Bhp Group Ltd · ASX:BHP
Bhp — RIO Tinto — Merger or Acquisition (March 2008)
31 slides from Bhp's merger presentation, Mar 5, 2008
Slide 1: The Resources Sector Australian Shareholders Association
The Resources Sector Australian Shareholders Association Mr Don Argus AO Chairman, BHP Billiton
Slide 2: 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 the resources sector. By reviewing/attending this presentation you agree to be bound by the following conditions. The dire
Slide 3: Disclaimer (continued)
Disclaimer (continued) Information Relating to the US Offer for Rio Tinto plc BHP Billiton plans to register the offer and sale of securities it would issue to Rio Tinto plc US shareholders and Rio Tinto plc ADS holders by filing with the SEC a Registration Statement (the “Registration Statement”),
Slide 4: Overview of today’s presentation
Overview of today’s presentation • The significance of the resources sector to Australia • Demand for resources is in a period of strong growth • BHP Billiton is extremely well positioned to benefit from this growth • BHP Billiton’s offer for Rio Tinto – unlocking value
Slide 5: The significance of the resources sector to Australia
The significance of the resources sector to Australia
Slide 6: The mining sector is a major contributor to Australia’s economic wellbeing – GDP and taxes paid
The mining sector is a major contributor to Australia’s economic wellbeing – GDP and taxes paid • Mining and its related economic activities contributed in excess of A$166 billion to Australia’s GDP in FY2007 (a) .....17% of Australia’s GDP .....and 38% of Australia’s GDP growth • Resource companies
Slide 7: The mining sector is a major contributor to Australia’s economic wellbeing – exports and jobs created
The mining sector is a major contributor to Australia’s economic wellbeing – exports and jobs created 56.7 (17.2) 31.9 62.7 69.1 85.4 Total export revenues (a) (A$ bn) Jobs created, 2001–07 (b) (‘000s) Many jobs are created in rural and regional Australia Mining Manufacturing FY 01 FY 07 Mining Manu
Slide 8: The resource sector now represents ~30% of Australia’s primary market index…
The resource sector now represents ~30% of Australia’s primary market index… ASX 200: Resources vs all other sectors (Aggregate market capitalisation, A$bn) Source: IRESS, data as at 28-Feb-2008. 1,000 1,200 1,400 Jan-01 Jul-01 Jan-02 Jul-02 Jan-03 Jul-03 Jan-04 Jul-04 Jan-05 Jul-05 Jan-06 Jul-06 Ja
Slide 9: …and has delivered strong returns for investors
…and has delivered strong returns for investors ASX 200 Resources accumulation index (Index: 1-Jan-2001 = 100) A$10,000 invested in the ASX 200 Resources Accumulation Index in January 2001 would now be worth A$51,957, a 26% compound annual growth rate Source: IRESS, data as at 29-Feb-2008. $ 51,957
Slide 10: Australia is home to some of the world’s largest resource basins
Australia is home to some of the world’s largest resource basins Bauxite (mt) Uranium (kt) Source: USGS (Mineral Commodity Surveys – Jan 2007), BP Statistics Report and Uranium 2005: Resources, Production and Demand. * Reserve base for bauxite, iron content reserve base for iron ore, recoverable res
Slide 11: But is home to only one major mining company
But is home to only one major mining company Sources: Bloomberg, Datastream. Top 15 metals and mining companies (Market capitalisation as at 29-Feb-2008, US$bn) Australian head office Non-Australian head office
Slide 12: Demand for resources is in a period of strong growth
Demand for resources is in a period of strong growth
Slide 13: The US economy is over four times larger than that of China…
The US economy is over four times larger than that of China… Structure of 2007 Nominal GDP (US$ trillion) -3 USA China Net Trade Consumption Investment 13.8 3.2 ~300m People ~1,300m People Source: Global Insight (February 2008) and CEIC Data Co. Ltd (February 2008). Notes: Investment also includes n
Slide 14: ...but it is China industrialisation that is driving global metals consumption growth
...but it is China industrialisation that is driving global metals consumption growth China USA 1,000 1,200 1,400 2,000 4,000 6,000 8,000 10,000 12,000 3,000 6,000 9,000 12,000 15,000 18,000 Copper consumption (kt) Nickel consumption (kt) Seaborne iron ore (mt) Energy consumption (mtoe) Other Notes:
Slide 15: ...and industrialisation and urbanisation in China appears to have a long way to go
...and industrialisation and urbanisation in China appears to have a long way to go China’s tiered city structure: 84 tier 1-3 cities (a) 106 tier 1-3 cities (b) 143 tier 1-3 cities (c) Tier 1 Tier 2 Tier 3 Source: Global Insight; National Bureau of Statistics of China – China Statistical Yearbook;
Slide 16: To satisfy demand the world may need to mine as much copper over the next 25 years as throughout history
To satisfy demand the world may need to mine as much copper over the next 25 years as throughout history 5,000 10,000 15,000 20,000 25,000 30,000 35,000 40,000 World copper demand (‘000 tonnes refined copper) Source of data: CRU Copper Quarterly (January 2008); CRU archive data. a) Future copper con
Slide 17: BHP Billiton is extremely well positioned to benefit from this growth
BHP Billiton is extremely well positioned to benefit from this growth
Slide 18: BHP Billiton’s business is truly global in scope and scale…
BHP Billiton’s business is truly global in scope and scale… Stainless Steel Materials Nickel Iron Ore Iron Ore Manganese Manganese Ore, Manganese Alloy Metallurgical Coal Coking Coal, Thermal Coal Base Metals Copper, Lead, Silver, Uranium, Zinc Aluminium Alumina, Aluminium Energy Coal Thermal Coal P
Slide 19: …but Australian operations are the foundation
…but Australian operations are the foundation • 50% of assets in Australia • 49% of profit before interest and taxation, generated by Australian based assets • Over 60% of issued capital relates to the Australian side of the DLC (a) • Over 495,000 Australian retail BHP Billiton Ltd shareholders who
Slide 20: It has achieved substantial growth since the DLC merger…
It has achieved substantial growth since the DLC merger… Notes: a) Source: Production shown for the months ending 30-June. Converted to copper equivalent units using BHP Billiton FY2007 average realised prices and BHP Billiton estimates. Excludes all production from sold or ceased operations. Produc
Slide 21: Created a unique diversified portfolio balanced across high margin commodities…
Created a unique diversified portfolio balanced across high margin commodities… Underlying EBITDA (12 months, US$bn) Underlying EBITDA Margin (a) (CY2007, 12 months) Note: Historical financial information has been restated for comparative purposes per note 1 of BHP Billiton’s half-year financial rep
Slide 22: Delivered strong dividend growth…
Delivered strong dividend growth… 6.5 7.0 16.5 13.5 17.5 20.0 Ordinary dividends per share (US cents per share) Note: Two interim dividends were paid in FY2004 45% increase in interim dividend 13.0 14.5 26.0 28.0 36.0 47.0 29.0 FY2002 FY2003 FY2004 FY2005 FY2006 FY2007 FY2008 Full year dividend Inte
Slide 23: …and created considerable wealth for global investors
…and created considerable wealth for global investors Value at 28 June 2001 A$10,372 Value at 30 June 2003 A$9,902 Value at 30 June 2005 A$20,171 Value at 30 June 2007 A$38,380 BHP Billiton Ltd (a) (A$) Source: Bloomberg, Iress. a) Dividends/distributions assumes that the dividends are received in c
Slide 24: The future looks bright for BHP Billiton…
The future looks bright for BHP Billiton… Boffa/Santou Refinery As at 29 February 2008 Proposed capital expenditure <$500m $501m-$2bn $2bn+ SSM Petroleum D&SP Energy Coal Aluminium Iron Ore Base Metals Met Coal Manganese CSG Execution Pyrenees Samarco Neptune Shenzi WA Iron Ore RGP 4 NWS T5 Alumar A
Slide 25: off
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Slide 26: BHP Billiton’s offer for Rio Tinto – unlocking value
BHP Billiton’s offer for Rio Tinto – unlocking value
Slide 27: Unlocking value: Why a combination with Rio Tinto?
Unlocking value: Why a combination with Rio Tinto? 1 2 3 4 5 Combined entity will have a unique portfolio of tier 1 assets – Highly complementary large-scale, low-cost, long-life assets – Strengthened asset portfolio and superior future growth options Unparalleled exposure to overlapping mineral bas
Slide 28: Creating a natural resources “super-major”
Creating a natural resources “super-major” Top 10 companies in the world by market capitalisation (As at 29-Feb-2008, US$bn) Source: Datastream. a) Based on BHP Billiton Ltd and BHP Billiton Plc closing share prices on 29-Feb-2008 and assuming BHP Billiton acquires 100% of the shares in Rio Tinto Lt
Slide 29: In summary
In summary • A strong resources sector is fundamental to Australia’s economic prosperity • The global resources industry is undergoing extraordinary change • Standalone, BHP Billiton has a bright future • The offer for Rio Tinto has the potential to enhance this by creating a company that is unique
Slide 30: Legitimate questions
Legitimate questions • Assuming a satisfactory regulatory outcome, Rio Tinto shareholders will be faced with 2 choices: – Accept BHP Billiton’s offer, which is priced at a 45% premium to the pre- approach trading valuations of the two companies; or – Reject BHP Billiton’s offer • Rio Tinto sharehold
Slide 31: bhpbilliton
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