Bhp Group Ltd · ASX:BHP
Bhp — RIO Tinto — Merger or Acquisition (December 2007)
40 slides from Bhp's merger presentation, Dec 12, 2007
Slide 1: Filed by BHP Billiton under 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 and Rio Tinto Limited Commission File No.: 000-20122 The following are slides comprising an investor presentation that was first giv
Slide 2: BHP Billiton and Rio Tinto: A Matter of Value
BHP 12 December Billiton and 2007Rio Tinto A Matter of Value
Slide 3: Disclaimer
Disclaimer combination The presentation Subject no This or connection of from Neither jurisdictions Order persons included sourced Certain cost lives looking risks forward-looking Billiton Page otherwise securities reliance directors and document presentation and, and any such 22005 statements this
Slide 4: Disclaimer (Continued)
Disclaimer There results Billiton transaction, additional combinations forward-looking year-ended Report disclaims undertaking events, None earnings actual The extract. terms investors Goldman responsible referred shareholders jurisdiction of Securities In the by relevant US PROSPECTUS AMENDMENTS wh
Slide 5: Agenda
1. BHP Agenda 2. 3. Page 4 Billiton’s Billiton: World Superior proposal class shareholder to growth Rio Tinto assets value creation
Slide 6: BHP Billiton: Superior shareholder value creation
1. BHP Page 5 Billiton: Superior shareholder value creation
Slide 7: Superior capitalisation growth
Superiorcapitalisation Market market value growth (US$B) BHP Billiton 240 CAGR: 37% US$230B 210 180 150 Rio Tinto CAGR: 29% US$122B 120 90 60 US$31B 30 US$24B 0 29-Jun- 2001 Source: Note: US$11.4B Page 6Market Datastream andcapitalisation Rio Tinto and financial undertook based reports onshare share
Slide 8: BHP Billiton's track record of execution
•BHP – Page Track Translates Ownership Total Continued Execution Delivering Earnings Dividend Billiton’s 7 shareholder record per per to on investment of production of share drivers share time a portfolio return and growth growth ofin growth on value of development budget Tier 1 assets throughout th
Slide 9: Total capital expenditure on completed projects
TotalOre (US$B BHP Iron CY2007 CY2006 CY2005 CY2004 CY2003 CY2002 CY2001 (a) 0.0 Nil Ni 0.5 1.0 1.5 2.0 2.5 3.0 Other Source: Note: Page 2007.Billiton 8capital Total Developments since BHPcapital expenditure Jul-2001) Billiton has invested Rio Tinto expenditure and Total on Rio more completed =Tinto
Slide 10: Strong project execution performance
Strong Major Over Cost Ahead Budget Under 80% 100% 120% Mozal 0% 20% 40% Schedule 60% Hillside Mount Spence Escondida Products Mining Phase Ravensthorpe Area North Sulphide Norte Notes: Expansion Leach (forecast) Capacity Page Behind C 9Budget IV minerals 2of a) Arthur execution 3&Selected RGP2devel
Slide 11: Superior production growth
Superior Excl. 8% 4% Incl. (Index: BHP 140 150 160 170 5% Rio 120 130 2% Source: FY07 FY06 FY05 FY04 FY03 FY02 FY01 100 110 Note: and Tinto PageCAGR Tinto BHP production Billiton 10 production includes Production FY2001 Rio production Billiton Tinto production from production from shown estimates. p
Slide 12: Superior earnings growth
Superior Earnings (Index: 800 500 600 50% 700 F 0 100 200 300 CAGR 400 37% Source: BHP Rio Page Y2002 Tinto Tinto’s Billiton Billiton’s 11FY2002 BHP FY2003 EPS perEPS share Billiton growth EPS = calendarised FY2004 100; represents and US$) Rio FY2005 to Tinto reported year FY2006 annual ending under
Slide 13: Superior dividend growth
Superior Declared (Index: BHP 400 29% Rio 200 300 11% F 0 100 Source: FY2007 FY2006 FY2005 FY2004 FY2003 Note: undertook Page Y2002 Tinto CAGR Billiton 12 Rio FY2002 BHP dividend ordinary Tinto’s share Billiton buybacks =ordinary growth 100; dividends and US$) Rio of dividends per US$4.7B Tinto shar
Slide 14: Superior total shareholder return
Superior (Index: BHP 600 30% Rio 200 300 400 500 J23% 0 100 Dec-05 Jan-05 Mar-04 Apr-03 May-02 Total Oct-07 – Source: received Page un-01 BHP Rio Tinto CAGR Billiton 13 shareholder Tinto Billiton Jun-2001 Nov-06 IRESS. by total Ltd Ltd: BHP Ltd shareholder Ltd Ltd: TSR a) A$37,612 Billiton and =retu
Slide 15: BHP Billiton: World class growth assets
2. BHP Page 14Billiton: World class growth assets
Slide 16: Simplicity, capital projects pipeline
Simplicity, As CSG capital Proposed Manganese D&SP Petroleum Met SSM Aluminium Base Energy US$501m <US$500m $2B -US Blackwater Turrum Alloy Angola & Saraji WFG Canadian Thebe Bakhuis Angostura Red Gas Nimba Angel NWS E&G Neptune Worsley UG Cliffs Kennedy Hallmark T5 Kipper Endeavour GEMCO SA Expansi
Slide 17: BHP Billiton: World class growth assets
•BHP – Page Pilbara Olympic Nickel Petroleum A Mineralisation Multi-stage Significant Double History Strong tier world major Billiton: 161historical growth iron digit asset of global class Dam exploration brownfield growth ore expansion World volume resource profile positions producer financial clas
Slide 18: Pilbara iron ore: Tier 1 asset
Pilbara •– Page Very Resource High Large First Neither Total Rail17 Port: system: class low level Inner Outer-Harbour potential iron high company cost and project infrastructure ore: of grade Harbour can equity mineralisation curve Tier port be ore needs development 1capacity position expanded owner
Slide 19: BHP Billiton Pilbara Reserves and Resources
(Billion BHP Pilbara 20-30 14.2 Rio Reserves Targeted additional Notes: 18-30c) 8.0 Mineralisation The geophysics, define subject Potential Page14.2 Tinto Potential Billiton 18 (c) aa) iron Reserves Mineralisation totonnes, Mineral additional Mineralisation & Source: Pilbara the Pilbara Resources or
Slide 20: Pilbara iron ore: Resources and potential mineralisation
Pilbara B 7 ~11 Targeted (Billion 16 15 BHP Rio Notes: The geophysics, define subject Tinto Resources d) Page HP BHP - Tinto potential 27 23 Billiton 19 Resources aa) iron Reserves to Billiton tonnes, Mineral additional Bar (c) (est.) the are assumed ore: known (b) Mineralisation size notes quoted (
Slide 21: Pilbara iron ore: Resources in large ore bodies and clusters
Pilbara iron ore: BHP Billiton’s Resources are in large ore bodies and located in clusters Port Hedland Dampier Deposit (equity 0.5bt 1.0bt 2.0bt share) size Capescale Lambert BHP Billiton Reserves / Resources BHP •Rio Notes: Page Billiton’s distribution, Reserves Large, Clustered Tinto’s 20Bubble l
Slide 22: Pilbara iron ore: assets clustered around infrastructure
Pilbara Port iron ore: BHP Billiton’s mineralisation assets are individually large and clustered around its infrastructure Hedland Dampier Deposit Rio 0.5bt 1.0bt 2.0bt •BHP Enable Reduce Source: as from Tinto’s representative Bubble Page BHP Rio Combining locations Tinto Billiton the 21 Tinto’s Bil
Slide 23: Pilbara iron ore: Port Hedland expansion
New Third Port •BHP Notes: Study Page Total Clear Port: Strong CanHedland Existing Billiton’s Billiton 22 be Party Phase Inner Outer-harbour a) potential growth Government expanded Alannah Berths harbour 2,rail Berths Stockyards harbour channel path August Pilbara port system MacTiernan, tocapacity
Slide 24: Pilbara iron ore: organic production growth
Pilbara (Index: Organic 1,200 Production 100% 1,000 BHP 800 Rio 600 CY1990 8.1% Actual 200 CY1999 400 C 0 Sources: growth”; capacity Page Y1990 Tinto Rio CY2009 Billiton 23 CAGR CY1990 Basis Equity Forecast iron 100 Tinto Growth of –Rio CY1995 Production Total CY2018 Historical 420mt = Basis ore: or
Slide 25: Olympic Dam: world class resource
Olympic mt 4th 160 140 80 100 120 60 40 20 (Page el kt The 2500 1000 1500 2000 0 Copper largest deposit deposit O 500 Dam: Witwatersrand 5th Pebble(Copper)copper in200 Grasberg(Copper) Muruntau Olympic Sukhoi Natalka Carlin LIHIR Oyu Sources: Note: Resource a)(a)(a) lympic 50 Teniente U3O8 largest l
Slide 26: Contained copper equivalent comparison
Contained (Equity O 0 20 40 60 80 100 120 140 160 Copper Olympic 0.0 0.5 1.0 1.5 2.0 BHP Source: using Oyu Mines Page lympic Tolgoi Billiton 25 GSJBW ownership equivalent basis) BHP Dam copper project Billiton interests long relative Resolution interest equivalent grade assumes term estimates Rio to
Slide 27: Olympic Dam: uranium and nuclear demand
Olympic Existing Operational Notes: Nucelar Page 26a)Safety operational Dam: Location (power Centre Exposure ofplants) power reactors at ANL, to–plants strong 439 that Aug-2005 reactors(c) and are nuclear planned, future (www.insc.anl.gov/pwrmaps/world_map.pdf). demand Planned development under grow
Slide 28: Olympic Dam: Multi staged expansion
Mining Dam: Multi staged expansion Olympic 10mtpa 0mtpa 9mtpa Smelting Concentrating (500ktpa(100ktpa +2Mtpa +3Mtpa Underground +2Mtpa con) +18Mtpa Open 70mtpa 50mtpa 18mtpa +18mtpa +20mtpapit (250ktpacon) con) (800ktpa +20mtpa Market (800ktpa Note: The Stages CONCEPTUAL Cu O 0 1.1 Modify 600 3 Page
Slide 29: Nickel: Top global producer and growth pipeline
Nickel Nickel: Top (ktpa, 150 200 250 300 350 N 0 50 100 purchases BHP Development Project Hallmark Leach Y 1 Maya Eastern abulu orilsk 3rd 10 Billiton(c) Indonesian 2006 Line Facility global CMSA A Vale party Perseverance CMSA Talc MKO Deeps major Heap saleable Murrin pipeline(b) nickel Heap Xstrat
Slide 30: Nickel: Multi staged growth
Nickel: Power +3Mtpa Processing Mining 50 1Mtpa +40 Coal Ore smelter mine Ferronickel +3.5Mtpa 13Mtpa 9.5Mtpa 6Mtpa 3Mtpa +20 Nickel Heap Mine Stages CONCEPTUAL Cont’d 0 (ktpa) L3,4 open HL1 HL2 + Note: The Page Current Further ktpa mined conceptual ktpa Build Expand pit 29 leach Unless plant Output
Slide 31: Petroleum: Volume growth
Petroleum: •Volume * Atlantis Train Stybarrow Zamzama Neptune Shenzi Pyrenees Page Source BHP 305:Total growth –NWS –FY2007A (Attributable FY2006A 100 110 120 130 140 150 160 170 CAGR 10.5% 180 –Start Billiton BHP–Strong Online, –Start –Start 2P Second Online, LNG to up Reserves: MMboe,up up 2010 gr
Slide 32: Petroleum: Significant exploration and major projects
Petroleum: Significant Major – * Trinidad West 4Deep Colombia Malaysia East South Falklands Deep (mmboe) Source 2near Coast Australia :Water Development Shenzi Gas Angostura WFG Thebe Atlantis Turrum Kipper Phase Browse NWS Rankin Macedon Future Feasibility Scarborough Page <50 50-200 >200 31NthTota
Slide 33: BHP Billiton: Superior growth outlook
•BHP – Page Pilbara Olympic Nickel Petroleum Already With Similar Large Not Production One Significant Strong Rapidly Supplemented Billiton: 32 constrained of an ore history iron the targeted exciting 3rd increasing Dam bodies world’s brownfield growth ore Superior largest of byby additional growth
Slide 34: BHP Billiton's proposal to Rio Tinto
3. BHP Page 33Billiton’s proposal to Rio Tinto
Slide 35: Relative value and prospects
•Relative – Notes: Billiton available Page From On Growth BHP We BHP measures 34 believe Billiton’s a) Billiton’s aissued value similar information Based prospects Rio we ordinary on asset conclusions size track Tinto’s consider BHP are inportfolio record clearly June shares Billiton shares relevant
Slide 36: Why combine with Rio Tinto?
•Why – Notes: “Further Full Page Ability Material Combined US$1.7B US$2.0B Other Enhanced Greater Optimised Maintenance Intended run a a) 35combination combination rate to details Estimated diversity quantifiable initial deliver nominal additional ability entity capital synergies ofonUS$30B BHP will
Slide 37: Exchange ratio
Exchange Rio Rio Tinto’s Tinto ratio lower relative Rumours Riocontribution post Alcan 2006 results offer forofAlcanTinto BHP to Rio Billiton Tinto Boardconfirms approach 3.1x 3.00 BHPTinto 2.9x Rio proposal: 2.7x 28% 1H premium(a) Billiton 2007 3-for-1 Ratio 2.5x (x) Results Exchange Rumours 2.40 o
Slide 38: BHP Billiton's proposal: premium and benefits for Rio Tinto shareholders
BHP the •– Notes: £43.09 of Rio share respectively Ltd) Billiton US$/A$ 31-Oct-2007. with conjunction effected Page consideration. The Under So Immediate Overall 3.0 41% Ongoing Intended CGT £17.99 synergies(c),(d) Tinto far, as exercise Billiton’s 37 BHP prices transaction share a) rollover and atL
Slide 39: Summary
•Summary We Page As The BHP Proposed Our believe an 38 benefits proposal Billiton’s all share US$30B in the of includes creates proposal, shares this combination. buyback combination wealth have a significant wedelivered and for are It all offering must progressive cannot shareholders premium outsta
Slide 40: BHP Billiton and Rio Tinto: A Matter of Value
BHP Billiton Page 39 and Rio Tinto A Matter of Value