Slide 1: Australian Site Tour Olympic Dam
For personal use only Australian Site Tour Olympic Dam 31 October 2008
Slide 2: Disclaimer
Disclaimer Reliance on third party information The views expressed here contain in formation that have been derived from publicly availa ble sources that have not been For personal use only independently verified. No representatio n or warranty is made as to the accuracy, completeness or relia bilit
Slide 3: Agenda
For personal use only Agenda Introduction & Olympic Dam Resource Market Current Business Performance Olympic Dam Expansion Strong Future for the Uranium Business Slide 3
Slide 4: Introduction & Olympic Dam Resource
For personal use only Introduction & Olympic Dam Resource Graeme Hunt President Uranium and Olympic Dam Development
Slide 5: Introduction and Resource Key Points
For personal use only Introduction and Resource Key Points • Safety is our Key Priority • The current business is performing strongly • Work is progressing on the Olympic Dam Expansion Study Slide 5
Slide 6: One co-ordinated Uranium business unit
For personal use only One co-ordinated Uranium business unit Marius Kloppers Chief Ex ecutiv e Officer Graeme Hunt President Uranium and Photo Olympic Dam Development • 33 years with BHP Billiton • Previously - President Aluminium - President Iron Ore Olympic Dam Olympic Dam Expansion Corporate Affa
Slide 7: Olympic Dam: A world class resource
Olympic Dam: A world class resource Thousand tonnes U3O8 Million tonnes Copper Million oz Gold For personal use only 2,500 120 300 ~1,100 Largest uranium 4th largest copper 4th largest gold resource in the world 100 resource in the world 250 resource in the world 2,000 80 200 1,500 60 150 1,000 40 1
Slide 8: A multi-generational business
A multi-generational business Mineral Resource For personal use only Olympic Dam Resource (Mt) 9,000 8,339 Mt Resource 8,000 7,000 Inferred 6,000 5,000 2.33 Mt Contained U3O8 4,000 Indicated 3,000 2,000 Existing Operation 1,000 Measured in our backyard 0 2005 2006 2007* 2008* * Excludes Non Sulphide
Slide 9: Copper Market
For personal use only Copper Market John Crofts Chief Commercial Officer
Slide 10: Copper Market Key Points
For personal use only Copper Market Key Points • BRICs development underpinned by energy & infrastructure build out associated with urbanisation • Advantageous industry economics. Low price elasticity of demand in key electrical uses • Supply interruptions (now) and constrained growth (future) a dif
Slide 11: World copper demand: The paradigm shift
World copper demand: The paradigm shift Global refined Cu demand 1950-2006 For personal use only (Mt) 20 Reconstruction Stagnation China 1950—1970 1970—1996 1997 – 18 4.5% 2.1% 3.3% 16 14 Global recession reduces global Rapid growth of 12 demand China causing supply shortages 10 Industrialization of
Slide 12: Copper – GDP per capita vs consumption per capita
Copper – GDP per capita vs consumption per capita Copper Consumption For personal use only (kg / capita) China Germany 20 India Japan Korea, Rep. United States 15 Taiwan 10 5 0 0 5,000 10,000 15,000 20,000 25,000 30,000 35,000 40,000 45,000 50,000 GDP/Capita (Jan. 2008 Constant US Dollars) Source: W
Slide 13: Future supply growth: Disruption a feature of new supply growth?
Future supply growth: For personal use only Disruption a feature of new supply growth? Expected future production from highly probable and probable copper developments as at 2006 Q1 (kt) 8,000 7,000 6,000 2-3 year delays 5,000 Forecast production 4,000 as at 2006 Q1 3,000 Forecast production 2,000 a
Slide 14: Supply side constraints are limiting the industry's response
For personal use only Supply side constraints are limiting the industry’s response Existing Supply Future Supply Growth • Equipment stress • Infrastructure challenges • Industrial action and wage disputes • Developments are increasingly • Labour shortages tending to be: • Equipment shortages – Small
Slide 15: Copper exchange stocks and LME cash price
Copper Exchange Stocks LME Cash price For personal use only (t) ($/t Nominal) 800,000 Comex 9,000 SHFE 700,000 8,000 LME LME Cash (RH) 7,000 600,000 6,000 500,000 5,000 400,000 4,000 300,000 3,000 200,000 2,000 100,000 1,000 0 0 Apr-04 Apr-05 Apr-06 Apr-07 Apr-08 Jan-04 Jul-04 Oct-04 Jan-05 Jul-05 O
Slide 16: China copper raw material requirements
For personal use only China copper raw material requirements Copper raw materials 2008 estimates by sources (kt Cu contained) 5,000 4,500 Scrap Domestic Scrap 4,000 Mine 3,500 21% Net 3,000 29% Imported Cathode 2,500 2,000 Imported 29% 1,500 Concentrates 21% 1,000 Domestic Net Imported 500 Mine Conc
Slide 17: Indian copper consumption 1960-2020F
Indian copper consumption 1960-2020F Copper consumption For personal use only (kt) 1,800 2008F – 2020F (7.7% growth pa) Enabling policies Generation capacity growth, rural electrification 1,500 The XI Five year plan (Apr’07-March’12) Access to electricity to all village households Energy Efficiency
Slide 18: Results of Network Substitution Survey
For personal use only Results of Network Substitution Survey Selected applications of which 2006 CU % share of 14 Mt % share of 14.5 demand = 14 Mt Level of substitution – Net view by threat Mt by threat % share of 14 Mt Selected applications 2006 2007 2006 2007 21 Building wire Low and stable Low 1
Slide 19: Uranium Market
For personal use only Uranium Market John Crofts Chief Commercial Officer
Slide 20: Uranium Market Key Points
For personal use only Uranium Market Key Points • Real impact of Climate Change still to come & meaningful options are limited • Security of supply key for BRICs • Supply side response challenges (near term & future) • Nuclear cost competitiveness on the rise – priced carbon & reduced capital intens
Slide 21: Primary energy consumption is strongly correlated to economic development
Primary energy consumption is strongly correlated to economic development Primary energy use For personal use only (tonnes of oil equiv/capita) 10 China Germany India 8 Japan Korea, Rep. United States 6 Taiwan 4 2 0 0 5,000 10,000 15,000 20,000 25,000 30,000 35,000 40,000 45,000 50,000 GDP/Capita (J
Slide 22: China's power output growth
China’s power output is annually growing by as much as the total power output of a major European country China’s Growing Power Output For personal use only (in billion kWh) 3,500 Power output added from previous year 3,000 426 2,500 2,000 1,500 1,000 UK’s total power output today 500 400 0 1999 200
Slide 23: China is only just starting to develop nuclear strategy
China is only just starting to develop nuclear strategy China’s nuclear programme: For personal use only – Current share of nuclear generation approximately 2% – Latest announced target of 70 GWe, approximately 5% of 2020 generation – Recent purchase of reactors (Areva) included technology transfer
Slide 24: China is preparing for a major nuclear programme
China is preparing for a major nuclear programme Ling Ao: two new reactors being built adjacent to the two operating For personal use only reactors, representing a key strategy for China nuclear power expansion, complementary to green-field (Date: 10 Dec. 2007) Taishan project ready for foundation w
Slide 25: Nuclear growth in China is not restricted to coastal areas
For personal use only Nuclear growth in China is not restricted to coastal areas • Current nuclear capacity and capacity under construction is concentrated along the coast • Increasing number of planned and proposed reactors in landlocked provinces Currently operating Under construction Planned / pr
Slide 26: China has demonstrated its ability for fast growth
China has demonstrated its ability for fast growth…… China’s share of world aluminium production China’s share of crude steel production has For personal use only has grown from 11% in 2000 to 33% in 2007 grown from 15% in 2000 to 36% in 2007 (Million tonnes) (Million tonnes) 25.0 40% 1400 40% China
Slide 27: China re-writing capital intensity and delivery times
….and shown itself very capable of re-writing capital intensity For personal use only and delivery times China Western Benchmark Alumina refinery 10x 300mw power stations and Shangdong 3500kt/yr alumina refinery – 40 Months + province construction time 10 months East Hope 800kt/yr alumina refinery –
Slide 28: Short to medium term market outlook balanced, long term supply growth required
Short to medium term market outlook balanced, long term primary supply growth required WNA supply and demand forecast An external view For personal use only (kt u3o8) (GWe) 2,000 1,634 400 1,600 HEU 1,200 960 MOX & RepU 350 800 other secondary supply 372 400 Primary supply 300 0 WNA high 2008 instal
Slide 29: Supply developments and events dominating market dynamics
Short to medium term market outlook balanced, long term primary supply growth required Supply developments and events likely to dominate short to medium term For personal use only market dynamics: • Kazakhstan – upside surprise • Cigar Lake – uncertainty on start-up • Dominion – care and maintenance
Slide 30: Legacy fixed sales position is winding off
Legacy fixed sales position is winding off • Current “legacy” portfolio continues to hold significant fixed price For personal use only sales at historic prices • BHP Billiton does not have committed sales at fixed prices more than forecast production in any one financial year Uranium fixed sales co
Slide 31: Olympic Dam Expansion - Uranium marketing
Olympic Dam Expansion - Uranium marketing • BHP Billiton has agreed 10 term sheets with customers in Europe, For personal use only US and Asia – Aggregate market interest is well in excess of the first phase expansion tonnage • BHP Billiton intends to put in place a portfolio of sales contracts prio
Slide 32: Current Business Performance
For personal use only Current Business Performance Paul Dunn Vice President Finance
Slide 33: Current Business Performance Key Points
For personal use only Current Business Performance Key Points • Experienced team leading the turnaround in performance • Safety the driver for cultural change • Sustainable improvement in performance Slide 33
Slide 34: An experienced team leading the turnaround in performance
An experienced team leading the turnaround in performance Dean Dalla Valle For personal use only President and Chie f Operating Officer • 31 years with BHP Billiton • Previously - Asset Leader Olympic Dam - Asset Leader Cannington Barr y Mitchell Paul Dunn Vice President Mining Vice President Financ
Slide 35: Site Layout
Site Layout 1 kilometre For personal use only Quarry Underground Mine Tailings Storage Facility Process Plant Phase 1 Evaporation Ponds Open Pit Slide Slide35 35
Slide 36: Olympic Dam Underground Mine Layout
For personal use only Olympic Dam Underground Mine Layout Slide Slide36 36
Slide 37: Process Plant Layout
Process Plant Layout 200 metres For personal use only Hydromet Smelter & Acid Plant Concentrator Refinery & Gold Room Slide Slide37 37
Slide 38: 2008 Copper Supply Cost Curve
2008 Copper Supply Cost Curve C1 Cash Cost (Brook Hunt Normal Costing) For personal use only (US¢/lb Cu) 175 150 OLY MPIC DAM 125 100 75 50 25 0 -25 -50 -75 -100 0 2,000 4,000 6,000 8 ,000 10,000 12,000 14,000 Cumulative Cu Production (kt) Source: Brook Hunt 2008 Production Cost League Slide 38
Slide 39: 2008 Uranium Supply Cost Curve
2008 Uranium Supply Cost Curve Uranium Supply For personal use only (US$/lb) 50 45 40 35 30 OLYMPIC DAM 25 20 15 10 5 0 0 10,000 20,000 30,000 40,000 50,000 60,000 70,000 80,000 Tonnes U3O8 Source: NAC International, estimated 2008. Slide 39
Slide 40: What Drives Value at Olympic Dam?
What Drives Value at Olympic Dam? Economic Value Drivers Supported by For personal use only Mine Capacity Ore Throughput Mill Capacity Smelter Metal Capacity Production Copper Grade Metal Grades Value Uranium Grade Copper Metal Recovery Recoveries Uranium Recovery Copper Price Metal Prices Contract
Slide 41: High Priority Areas since Acquisition
High Priority Areas since Acquisition Economic Value Drivers Supported by For personal use only Mine Capacity Ore Throughput Mill Capacity Mill Capacity Smelter Metal Capacity Production Copper Grade Metal Grades Value Uranium Grade Copper Metal Recovery Recoveries Uranium Uranium Recovery Copper Pr
Slide 42: High Priority Areas since Acquisition: Safety
High Priority Areas since Acquisition Supported by For personal use only Total Recordable Injury Frequency Rate (per million hours, 12 month moving average) 40 • Safety – the driver of cultural change 30 20 10 0 Apr-08 Apr-06 Aug-06 Oct-06 Dec-06 Apr-07 Oct-07 Dec-07 Feb-08 Jun-08 Jun-06 Feb-07 Jun-
Slide 43: High Priority Areas since Acquisition: Ore hoisting and milling
High Priority Areas since Acquisition Economic Value Drivers For personal use only Annual Record Ore Hoisted and Material Milled in FY08 FY06 FY07 FY08 Quarterly Record Ore Hoisted in Q1 FY09 Ore Hoisted (kt) 8,219 8,566 9,674 • Improve mine flexibility Material Milled 1 (kt) 9,635 2 8,889 9,910 - R
Slide 44: High Priority Areas since Acquisition: Uranium recovery
High Priority Areas since Acquisition Economic Value Drivers For personal use only Uranium Recovery Future • Uranium recovery project • Leach circuit tank upgrade and capacity increase • Improved process optimisation and control, supported by • Minor upgrades of Solvent Extraction circuit improved r
Slide 45: Recent copper price performance and cost structure
Recent copper price performance and cost structure 2008 Daily Copper Price & Exchange Rate Current Cost Structure For personal use only ($) 10,000 1.50 Maintenance 1.40 Labour 8,000 1.30 14% Royalties 1.20 24% 5% 6,000 1.10 Administration 5% 1.00 Electricity 3% 4,000 0.90 0.80 19% 30% 2,000 0.70 US$
Slide 46: Moving Forward – Priority Areas
For personal use only Moving Forward – Priority Areas Zero Harm – A core value Volumes • Good safety is good business • Pre-expansion volume growth to offset declining • Water efficiency grades • Energy efficiency – US$30.5m approved for early works • Smelter outage FY2011 People – 60 days Sept 2010
Slide 47: Olympic Dam Expansion
For personal use only Olympic Dam Expansion Ted Bassett Project Director 31 October 2008
Slide 48: Olympic Dam Expansion Key Points
For personal use only Olympic Dam Expansion Key Points • Configuration established • Utilising a staged expansion path • Politically stable environment ODX Photo • Environmental Impact Statement to be issued to government before the end of 2008 • Focus on simplicity & preservation of future options
Slide 49: A team with large project experience
A team with large project experience Ted Bassett For personal use only Project Director • 2 years with BHP Billiton • 38 years mine project development ex perience, Previous Roles - VP Capital Projects Inco Ltd - Project Director Goro Nickel Project Jon Gilligan Ken Sutliff DPD Mine Development DPD
Slide 50: Staging reduces risk and allows integration of technology
Staging reduces risk and allows integration of technology Stage 1 Optimise the existing operation. Alternatives are under evaluation for expansion of For personal use only the ore delivery and treatment capacities up to 12 Mtpa. Stage 2 Develop 20 Mtpa open pit ore supply (2A), Cu concentrator and U
Slide 51: The proposed staged development of Olympic Dam
The proposed staged development of Olympic Dam CONCEPTUAL For personal use only Concentrating & Stages Proposed Capacity Mining Smelting Hydrometallurgy Cu U30 8 Au (ktpa) (ktpa) (kozpa) 10Mtpa 0 0 Current 180 4 100 9Mtpa 0Mtpa 10Mtpa (500ktpa con) 1 Optimise underground 1.1 200 4.5 120 Brown- field
Slide 52: Scale: A very large open pit
For personal use only Scale: A very large open pit Estimated Escondida Mine Final Pit Depth: 1,055 m Depth: 885 m Estimated Olympic Dam Depth: 1,220 m Final Pit 1 km Slide Slide52 52
Slide 53: Olympic Dam Resource
For personal use only Olympic Dam Resource U3O8 >300ppm Au >0.3g/t Cu >0.5% Cu >1.0% Cu >2.0% Pit @ 100 yrs Slide 53
Slide 54: Simplification: Five-fold increase in ore volume
Simplification: For personal use only Five-fold increase in ore volume, doubling of plant footprint Existing Process Plant 12 Mtpa1 New Process Plant 60 Mtpa Processing Facility after Stage 5 Notes: 1- Potential capacity after optimisation, current capacity 10Mtpa. Slide 54
Slide 55: Process Plant Project Staging
For personal use only Process Plant Project Staging Stage 2 Stage 4 Stage 5 Slide 55
Slide 56: Shipping copper concentrate allows smelter to move to China
Shipping copper concentrate and not cathode allows capital intensive smelter to move to China For personal use only 1 2 Commercial agreement needed to import concentrate into China. Discussions positive, work plan in place. Significant Get concentrate out of capital savings (ballpark Australia, in f
Slide 57: Autonomous Mining Systems
Autonomous Mining Systems Why? For personal use only • Potential step change in risk exposure • Reduced mining cost Technology • DARPA Urban Challenge • Autonomy trials at a number of different mine sites • Technology is well advanced. Integration remaining BHP Billiton • Development contract signed
Slide 58: Environmental Impact Statement (EIS) Status
Environmental Impact Statement (EIS) Status • Documentation completed for internal review For personal use only • Subject to above review − First release to Governments end of 2008 (permission to print) − Public display April/May 2009 − Submit response document Oct 2009 − Ministers’ decisions Feb 20
Slide 59: Project Schedule
For personal use only Project Schedule • Stage 1 in production by 2013 • EIS approval to take between 12 and 18 months • Development of open pit to take 5 years • Ore Processing expansion developed in three stages Slide 59
Slide 60: Strong Future for the Uranium Business
For personal use only Strong Future for the Uranium Business Graeme Hunt President Uranium and Olympic Dam Development
Slide 61: Yeelirrie: A large undeveloped resource
For personal use only Yeelirrie: A large undeveloped resource Good news • Australia’s second largest undeveloped uranium resource Yeelirrie • 130km North of BHP Billiton’s Mount Keith Mount Keith Nickel infrastructure Leinster Nickel • 100% BHP Billiton owned • Approximately 35kt U @ 0.15% (~ 70kt U
Slide 62: Yeelirrie is flat and the deposit shallow
For personal use only Yeelirrie is flat and the deposit shallow Slide 62
Slide 63: Yeelirrie is well drilled and has great grades
Yeelirrie is well drilled and has great grades, further work For personal use only required to develop JORC compliant resource N W E Outline of 50m grid (Class 1) S 1000m Slide 63
Slide 64: Key Messages
Key Messages • We have a strong team managing our For personal use only uranium business • Olympic Dam is a unique resource – Will support a multi-generational business • Longer term demand outlook is strong • Olympic Dam is a good business today • Yeelirrie is another outstanding long term opportun
Slide 65: For personal use only
cdl bhpbilliton rcing the future