Bhp Group Ltd · ASX:BHP
Bhp — BHP Billiton — Investor Presentation (June 2007)
38 slides from Bhp's investor presentation, June 2007
Slide 1: BHP Billiton Base Metals Investor Presentation
BHP Billiton Base Metals Investor Presentation June 2007
Slide 2: Disclaimer
Disclaimer The views expressed here contain information 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. Any forward looking information in this presentation ha
Slide 3: Base Metals Global Footprint
Base Metals Global Footprint Antamina 33.75% Operatio ns Projects Offices Marketing Cerro Colorado Spence Escondida 57.5% Olympic Dam Cannington Slide 3
Slide 4: Base Metals - Vision
Base Metals - Vision To create value for our stakeholders through being the pre-eminent base metals supplier. Pre-eminent means: – Zero Harm embedded, an industry leading Health, Safety, Environment and Community performance – Sustained superior financial returns – A great workforce – World-class op
Slide 5: Base Metals - Strategic Focus
Base Metals - Strategic Focus Olympic Dam, Resolution, Exploration Sulphide Leach, Spence Leading BHP Billiton CSG Growth in terms of Business Options Excellence savings First half operating margins of 62% and Project Pipeline EBIT of over US$2.9B Numerous Financial Strength awards and Discipline La
Slide 6: Base Metals - Safety
Slide 6 0.0 2.1 4.2 6.3 8.4 10.5 12.7 Ju n-0 4 3.06 Ju 5.51 l- 04 Au g -0 4 Se p -0 4 Oc t- 0 4 No v-0 De 4 c-0 4 Jan -0 5 Fe b- 0 Ma 5 r-0 Ap 5 r -0 5 Base Metals - Safety Ma y- 0 5 Ju n-0 5 2.70 4.33 Jul - 05 Au g -0 5 Se 12 MRA TRIFR BM TOTAL 2005 p -0 5 Oc Olympic Dam t- 0 5 No starts reporting
Slide 7: Base Metals - A key contributor to total Underlying EBIT
Base Metals - A key contributor to total Underlying EBIT Half year ended December (US$M) 2006 2005% % Change Change Petroleum 1,612 1,436 +12 Aluminium 840 406 +107 Base Metals 2,905 1,893 +54 Diamonds & Specialty Products 105 261 -60 Stainless Steel Materials 1,436 374 +284 Iron Ore 1,406 1,243 +13
Slide 8: Base Metals – Overview
Base Metals – Overview • Market demand remains healthy while stocks continue at low levels • Particularly susceptible to supply disruptions • TC/RC softened as the concentrate market moved into deficit • Escondida delivering exceptional returns • Commissioning of Spence and Sulphide Leach delivered
Slide 9: Base Metals- China a key driver of global copper demand
Base Metals- China a key driver of global copper demand kt 18,000 China 22% 15,000 USA 13% 12,000 10% India 21% Japan 9,000 Europe 6,000 3,000 Other 0 1996 2006 Source: CRU, Brook Hunt, BP Statistical Review, IISI, BHP Billiton Slide 9
Slide 10: China copper consumption growth set to continue
Base Metals - China copper consumption growth set to continue following the path of other developed economies Copper Intensity per Capita USA (1878-2005) 30.0 Japan (1950-2005) S. Korea (1970-2005) 25.0 Germany (1950-2005) Taiwan (1970-2005) China (1950-2005) Kg Copper/Capita 20.0 India (2005) 15.0
Slide 11: Escondida
Escondida • The largest single copper mine in the 800 Escondida Copper Production (BHPBilliton Share 57.5%) world 700 Cathode 600 Concentrate • EBIT in H1 FY07 of US$ 1,774 000 tonnes 500 million (BHP Billiton share) 400 300 • Two pits feeding two concentrators 200 • Two leaching operations : oxide
Slide 12: Cannington
Cannington • The largest single Silver producer in 60 Cannington Production the world Silver million ounces silver 50 • EBIT in H1 FY07 of US$ 198 million 40 30 • Rehabilitation of ground support 20 program was undertaken in FY06 - 10 FY07 and is now complete 0 • The mine is better positioned post -
Slide 13: Cerro Colorado
Cerro Colorado Cerro Colorado Copper Production • Combined oxide-sulphide leach 140 operation 120 100 000 tonnes • EBIT in H1 FY07 of US$ 255 million 80 60 • Current mine plan sees production 40 through 2016 20 0 • Work continues evaluating the FY02 FY03 FY04 FY05 FY06 FY07 March YTD extent of a hyp
Slide 14: Antamina
Antamina • JV with 33.75% BHP Billiton Antamina Production (BHP Billiton Share 33.75%) 140 ownership. 120 Copper • EBIT in H1 FY07 of US$ 387 100 Zinc 000 tonnes million (BHP Billiton share) 80 60 • Plant consistently exceeding 40 design throughput 20 • Voluntary Contribution Fund for 0 FY02 FY03 FY
Slide 15: Spence
Spence Spence Copper Production Ramp-Up (Annualized) • Greenfield mine development at 250 Sierra Gorda in Northern Chile 200 • Successfully completed on time and 000 Tonnes 150 on budget 100 • First cathode produced in Dec 2006 50 and in ramp up to full production - Jun-2007 Dec-2007 Dec-2008 • FY07
Slide 16: Olympic Dam
Olympic Dam Olympic Dam Copper Production • World class mineral resource is the largest 250 WMC BHPB known Uranium mineral deposit and sixth 200 largest Copper deposit 000 ton nes 150 • EBIT in H1 FY07 of US$ 360 million 100 • Mine is critical path constraining production 50 before major expansion 0
Slide 17: Why is Olympic Dam so valuable?
Why is Olympic Dam so valuable? US$ Gross average revenue per tonne of resource 120 100 Molybdenum 80 Zinc Silver 60 Gold Uranium 40 Copper 20 0 Escondida Antamina Olympic Dam a) Resources, metal grades and recover rates obtained from the FY2006 Annual Report (except for Moly). b) Moly recovery rate
Slide 18: Nuclear growth will be especially strong in Asia
Nuclear growth will be especially strong in Asia Under construction - 27 Planned – > 80 Operational - 441 Mtoe Slide 18
Slide 19: Base Metals – Power in Northern Chile
Base Metals – Power in Northern Chile Considering the gas fired power generation installed in the SING and the uncertainty in the natural gas supply, Base Metals is working to ensure electricity supply at the lowest possible cost : Interim Solution (2007-2010): Running pre-feasibility studies for di
Slide 20: SING Generation in the near future (2006 – 2010)
SING Generation in the near future (2006 – 2010). Power MW Installed 3000 -- Generation GAS 3,600 MW GAS 2,100 MW 2,100 MW Gas or Diesel 2000 -- generation Dual-Diesel needs 800 MWmax D-FO Diesel- FO 300 MW 300 MW BHPB 1 1 1 2100 2,120 MW 1000 -- 7 8 9 New Coal SING MW Without 5 5 5 Demand Gas COAL
Slide 21: Base Metals – Water in Northern Chile
Base Metals – Water in Northern Chile • Water is a scarce resource in Northern Chile • Availability of new underground water is increasingly limited • Environmental sensitivity is increasing • Learning curve on technical environmental management and policies of the topic • However, BHP Billiton is w
Slide 22: Summary
Summary • Consistent execution of strategy • Delivering increase volumes • Record results • With a portfolio than can perform in a low price environment and deliver exceptional returns at times of high prices • Growth potential through development of world class resources • Demand outlook remains po
Slide 23: Appendix
as Appendix dé Slide 23 bhpbilliton
Slide 24: Base Metals: Refined Copper Market
Base Metals Refined Copper Market
Slide 25: 2007 mixed views, surplus beyond that
2007 mixed views, surplus beyond that Balance - '000 tonnes Brook Hunt - July 2006 1000 Brook Hunt - Oct 2006 Brook Hunt - Feb 2007 800 CRU - July 2006 CRU - Oct 2006 CRU - Feb 2007 600 400 200 0 -200 -400 2006 2007 2008 2009 Data: CRU, BH
Slide 26: Exchange stocks of refined copper have risen from lows but remain very low
Exchange stocks of refined copper have risen from lows but are still at very low levels LME 3-month copper price – US$/tonne Copper stocks – ‘000 tonnes 8000 800 7600 7200 700 6800 6400 600 6000 500 5600 5200 400 4800 4400 300 4000 3600 200 3200 SHFE 2800 Comex 100 2400 LME 2000 0 J- F M A M J J A S
Slide 27: Refined Copper Market Summary
Refined Copper Market Summary • Market is moving from deficit to a modest surplus but remains very vulnerable to supply disruptions and problematic ramp-up of new production • Current view is still very positive for refined demand – Growth in China, SE Asia, CIS, Middle East, India – World is becomi
Slide 28: Base Metals: Copper Concentrate Market
Base Metals Copper Concentrate Market
Slide 29: Contract terms have historically been less volatile than spot terms
Contract terms have historically been less volatile than spot terms - current contracts reflect renewed tightness in the market World Cu concentrate market gap Quarterly average spot and contract TC/RCs Theoretical balance – ‘000 tonnes TC/RC – Nominal Cents/lb 500 50 World Balance - BHPB Mar 2007 4
Slide 30: Concentrate Update
Concentrate Update • Structural smelting overcapacity due to recent significant expansions (China/India but others as well) • Exacerbated by chronic mine underperformance • 2004 and (to a lesser extent) 2005 were soft years for miners (TC/RC’s) but the tables turned in 2006 and the next few years lo
Slide 31: Concentrate Update (continued)
Concentrate Update (continued) • Theoretical concentrate deficit for the next two to three years is greater than what can practically transpire (insufficient stocks left to satisfy the deficit) • But it continues to be a dynamic market … 600 400 200 0 - 200 World Ba lance - BHPB De c 2 0, 200 4 - 40
Slide 32: Base Metals: Uranium Market
Uranium Market od bhpbilliton
Slide 33: Supply and demand: historical look
Supply and demand: historical look 1985-2003 1970-1984 Inventory liquidation era Commercial inventory 1945-1969 accumulation 90 Weapons procurement era 80 FSU + China (est) 70 Others 60 Production ('000 t U3O8) USA 50 Canada 40 Australia Commercial U demand 30 20 10 0 1945 1950 1955 1960 1965 1970 1
Slide 34: Uranium spot price: historical look
Uranium spot price: historical look Government Floor Prices: US embargo Australia 1980-89 US$30/lb 160 1998: USEC privatization 1959 - 1974 – sale of gov. stocks 140 120 Russian U3O8 import through Nuexco US $/lb U3O8 (2005 real $) 100 Supply disruptions and long term supply 80 concerns 60 1994: HEU
Slide 35: Supply and demand: outlook
Supply and demand: outlook 160 Requirements Other secondary supplies Tails re-enrichment HEU (WNA upper Continued growth in Russia & East Asia case) 140 HEU deal ends 2013 y Requirements 120 il le db be f oje c ts (WNA reference Inventory reduction To pr new case) ('000 t U 3O8) 100 Secondary suppli
Slide 36: Nuclear plays an important role in supplying electricity
Nuclear plays an important role in supplying electricity to many industrialised countries France 78% Belgium 55% Sweden 52% Ukraine 51% Switzerland 40% Korea 38% Germany 32% Japan 29% Finland 27% Spain 23% USA 20% UK 19% Russia 16% Canada 15% India 3% China 2% World 16% 0% 20% 40% 60% 80% 100% Slide
Slide 37: Olympic Dam will play a significant role fuelling the nuclear renaissance
Olympic Dam will play a significant role fuelling the nuclear renaissance Top 20 known uranium resources 1,800 World known recoverable resources 1,600 1,400 Resource ('000 t U3O8) 1,200 Operating Olympic World, 62% Dam, 38% Construction 1,000 Unde veloped 800 600 400 200 0 Streltsovskoye McClean Lak
Slide 38: Uranium market - summary
Uranium market - summary • Market remains tight in the near term: – Production delays have shifted some supply out farther – Demand is poised to grow with many countries embarking on massive nuclear expansion plans. – Many utilities are now buying uranium for their initial fuel cores putting additio