ 3% Light extruded engineering products 8% 7% Building Pigments General 48% 12% engineering 16% Batteries Electrical 71% 17% SILVER ZINC Other Other 3% Semis 3% 8% Photography Chemicals 24% 9% Industrial 40% Galv
Slide 33: Market share of refined copper demand
Market share of refined copper demand: Asia accounts for more than 40% of reported off take Growth in consumption has taken place in China, South Korea and Taiwan at the expense of Europe, the USA and Japan, as manufacturing has migrated Demand for Refined Copper – Market Share (%) CIS+E.Eur. 1980 6
Slide 34: 10-year average annual demand growth rates
10-year average annual demand growth rates – subject to wide variation at regional/national level but heavily influenced by China China’s copper demand growth at more than 10% p.a. is a key influence in lifting world demand rates since the 1980s 10-Year Average Annual Compound Growth (% p.a.) 20 15
Slide 35: We have a leading position in most of our markets
We have a leading position in most of our markets EQUITY OWNERSHIP • Copper concentrates '000 mt Cu or Cu content 2000 – Around 35% of custom traded market (largest 1500 supplier) 1000 500 – Escondida is the largest copper mine in the 0 world (metal contained) • Lead concentrates M PB glo to lco rt
Slide 36: Channels to Customers
Channels to Customers Fabricators COPPER, LEAD AND ZINC CONCENTRATES CUSTOM (metal SMELTERS consumers) Strategy is to get closer to the actual metal consumer Diversified smelter base - 30 copper smelters worldwide - 14 lead and zinc smelters in Far East and Europe COPPER CATHODES ROD AND BRASS MILLS
Slide 37: Our organisation structure reflects the new model of marketing
Our organisation structure reflects the new model of marketing as a business in itself MARKETING DIRECTOR John Crofts CONCS/METAL DISTRIBUTION FINANCE PRICE RISK LATIN MARKET MARKETING David Martin Stewart Hart Chris AMERICA DEVELOPMENT & TRADING Schwagermann Cristian Martinez Ian Rose Marc Ingelbin
Slide 38: Market Focused Business Strategies
Market Focused Business Strategies •One aligned Market Focused Business Strategy •Capturing the full benefits of the centralized marketing model and common execution systems •Increased liquidity and risk management •Pursuing opportunities for aggregation of third party product (concentrates and meta
Slide 39: Technology
Ken Pickering bhpbilliton
Slide 40: Technology R&D
Technology R&D • R&D programs are focused on generating breakthroughs in the leaching of primary and secondary copper sulfide ores and concentrates • Leveraging bioleaching, geochemistry, process modeling and process engineering expertise of BHPB internal technology centres – Johannesburg and Newcas
Slide 41: Technology
Technology § EPCM project is more than 30% complete § Earthworks are finished and bioleach reactors are being installed on their platforms. § Bacteria inoculation to start in May 2003. § Full mechanical completion and start of commissioning during Q3 CY 2003. § Decision on commercial scale plant 200
Slide 42: The Way Forward
The Way Forward Brad Mills
Slide 43: BHP Billiton Base Metal Position on the Cost Curve
BHP Billiton Base Metal Position on the Cost Curve C1 Unit Cost cy-2001, Brook Hunt data •Brook Hunt’s 2001 cost $1.20 curves (with BHPB’s $1.00 Highland Tintaya estimate of Robinson and $0.672Valley Escondid Alumbrer Antimina $0.80 Pinto Valley overlain in Colorado $0.608 $0.60 Cerro yellow and Spe
Slide 44: Flexible Production
Flexible Production Tintaya Escondida Phase 4
Slide 45: Looking forward
Looking forward • We do not attempt to predict short term price variations – Demand is still weak – At the CESCO conference in Santiago in February we indicated that commodity prices had got ahead of themselves and that the pick up in IP did not necessarily indicate a recovery – We know that 5 of th
Slide 46: BHP Billiton Base Metals – Key Differentiators
BHP Billiton Base Metals – Key Differentiators Best in class HSEC management Ø BHP Billiton Charter Ø Zero harm Ø Community Relations Ø ISO 14001 Clear strategy Ø Flexible production, demand focused Ø Optimising capital efficiency Ø Maximising the value of our resources Ø Increasing the proportion o
Slide 47: BHP Billiton Base Metals – Key Differentiators
BHP Billiton Base Metals – Key Differentiators Exceptional resource base Ø Escondida Ø Cannington Ø Spence Unrivalled growth opportunities Ø Escondida Norte and Sulphide Leach Ø Spence Ø Cannington North Ø Tintaya Nuevo Centralised Marketing Model Ø Coordinated approach Ø Managing risk
Slide 48: BHP Billiton Base Metals – Key Differentiators
BHP Billiton Base Metals – Key Differentiators Leaching technology Ø Technology Labs Ø Pinto Valley chalcopyrite dump leach test bed Ø Escondida Sulphide Leach Ø Alliance Copper Experienced, value focused management team and workforce Ø Operations and project management Ø Continuous improvement – Si
Slide 49: END
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