Bhp Group Ltd · ASX:BHP
Bhp — BHP Billiton — Corporate Update (November 2003)
36 slides from Bhp's corporate update, Nov 4, 2003
Slide 1: South African Site Visit: Middelburg Ferrochrome
SOUTH AFRICAN SITE VISIT MIDDELBURG FERROCHROME 04 NOVEMBER 2003
Slide 2: Ferrochrome and the Way Forward
BHP Billiton STAINLESS STEEL MATERIALS FERROCHROME AND THE WAY FORWARD 04 NOVEMBER 2003
Slide 3: Stainless Steel Value Chain
Stainless Steel Value Chain (at current market prices and volumes – Aug 2003) Raw Materials Consumption by Grade Product Form End Use Stainless 74% Austenitic 70% 5.1 Mt US$ 4.6 Bn Steel Scrap AISI 300 Flat products 30% Process series Plant Sheet/Strip/ 18% Cr 13 Mt Plate 750 kt 10% Building & Prima
Slide 4: Stainless Steel is the fastest growing major use of metals
Stainless Steel is the fastest growing major use of metals, and is expected to continue to grow strongly 35 CAGR 1992 – 2002 CAGR 2002 – 2012 30 4.5% >5% 25 20 (mt) 15 Historical growth (30 years) 10 CAGR 1970 – 2000 4.6% 5 0 1992 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006
Slide 5: Stainless steel growth continues to be robust
Stainless steel growth continues to be robust 35,000 China 33 Mt Rest of World 30,000 Forecast CAGR 2002 – 2012 >5% 25,000 CAGR 1992 – 2002 25.3 Mt 4.5% 20,000 (kt) 15,000 10,000 CAGR (2002 – 2012) Growth in China will not displace melting China: 24 % 5,000 elsewhere in the world, but non-China grow
Slide 6: Regional stainless steel supply and demand breakdown (2002)
Regional stainless steel supply and demand breakdown (2002) All figures in Mt 8.1 3.2 5.3 0.9 China 2.8 2.7 Europe 3.8 2.3 America 4.1 3.6 Japan Rest of Asia 0.6 0.4 Crude Production Other Apparent Consumption Source: Heinz Pariser, BHPB analysis Slide 6
Slide 7: Regional stainless apparent consumption breakdown
Regional stainless apparent consumption breakdown China CAGR (2002 – 2012): 9 % 9.7 10 8.3 8 6 2002 5.3 (mt) 2012 4.1 3.6 4 3.5 2.7 2.5 2.4 2.3 2.2 2 0.9 0.7 0.4 0 America Europe Japan *China India Other Other *China includes Hong Kong Asia Source: Heinz Pariser Slide 7
Slide 8: Estimated market share of stainless steel producers - 2002
Estimated market share of stainless steel producers - calendar 2002 (melted production basis) Arcelor 13% Others 27% KTN 12% AK Steel 3% Acerinox JFE 9% 4% Nisshin Steel 4% NSC Avesta Polarit 4% 8% Allegheny Posco 4% Yieh United 7% 5% Source: BHPB Slide 8
Slide 9: Quarterly Stainless Slab Production & Total scrap ratio forecast
Quarterly Stainless Slab Production & Total scrap ratio forecast (Total World Basis) Forecast 46% 5900 45% 5700 44% 5500 43% ('000t) 5300 42% 41% 5100 40% 4900 39% 4700 Production Scrap ratio 38% 4500 37% Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 2001 2001 2001 2001 2002 2002 2002 2002 2003 20
Slide 10: South Africa has 70% of world chrome reserves
South Africa currently has 70% of world reserves and over 50% of world production comes from SA. World South Africa 70% Chrome Ore Reserves Zimbabwe 19% Kazakhstan 7% Other 4% Asia 12% Others 8% World Primary Samancor (BHP Billiton/Anglo) 16% Chrome Supply Xstrata 20% ASA 1% 2002 Ferralloys 5% Herni
Slide 11: SSM Marketing
SSM Marketing Ferrochrome Sales Volume By Product Charge Chrome 89% (958 mt) Medium Carbon FeCr 7% (69mt) 4% (46mt) Low Carbon FeCr Source: BHP Billiton Slide 11
Slide 12: Ferrochrome price trend
Ferrochrome price trend USc/lb (Real) 160 CAGR Price (80 - 00) = -3.24% Largest risks to cost 140 •Currency •Reductants 120 •Electricity •Logistics 100 80 60 40 CAGR Cost (80 - 00) = -4.3% Source: CRU, Samancor Analysis 20 80 85 90 95 00 19 19 19 19 20 Slide 12
Slide 13: Ferrochrome Supply / Demand Balance
Ferrochrome Supply / Demand Balance 2001 2002 2003 2004 Global Supply (kt) 4,055 4,416 5,124 5,451 %change -18.0% 8.9% 16.0% 6.4% Global Consumption (kt) 4,450 4,838 4,986 5,299 %change -3.6% 8.7% 3.1% 6.3% Annual Surplus/D efic it -394 -422 138 152 Quarterly supply and demand balance 1500 1100 1000
Slide 14: Ferrochrome Demand (kt)
Using forecast stainless steel growth curves, the FeCr forwards look promising. A mitigating factor will be scrap availability 14,000 Industry characteristics 12,000 •Capital intensity low •Ore reserves plentiful Ferrochrome Demand (kt) 10,000 •UG2 easily available 8,000 6,000 4,000 Source : ICDA, B
Slide 15: Ferrochrome developments and outlook
Ferrochrome developments and outlook • Quarterly ferrochrome production growth for CY year-on-year: – Q1 2003 = 15%, Q2 2003 = 17% – Forecasted Q3 2003 = 12%, Q4 2003 = 11% • Ferrochrome production grew by 9% in 2002 (world basis) to 4.4mt. Latest forecast for CY 2003 growth is 16% to 5.1mt; • High
Slide 16: Samancor cash operating costs (US$c/lb)
Samancor remains competitive in the SA dominated Ferrochrome market, and is aggressively reducing costs 55 Cash Operating Costs (C1) 50 **New producers in ramp-up excluded 45 40 35 (US$c/lb) 30 25 20 15 Samancor 10 5 0 30% 60% 90% 100% 10% 20% 40% 50% 70% 80% 0% (ex-plant basis based on projected 20
Slide 17: Currency strength will influence where FeCr growth occurs
A number of factors will influence where FeCr growth occurs. The first is the relative strengths of the major producers’ currencies against the Dollar. Main FeCr Producing Countries exchange rate index (1 = Jan'96) 7 6 SA Ra nd US$ 5 Ka za khsta n Tenge US$ 4 3 2 1 0 96 97 98 99 00 01 02 03 n- n- n-
Slide 18: Electricity supply in South Africa
The second is electricity supply in South Africa. Demand is predicted to exceed supply in 2009. New generating capacity capital charges will almost double electricity generation costs. Estimated Cost of Generation for New versus Existing Capacity Fuel Operations & Management Capital US c / kWh New C
Slide 19: Logistics: the BHMI index has doubled
USd/pd Slide 19 6000 7000 8000 9000 10000 11000 12000 13000 14000 15000 16000 02/01/2001 02/03/2001 02/05/2001 02/07/2001 02/09/2001 02/11/2001 02/01/2002 02/03/2002 02/05/2002 30 Sept 02 = $8,937 BHMI Index 02/07/2002 02/09/2002 02/11/2002 02/01/2003 02/03/2003 30 Sept 03 = $15,423 02/05/2003 02/07
Slide 20: Middelburg Plant Overview
MIDDELBURG INCORPORATING MIDDELBURG FERROCHROME AND MIDDELBURG TECHNOCHROME PLANT OVERVIEW 04 NOVEMBER 2003
Slide 21: History
HISTORY RMB Alloys of Rand Mines started experimenting with low carbon ferrochrome 1960 production near Johannesburg. Later, the whole operation was moved to Middelburg. 1964 First low carbon ferrochrome produced from purely South African raw materials. Late RMB Alloys, Southern Cross Steel and Palm
Slide 22: Site Overview
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Slide 23: Statistics
STATISTICS TOTAL PRODUCTION CAPACITY OF FURNACES • MTC • OPEN ARC 48 000 tons/annum • FeSiCr 26 000 tons/annum • MFC • M1 & M2 180 000 tons/annum • M3 55 000 tons/annum • Kiln 200 000 tons/annum EMPLOYEES • MTC 175 employees • MFC (including shared services) 362 employees Slide 23
Slide 24: Analyses
ANALYSES TYPICAL ANALYSES TYPE OF ALLOY % Cr %C %Si Cr:C Cr:Si Special Low Carbon >90 <0.01 0.4 9 000 225 Low Carbon 55-68 0.05 0.7 1 200 85 Charge Chrome 50 7.5 3.5 7 15 Plasma Chrome 50-58 8.0 1.8 7 30 Slide 24
Slide 25: SHECQ Systems in Place
SHECQ SYSTEMS IN PLACE OHSAS 18001 ISO 14001 ISO 9002 BHP Billiton Standards Slide 25
Slide 26: Safety: CIFR
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Slide 27: MFC: Production Tons per Annum
MFC: PRODUCTION TONS PER ANNUM 300000 250000 200000 150000 100000 50000 0 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 Actual Budget Slide 27
Slide 28: MTC: Production Tons per Annum
MTC: PRODUCTION TONS PER ANNUM 60000 50000 40000 30000 20000 10000 0 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 Actual Forecast Slide 28
Slide 29: Manning (Total MFC & MTC)
MANNING (TOTAL MFC & MTC – TEMPS INCLUDED) 1999-2003 750 1999/2000 2000/2001 2001/2002 2002/2003 2003/2004 700 650 600 550 500 BUDGET (Total MFC & MTC) TOTAL (Including Temps) Slide 29
Slide 30: M1 and M2 Furnaces
M1 AND M2 FURNACES • Two 48 MVA submerged arc furnaces. • Capacity 180 000 tons per annum. • Records achieved: – 1998/99 best furnace within Samancor Chrome. – Best cost of production (Years 2000 and 2003). – Best electrode consumption in Group. Slide 30
Slide 31: M1 & M2 Charge Chrome Production Process
M1 & M2 CHARGE CHROME PRODUCTION PROCESS Chrome Ores (Fines/lumps/ chips) Submerged Arc Furnaces Slag to Slag Dump Reductants Weighing System Hot Metal Transfer to (Coke/coal/ Columbus Stainless; char) Ingot Casting ChCr Stockpiles Quenching (Dispatched via Rail or Breaking Road to Harbours) Fluxes
Slide 32: Chrome Ores
CHROME ORES • The Bushveld Igneous Complex contains about 70% of the world’s economically-mineable reserves of chrome ore. Mining occurs along the eastern and western rims of the complex. • Samancor’s operations are organised under – Eastern Chrome Mines (Steelpoort), – Western Chrome Mines (near Ru
Slide 33: Location of Mines and Plants
LOCATION OF MINES AND PLANTS Chrome Chrome Coal Eastern Eastern Chrome Koornfontein Tubatse Tubatse Douglas Middelburg Optimum Manganese Coal Manganese Metals Khutala Mozambique Aluminum Mozal Chrome Chrome Witbank Western Western Chrome Johannesburg Johannesburg Maputo Manganese Manganese Hotazel H
Slide 34: Key Focus Areas for Environment
KEY FOCUS AREAS FOR ENVIRONMENT • Increasing environmental awareness of all employees. • Rendering the site acceptable in terms of current legislation. • Striving towards international pollution control standards. • Minimising visual aspects of the operations. • Ensuring optimal utilisation of raw m
Slide 35: Energy Management
ENERGY MANAGEMENT September 1997 – June 2003 35,000 6.0 30,000 5.5 Total Production 25,000 5.0 20,000 4.5 15,000 4.0 10,000 MWH per Ton 3.5 5,000 Tons MWh/ t 0 3.0 Sep 97 Jun 03 Slide 35
Slide 36: Thank you / The End
Thank you for the time you have spent with us. THE END Slide 36