Bhp Group Ltd · ASX:BHP
Bhp — RIO Tinto — Merger or Acquisition (July 2008)
34 slides from Bhp's merger presentation, Jul 29, 2008
Slide 1: Filed by BHP Billiton Plc pursuant to Rule 425
Filed by: BHP Billiton Plc and BHP Billiton Limited Pursuant to Rule 425 under the Securities Act of 1933 Subject Company: Rio Tinto plc Commission File No.: 001-10533 The following are slides comprising a presentation that was given by Marcus Randolph, Chief Executive Ferrous and Coal, BHP Billiton
Slide 2: BHP Billiton: Strength, Stability and Growth
BHP BillitonStrength, – Stability and Growth Securities & Derivatives Industry Association Marcus Randolph 29 July 2008
Slide 3: Disclaimer
Disclaimer This document has been prepared by BHP Billiton Limited and BHP Billiton Plc (“BHP Billiton") and comprises the written materials/slides for a presentation concerning BHP Billiton's offers for Rio Tinto Limited and Rio Tinto plc (“Rio Tinto”). By reviewing/attending this presentation you
Slide 4: Disclaimer (continued)
Disclaimer (continued) No statements concerning expected cost savings, revenue benefits (and resulting incremental EBITDA) and EPSaccretion in this presentation should be interpreted to mean that the future earnings per share of the enlarged BHPBilliton group for current and future financial years w
Slide 5: BHP Billiton: Strength, Stability and Growth
BHP Billiton: Strength, Stability and Growth • Today: The world’s leading diversified mining company • Our past: A proven track record • Our future: The outlook is exciting • The offer for Rio Tinto Slide 4
Slide 6: With a diversified global portfolio
With a diversified global portfolio Metallurgical Coal Base Metals Manganese #1 global supplier of seaborne #3 global producer of copper, silver and lead #1 global supplier of traded metallurgical coal seaborne manganese ore Energy Coal Iron Ore Stainless Steel Materials #4 global supplier of seabor
Slide 7: Western Australia: A share in the success
Western Australia: A share in the success *A$m • State (Royalties and Taxes) 639 • Payments to Local Contractors 384 • WA Contract Payments 2956 • Wages and Superannuation 587 (employees) • Community Contributions 23 * FY 2008 Estimate
Slide 8: Creating the world's largest diversified natural resources company
Creating the world’s largest diversified natural resources company Top 10 metals and mining companies (Market capitalisation as at 17-July-2008, US$bn) 240 Australian head office BHP Billiton Non-Australian head office 180 Rio Tinto Vale 120 Undisturbed (a) China Shenhua Anglo American Xstrata Noril
Slide 9: Led by an experienced management team
Led by an experienced management team Chairman and Chief Executive Officer Don Argus Marius Kloppers Chairman Chief Executive Officer • Chairman of BHP Billiton • 15 years resources Group since June 2001 experience • Chairman of BHP Limited • 15 years at BHP Billiton since April 1999 Group Managemen
Slide 10: Maintaining our commitment to our core strategy
Maintaining our commitment to our core strategy • Focus on Tier 1 assets that are large, low-cost and expandable • Focus on the extraction of upstream natural resources • Portfolio diversified by commodity, customer and geography reducing the volatility of cash flows • Maintenance of a deep diversif
Slide 11: With an overriding commitment to ethics, safety, environmental practice and community engagement
With an overriding commitment to ethics, safety, environmental practice and community engagement • Sustainable development is fundamental to our success • Our licence to operate depends on responsibly operating our business: – A track record of being valued by our communities will contribute to us b
Slide 12: Our past: A proven track record
Our past: A proven track record Slide 11
Slide 13: Our business today: a unique diversified portfolio balanced across high margin commodities
Our business today…a unique diversified portfolio balanced across high margin commodities (a) Underlying EBITDA Underlying EBITDA Margin (CY2007, 12 months, US$bn) (CY2007, 12 months) 24,000 23,623 Diamond & Specialty Products Diamond & 34% Energy Coal Specialty Products Energy Petroleum Energy Coal
Slide 14: A track record of investing early to meet demand
A track record of investing early to meet demand… Completed projects (US$bn) FY2002 FY2003 FY2004 FY2005 FY2006 FY2007 FY2008 Antamina Escondida Phase IVWAIO - Area C NWS Train 4 Escondida Norte Spence Genghis Khan Typhoon San Juan UG Mt Arthur North ROD Paranam BMA Phase 2 Atlantis South Tintaya Ox
Slide 15: Most developments have been executed to expectations
Most developments have been executed to expectations, wherever on the globe they are located Major minerals development projects commissionedsinceJuly2001(a) (b) Over Budget Budget Behind 120% Schedule Time 100% 80% Under Budget Ahead of Schedule 60% 40% 20% 0% Mozal2 Hillside 3 Escondida Escondida
Slide 16: Significant EPS and DPS growth delivered for shareholders
Significant EPS and DPS growth delivered for shareholders Earnings per share (a) Ordinary dividends per share (b) (US$ per share) (US cents per share) 50 2.50 47.0 2.34 2.00 40 36.0 29% CAGR 1.68 50% CAGR 1.50 30 28.0 26.0 1.06 1.00 20 14.5 13.0 0.56 0.50 10 0.31 0.31 0.00 0 FY2002FY2003FY2004FY2005
Slide 17: Our future: The outlook is exciting
Our future: The outlook is exciting Slide 16
Slide 18: Chinese growth is driving global materials demand
Chinese growth is driving global materials demand Change in global consumption (a)) (%, 1997-2007 36 % 64 % 88 % 96 % 57 % 50 % 16 % 7% 7% (4)% (2)% (14)% Copper Nickel Seaborne Iron Ore Energy China USA Other Notes: Seaborne iron ore demand based on import statistics - CRU data for 2007, IISI data
Slide 19: Industrialisation and urbanisation in China have a long way to go
...and industrialisation and urbanisation in China appears to have a long way to go Finished steel consumption (kg/capita) China Germany 1,200 India Japan 1,000 Korea, Rep. United States Taiwan 800 600 400 200 0 0 5,000 10,000 15,000 20,000 25,000 30,000 35,000 40,000 45,000 50,000 GDP/Capita (Jan 2
Slide 20: India: the journey has begun
India –the journey has begun (a) GDP BHP Billiton copper equivalent sales volume units (US$ billion) (100=FY2002 sales to China) 1,000 500 450 800 400 100% 350 Basis 600 300 Equity 250 Basis 400 200 150 200 100 50 0 0 China India China India 1996 2006 FY 2002 FY 2007 Source: World Bank, Focus Econom
Slide 21: Deep diversified inventory of growth options, many brownfield expansions
BHP Billiton has a deep diversified inventory of growth options, many of which are brownfield expansions CMSA Heap Angola CMSA Heap Perseverance NWS Nth WA Iron Ore WA Iron Ore DRC Leach 2 Olympic Dam & DRC Macedon Leach 1 Deeps Rankin B RGP 4 Quantum 2 Smelter Expansion 1 Maruwai NWS KNS Cerrejon A
Slide 22: Clear plan for growth to 300 mtpa and beyond
Clear plan for growth to 300 and mtpabeyond Western Australia Iron Ore capacity (mtpa, 100% basis) Advanced planning Construction 50 Completed > 350 60 capacity 300 40 capacity in 2015 45 240 capacity 26 in 2012 20 112 2007 RGP3* RGP4 RGP5 RGP6 Quantum 1 Quantum 2 Status CY07 ActualRamping upConstru
Slide 23: Raw material prices have risen, but still low as a % of steel price
Raw material prices have risen, but still low as a % of steel price Commodity price movement Hot rolled coil price and raw material costs (% change 2001-2008) (US market transactions (US$/mt) and share of raw materials costs (%)) 599% 1,000 (d) 100% Raw materials cost as % of HRC price, % (RHS) (e)
Slide 24: The offer for Rio Tinto
The offer for Rio Tinto Slide 23
Slide 25: Overlapping mineral basin positions. US$3.7bn per annum of synergies
Overlapping mineral basin positions. US$3.7bn per annum of synergies Selected existing BHP Billiton and Rio Tinto assets, projects and concessions. Slide 24
Slide 26: Summary of the offer for Rio Tinto
Summary of the offer for Rio Tinto • BHP Billiton has made a pre-conditional offer for Rio Tinto, it will be capable of acceptance by shareholders following regulatory approvals and posting documents of offer • The offer is being made direct to the shareholders of Rio Tinto • Rio Tinto shareholders
Slide 27: BHP Billiton and Rio Tinto share prices strongly correlated
BHP Billiton and Rio Tinto’s share prices have been strongly correlated, with BHP Billiton outperforming (a) (b) BHP Billiton Ltd and Rio Tinto Ltd TSR BHP Billiton Ltd Rio vs Tinto Ltd relative performance (Index: Jun-2001 = 100) (Price performance relative to Jun-2001 = 100) 600 BHP Billiton 500 C
Slide 28: Offer for Rio Tinto: Compelling terms
Offer for Rio TintoCompelling – terms 3.6 for 1 06-Feb-2008 BHP Billiton's offer for Rio Tinto 3.4 for 1 3.2 for 1 3.0 for 1 12-Nov-2007 BHP Billiton's proposal 2.8 for 1 2.6 for 1 Pre approach fair value exchange ratio 2.4 for 1 2.2 for 1 Jul-2007 Sep-2007 Nov-2007 Jan-2008 Mar-2008 May-2008 Jul-20
Slide 29: Conclusion: Strength, stability and growth
Conclusion Strength, – stability and growth • BHP Billiton on a standalone basis has a bright future • The core strategy remains unchanged • Focused on producing volumes from low cost assets • A combination of BHP Billiton and Rio Tinto can generate substantial additionalvalueforshareholders – weare
Slide 30: Questions and Answers
Questions and Answers Slide 29
Slide 31: Senior Executive Profiles
Senior Executive Profiles Slide 30
Slide 32: Appendix: Marcus Randolph Profile
Appendix: Marcus Randolph Profile Marcus Randolph Chief – Executive Ferrous and Coal Age: 52 Professional qualifications: • MBA (Harvard Business School) • Bachelor of Science (Colorado School of Mines) Previous BHP Billiton positions: • Chief Organisation Development Officer • President Diamonds an
Slide 33: Appendix: Marius Kloppers Profile
Appendix: Marius Kloppers Profile Marius Kloppers Chief – Executive Officer Age: 46 Professional qualifications: • BE (Chem), MBA, PhD (Materials Science) • Bachelor of Chemical Engineering (University of Pretoria (South Africa)) • PhD from Massachusetts Institute of Technology (MIT) (USA) • MBA fro
Slide 34: cdl
cdl bhpbilliton sourcing the future