Bhp Group Ltd · ASX:BHP
Bhp — RIO Tinto — Merger or Acquisition (May 2008)
39 slides from Bhp's merger presentation, May 8, 2008
Slide 1: Rule 425 filing cover note
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 an investor presentation that was given by Don Argus, Chairman, BHP Billiton on May 8, 2008.
Slide 2: BHP Billiton Strength, Stability and Growth
BHP BillitonStrength, – Stability and Growth May 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) Noneofthestatements concerning expectedcostsavings,revenuebenefits(andresultingincremental EBITDA)andEPSaccretion inthispresentation shouldbeinterpreted tomeanthat thefutureearnings pershareoftheenlargedBHPBillitongroupforcurrentandfuturefinancialyearswillnecessarily matchor e
Slide 5: BHP Billiton Strength, Stability and Growth
BHP BillitonStrength, – Stability and Growth • Today – we are the world’s leading diversified mining company • Our past a– proven track record • Our futurethe – outlook is exciting • The offer for Rio Tinto Slide 4
Slide 6: Today – the world's leading diversified mining company
Today –the world’s leading diversified mining company Slide 5
Slide 7: With a global portfolio diversified by geography and commodity
With a global portfolio diversified by geography and commodity… 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
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 18-Apr-2008, US$bn) 240 BHP Billiton Australian head office Non-Australian head office 180 Vale Rio Tinto (a) China 120 Shenhua Anglo American Xstrata Norilsk Nickel Fre
Slide 9: Led by an experienced management team
…. led by an experienced management team Chairman and Chief Executive Officer Don Argus Marius Kloppers Chairman Chief Executive Officer • Chairman of BHP Billiton • 15 years resources Group since June 2001 experience • Chairman of BHP Limited • 15 years at BHP Billiton since April 1999 Group Manage
Slide 10: Maintaining our commitment to our core strategy
…. maintaining our commitment to our core strategy • Large, low-cost, expandable assets • Focus on the extraction of upstream natural resources • Portfolio diversified by commodity, customer and geography reducing the volatility of cash flows • Maintenance of a deep diversified inventory of growth o
Slide 11: Commitment to ethics, safety, environmental practice and community engagement
With an overriding commitment to ethics, safety, environmental practice and community engagement • Sustainable development is fundamental to our success • Our licence to operate depends on responsibly operating our business: – A trackrecordofbeingvaluedbyourcommunities will contribute tousbeingconsi
Slide 12: A unique diversified portfolio balanced across high margin commodities
Our business today… a unique diversified portfolio balanced across high margin commodities Underlying EBITDA EBITDAMargin(a) Underlying (CY2007, 12 months, US$bn) (CY2007, 12 months) 24,000 23,623 Diamond & Specialty Products Diamond & 34% Energy Coal Specialty Products Energy Petroleum Energy Coal
Slide 13: With full exposure to steel demand growth
With full exposure to steel demand growth…. • BHP Billiton has leading global positions in the three core raw materials for steel production – #1 global supplier of seaborne traded metallurgical coal – #3 global supplier of seaborne iron ore – #1 global supplier of seaborne manganese ore • With sign
Slide 14: With Petroleum as a key business
…with Petroleum as a key business Petroleum EBIT contribution to BHP Billiton (US$ ‘000) 3,500 3,000 2,500 2,000 1,500 1,000 500 0 19851986198719881989199019911992199319941995199619971998199920002001200220032004200520062007 Source : BHP Billiton 2008. Notes: Results are presented in accordance with
Slide 15: Our past… a proven track record
Our past… a proven track record Slide 14
Slide 16: BHP Billiton invested in growth early to meet demand
BHP Billiton invested in growth early to meet demand Completed projects (US$bn) FY2002 FY2003 FY2004 FY2005 FY2006 FY2007 FY2008 Antamina Escondida Phase IVWAIO - Area C NWS Train 4 Escondida Norte Spence Genghis Khan Typhoon San Juan UG Mt Arthur North ROD Paranam BMA Phase 2 Atlantis South Tintaya
Slide 17: Most developments executed to expectations
Most developments have been executed to expectations, wherever on the globe they are located Major minerals development projects commissioned since July(a) (b) 2001 Budget Over Budget Behind 120% Schedule Time 100% 80% Under Budget Ahead of Schedule 60% 40% 20% 0% Mozal2 Hillside 3 Escondida Escondi
Slide 18: Delivering superior EPS growth for shareholders
Delivering superior EPS growth for shareholders… Earnings per share (US$ per share) US$ 2.34 US$ 1.68 50% CAGR US$ 1.06 US$ 0.56 US$ 0.31 US$ 0.31 FY2002 FY2003 FY2004 FY2005 FY2006 FY2007 Note: BHP Billiton’s EPS represents reported underlying EPS for the financial year ending 30-June. EPS in FY200
Slide 19: Dividend growth, with consecutive ordinary dividend increases
…and dividend growth, with 12 consecutive ordinary dividend increases Ordinary dividends per share (US cents per share) 50 47.0 Full year dividend 45 Interim dividend 40 36.0 35 29% CAGR 29.0 45% 30 28.0 increase in 26.0 interim 25 dividend 20.0 20 17.5 16.5 14.5 15 13.0 13.5 10 6.5 7.0 5 0 FY2002 F
Slide 20: Creating considerable wealth for our shareholders
Creating considerable wealth for our shareholders A holder of 1,000 BHP Billiton Ltd shares on 28 June 2001 would have seen the value of their total holding increase by 372% (a) BHP Billiton Ltd (A$) Value a 60,000 18 April 200 Dividends/Distributions Reinvested(a) A$48,92 Value of BHP Billiton Ltd
Slide 21: Our future… the outlook is exciting
Our future… the outlook is exciting…. Slide 20
Slide 22: Chinese growth is driving global materials demand
Chinese growth is driving global materials demand… Copper consumption (kt) Nickel consumption (kt) 18,000 1,400 15,000 1,200 1,000 12,000 800 9,000 600 6,000 400 3,000 200 0 0 1997 2007 1997 2007 Seaborne iron ore (mt) Energy consumption (mtoe) 900 12,000 750 10,000 600 8,000 450 6,000 300 4,000 150
Slide 23: Industrialisation and urbanisation in China have a long way to go
...and industrialisation and urbanisation in China appears to have a long way to go China’s tiered city structure: 2005 2010 2020 (a) (b) (c) 84 tier 1-3 cities 106 tier 1-3 cities 143 tier 1-3 cities Tier 1 Tier 2 Tier 3 Source: GlobalInsight;NationalBureauofStatisticsofChina– ChinaStatisticalYearb
Slide 24: Sales to China currently represents 20% of revenue
Sales to China currently represents 20% of BHP Billiton’s revenue BHP Billiton revenue from China (US$m) 5,500 5,293 5,000 BHP Billiton sales revenue geographical split 5,013 (H1 08, US$bn) 4,500 ROW Europe 4,000 3,999 Australia 3,611 3,500 3,000 Japan 2,946 2,500 China 2,407 Other Asia Nth America
Slide 25: India – the journey has begun
India –the journey has begun Gross domestic product (US$bn) Gross domestic product (US$ bn) 5,000 1,000 India China 4,000 800 3,000 600 2,000 400 1,000 200 0 0 China India 1996 2006 Source: International Monetary Fund, World Bank, Focus Economics, BHP Billiton. Slide 24
Slide 26: Deep diversified inventory of growth options
Our deep diversified inventory of growth options, many of which are brown field 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 Angostura Stage
Slide 27: The offer for Rio Tinto
The offer for Rio Tinto Slide 26
Slide 28: Unlocking value: Why a combination with Rio Tinto?
Unlocking value: Why a combination with Rio Tinto? 1 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 2 Unparalleled exposure tooverlapping mineralbasinpositi
Slide 29: Overlapping mineral basin positions. US$3.7bn per annum of synergies
Overlapping mineral basin positions. US$3.7bn per annum of synergies 47 2 1 56 15 1 55 45 57 16 19 4814 15 20 46 59 12 3 60 49 4 5213 61 8 51 58 Queensland 7 21 9 5 6 50 65 2 10 26 11 17 18 Coal 3 24 48 Ekati 26 Diavik South Hail Creek Water Creek 7 Goonyella 26 Dalrymple 5 62 4 6 63 Riverside 4848
Slide 30: The offer of 3.4:1 represents a 45% premium
The offer for Rio Tinto of 3.4:1 represents a 45% premium Rio Tinto Limited share price offer vsprice (A$) Rio Tinto Limited discount to offer price: 6.3% 155 150 145 $147.63 140 135 $138.2 Rio Tinto vs (a) ratio BHP Billiton historical share exchange 130 125 3.6 : 1 06-Feb-200 120 BHP Billiton's of
Slide 31: 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 • The offer is being made direct to the shareholders of Rio Tinto • Rio Tinto shareholders are being offered 3.4 BHP Billi
Slide 32: Indicative timetable
Indicative timetable 2007 2008 Offer Event Nov Dec Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec Day 0(a) Day 60 BHP Billiton announcement of 12- proposal to Rio Tinto Nov BHP Billiton announcement of offers for all of 6- the outstanding shares of Rio Tinto Feb Satisfaction of regulatory approval
Slide 33: Conclusion: Strength, stability and growth
Conclusion Strength, – stability and growth • A strong resources sector is fundamental to Australia’s economic prosperity • The global resources industry is undergoing extraordinary change • BHP Billiton on a standalone basis has a bright future • The core strategy remains unchanged • Focused on pro
Slide 34: Legitimate questions for all shareholders
Legitimate questions for all shareholders • 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
Slide 35: Questions and Answers
Questions and Answers Slide 34
Slide 36: Senior Executive Profiles
Senior Executive Profiles Slide 35
Slide 37: Appendix: Don Argus Profile
Appendix: Don Argus Profile Don ArgusChairman – Term of office: • Chairman of BHP Billiton Limited and BHP Billiton Plc2001 since June • Chairman of BHP Limited since April 1999 • Director of BHP Limited since November 1996 Other directorships and offices • Director of Australian Foundation Investme
Slide 38: 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
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