Bhp Group Ltd · ASX:BHP
Bhp — BHP Billiton — Corporate Update (November 2008)
24 slides from Bhp's corporate update, Nov 3, 2008
Slide 1: Aluminium Investor Presentation
Aluminium Investor Presentation Australia Analysts Site Visit 29 October 2008
Slide 2: Disclaimer
Disclaimer By viewing this presentation you agree to be bound by the following conditions. Certain statements in this presentation are forward-looking statements (including statements regarding contribution synergies, future cost savings, the cost and timing of development projects, future productio
Slide 3: Presenter introduction
Presenter introduction Jon Dudas Julius Matthys President Aluminium CSG COO Worsley Alumina • 24 years resources experience • 26 years resources experience • 17 years at BHP Billiton • 26 years at BHP Billiton Markus Meurer Warren McKenzie VP Marketing Alumina E&G Project Director • 21 years resourc
Slide 4: Presentation agenda
Presentation agenda Business overview – Operating performance – Significance to BHP Billiton portfolio – Comparison to peers – Key challenges for the industry Aluminium and alumina commodity outlook – Global demand and China growth outlook – Global supply outlook – Cost curves – Input costs Future g
Slide 5: Aluminium: Business overview
Aluminium investor presentation Business overview – Operating performance – Significance to BHP Billiton portfolio – Comparison to peers – Key challenges for the industry Aluminium and alumina commodity outlook – Global demand and China growth outlook – Global supply outlook – Cost curves – Input co
Slide 6: Business overview: HSEC
Business overview: HSEC Safety Community TRIFR Community Expenditure (12 MMA) (US$m) 9 Arts Other 2% Environment 7 7% Sport / Recreation 4% 6 5% 5 Community 46% Health 17% Welfare 3 2 19% 1 0 Education Jun-04 Dec-04 Jun-05 Dec-05 Jun-06 Dec-06 Jun-07 Dec-07 Jun-08 FY08 Community Expenditure amounted
Slide 7: Business overview: current assets
Business overview: current assets Facility Ownership Equity capacity Alumar 40% 180 Facility Ownership Equity capacity MRN Trombetas 14.8% 2,664 Kaaimangrasie 45% 720 Klaverblad 45% 630 Coermotibo 45% 630 Facility Ownership Equity capacity Expansion projects Alumar 36% 540 720 Paranam 45% 990 Facili
Slide 8: Business overview: operating performance
Business overview: operating performance Year ended June (US$m) 2008 2007 % Change Aluminium EBIT 1,465 1,856 -21.1 Record alumina production South African power situation will continue to impact metal production Worsley E&G approved EBIT Margin (%) 50 40 30 20 10 0 2004 2005 2006 2007 2008 Year End
Slide 9: Business overview: contribution to group
Business overview : contribution to group (Our portfolio is diversified and balanced across high margin commodities) Underlying EBIT Underlying EBIT Margin(a) (FY2008, US$bn) (FY2008) Petroleum 67% Petroleum Energy Energy Coal 30% (27%) Energy Coal Aluminium 31% Aluminium Base Metals 62% 15 Diamonds
Slide 10: Business overview: key challenges
Business overview: key challenges Raw material price pressures Global power supply Bringing on new capacity Quality of Chinese bauxite
Slide 11: Aluminium and alumina commodity outlook
Aluminium investor presentation Business overview – Operating performance – Significance to BHP Billiton portfolio – Comparison to peers – Key challenges for the industry Aluminium and alumina commodity outlook – Global demand and China growth outlook – Global supply outlook – Cost curves Future gro
Slide 12: Aluminium and alumina commodity outlook: Key China Messages
Aluminium and alumina commodity outlook Key China Messages • China has a significant influence on the Aluminium market – Aluminium is required to supply the intensive urbanisation of China – A question of self sufficiency of aluminium supply – Is power a constraining factor? – Domestic aluminium sup
Slide 13: China production capacity can respond rapidly to pricing opportunities
China production capacity can respond rapidly to pricing opportunities Smelter Production in China Aluminium Price (‘000 mt) (US$/t) 16,000 3,000 14,000 2,500 12,000 SHFE in US$ (2002 fixed exchange rate) 2,000 10,000 8,000 1,500 Chinese Marginal Smelter 6,000 1,000 4,000 500 2,000 0 0 2002 2003 200
Slide 14: China has been self-sufficient in smelting
China has been self-sufficient in smelting Chinese Aluminium supply is up 650% driven by low capital construction costs and strong domestic demand Aluminium Production (kt) 45 40 35 China 30 25 Asia Oceania Eastern Europe 15 Western Europe 10 Latin America North America 0 Africa 1988 1989 1990 1991
Slide 15: Chinese Aluminium capacity additions at the top end of cost curve
Chinese Aluminium capacity additions at the top end of cost curve Chinese Aluminium capacity additions come at the top end of the cost curve US$/t Other Smelters BHP Billiton Smelters 2,800 Chinese Smelters 2,400 Bayside 2,000 Alumar Hillside 1,600 Mozal 1,200 0 5,000 10,000 15,000 20,000 25,000 30,
Slide 16: China has a track record of bringing on new power capacity
China has a track record of bringing on new power capacity Ability to bring on new power capacity on time as planned Sources of Chinese power (GW) 750 Wind / Other Nuclear Hydro 600 Coal 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 Source: CEC.
Slide 17: Aluminium exchange stocks and LME cash price
200 400 600 800 1,000 1,200 1,400 1,600 1,800 (kt) Slide 17 0 Jan-04 Source: LME, SHFE and Comex. Apr-04 Jul-04 Exchange Stocks Oct-04 Jan-05 LME SHFE Comex Aluminium stocks Apr-05 LME Cash (RH) Jul-05 Oct-05 Jan-06 Apr-06 Jul-06 Oct-06 Jan-07 Apr-07 Jul-07 Oct-07 Jan-08 Apr-08 Jul-08 ( $ Oct-08 0 5
Slide 18: Chinese demand for imported Alumina and Bauxite
Chinese demand for imported Alumina and Bauxite Alumina (kt) 30,000 25,000 20,000 Alumina Imports 15,000 Domestic Alumina Production –Imported Bauxite Ore 10,000 Domestic Alumina Production –5,000 Chinese Bauxite 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008YTD Source: BHP Billito
Slide 19: Chinese alumina supply at the top end of the cost curve
Chinese alumina supply at the top end of the cost curve CRU Alumina cost curve, 2008 US$/t Other refineries BHP Billiton Refineries Chinese Refineries Paranam Worsley 240 Alumar 160 0 10,000 20,000 30,000 40,000 50,000 60,000 70,000 80,000 90,000 Cumulative capacity (kt) Source: CRU Alumina, 2008
Slide 20: Aluminium: Input costs
Aluminium investor presentation Business overview – Operating performance – Significance to BHP Billiton portfolio – Comparison to peers – Key challenges for the industry Aluminium and alumina commodity outlook – Global demand and China growth outlook – Global supply outlook – Cost curves – Input co
Slide 21: Most attractive bauxite deposits
Most attractive bauxite deposits Most attractive bauxite deposits are in Guinea World’s top 10 bauxite deposit countries (Bt) Kazakhstan Greece 0.4 Bt 0.6 Bt China Jamaica India 2.3 Bt 2.5 Bt 1.4 Bt Suriname 0.6 Bt Guyana 0.9 Bt Guinea 8.6 Bt Brazil 2.5 Bt Australia 7.9 Bt Source: USGS. Reserves
Slide 22: Guinea project
Guinea project Guinea • Long life, world class bauxite resource with embedded options • Strong government support • Currently finalising feasibility study • Greenfield projects are more challenging in new geographies
Slide 23: Aluminium: Growth profile and capital projects
Aluminium investor presentation Business overview – Operating performance – Significance to BHP Billiton portfolio – Comparison to peers – Key challenges for the industry Aluminium and alumina commodity outlook – Global demand and China growth outlook – Global supply outlook (The key constraints) –
Slide 24: Key messages
Key messages • China’s focus is on self-sufficiency in aluminium • China’s growing requirement to import alumina or bauxite to meet domestic metal demands • Our growth options and project pipeline are aligned to this view (to feed the emerging seaborne bauxite/alumina market) • We have a track recor