Bhp Group Ltd · ASX:BHP
Bhp — BHP Billiton — Investor Day (December 2013)
58 slides from Bhp's investor day presentation, Dec 10, 2013
Slide 1: Investor Briefing announcement
Company Secretariat BHP Billiton Limited BHP Billiton Plc 171 Collins Street Neathouse Place Melbourne Victoria 3000 Australia London SW1V 1BH UK GPO BOX 86 Tel +44 20 7802 4000 Melbourne Victoria 3001 Australia Fax + 44 20 7802 4111 For personal use only Tel +61 1300 554 757 Fax +61 3 9609 3015 bhp
Slide 2: Contacts
The tour will continue on Tuesday 10 December 2013, with the remaining material released on that day. Further information on BHP Billiton can be found at: www.bhpbilliton.com For personal use only Nicole Duncan Company Secretary BHP Billiton Limited Media Relations Investor Relations Australia Austr
Slide 3: Primed to deliver strong growth in free cash flow
For personal use only Primed to deliver strong growth in free cash flow Andrew Mackenzie Chief Executive Officer 9 December 2013
Slide 4: Disclaimer
Disclaimer For personal use only Forward-looking statements This presentation includes forward-looking statements within the meaning of the U.S. Private Securities Litigation Reform Act of 1995 regarding future events, conditions, circumstances and the future financial performance of BHP Billiton, i
Slide 5: Primed to deliver strong growth in free cash flow
Primed to deliver strong growth in free cash flow For personal use only • Extending our strong track record • The premier diversified resource portfolio • Unchanged production guidance for our high margin businesses • Our productivity agenda has strong momentum • Intense competition for capital is d
Slide 6: Extending our strong track record
Extending our strong track record For personal use only • Our high quality, diversified resource portfolio Strong growth in total shareholder returns3 and proven strategy has delivered (TSR, 31 October 2003 = 100) outstanding results1 800 – average EBIT margin of 41% CAGR 18% – a superior return on
Slide 7: The premier diversified resource portfolio
The premier diversified resource portfolio For personal use only FY13 to FY15 production growth contribution Other 2% Copper 10% Coal 19% Iron Ore 37% Onshore US (Oil & gas) Petroleum 32% Gulf of Mexico (Oil & gas) WAIO Queensland Coal (Iron ore) (Metallurgical coal) Escondida FY13 to FY15 forecast
Slide 8: Unchanged production guidance for our high margin businesses
Unchanged production guidance for our high margin businesses For personal use only Group production1 (FY04 = 100) 200 CAGR 8% FY04 – FY13 CAGR: 4% 150 100 50 0 FY04 FY05 FY06 FY07 FY08 FY09 FY10 FY11 FY12 FY13 FY14e FY15e Source: BHP Billiton analysis. 1. Calculated in copper equivalent terms for co
Slide 9: Iron Ore: targeting the capital efficient tonne
Iron Ore: targeting the capital efficient tonne For personal use only • Tracking well to deliver 13% growth in Iron ore production production this year (million tonnes, BHP Billiton share) +13% increase 200 – FY14 production guidance for WAIO recently increased to 212 mt1 – first production achieved
Slide 10: Coal: running at capacity at Queensland Coal
Coal: running at capacity at Queensland Coal For personal use only • Unchanged production guidance Metallurgical coal production (million tonnes, BHP Billiton share) – metallurgical coal production to grow by 50 +9% increase 9% to 41 mt1 40 – energy coal production to remain 30 unchanged at 73 mt1 2
Slide 11: Copper: on track to produce 1.3 million tonnes at Escondida in FY15
Copper: on track to produce 1.3 million tonnes at Escondida in FY15 For personal use only • Unchanged production guidance Copper production (thousands tonnes, equity share1) – 1.7 mt1 of total copper in FY14 1,800 – Escondida to deliver copper production of 1.1 mt2 in FY14 and 1.3 mt2 in FY15 1,500
Slide 12: Our productivity agenda has strong momentum
Our productivity agenda has strong momentum For personal use only • Our productivity initiatives continue to deliver Integrated Remote Operating Centre (WAIO) more volume from existing equipment and lower unit costs • This is one of the most value accretive activities that we can undertake • 100% of
Slide 13: Our productivity agenda has strong momentum
Our productivity agenda has strong momentum For personal use only • Our productivity initiatives continue to deliver WAIO R996 shovel productivity more volume from existing equipment and (index, July 2012 annualised total movement = 100) lower unit costs 140 • This is one of the most value accretive
Slide 14: Our productivity agenda has strong momentum
Our productivity agenda has strong momentum For personal use only • Our productivity initiatives continue to deliver BMC South Walker Creek CPP throughput more volume from existing equipment and (feed rate performance, tonnes per hour) lower unit costs 880 • This is one of the most value accretive a
Slide 15: Competition for capital will increase returns and deliver strong growth in free cash flow
Competition for capital will increase returns and deliver strong growth in free cash flow For personal use only • Our investment plans have been optimised Expenditure profile for our major projects in execution1 for value (US$ billion) • Capital and exploration expenditure will decline by 25% in FY1
Slide 16: Portfolio simplification will remain a key differentiator
Portfolio simplification will remain a key differentiator For personal use only • The quality and breadth of our portfolio will Growth1 enable us to further simplify our business (% copper equivalent production CAGR) whilst maintaining the benefits of 12 Note: diversification Bubble size represents
Slide 17: Primed to deliver strong growth in free cash flow
Primed to deliver strong growth in free cash flow For personal use only • Extending our strong track record • The premier diversified resource portfolio • Unchanged production guidance for our high margin businesses • Our productivity agenda has strong momentum • Intense competition for capital is d
Slide 18: For personal use only
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Slide 19: Global energy outlook
Shanghai For personal use only Global energy outlook Mark Swinnerton Vice President, Market Analysis 9 December 2013
Slide 20: Key themes
Key themes For personal use only • Global GDP growth will be driven by the emerging economies • China’s growth model is in transition and evidence of progress is building • India’s economic growth will be cyclical and its energy demand will be significant • Substitution in the energy complex allows
Slide 21: A diversified energy portfolio is a key differentiator
A diversified energy portfolio is a key differentiator For personal use only • Global energy demand forecast to grow at Global energy outlook by region 1.3% CAGR1 between 2010 and 2030 (%) 100 • Two thirds of growth to come from Asia, with China and India adding 1,870 GW of generation capacity 80 •
Slide 22: The emerging world will continue to increase its share of global GDP
The emerging world will continue to increase its share of global GDP For personal use only • Developed economies underpinned global Share of population and GDP growth before 2000, however global energy (% of global) (index, 1980=100) demand per capita progressively contracted 100 140 • As China inte
Slide 23: Emerging economies are driving energy consumption growth
Emerging economies are driving energy consumption growth For personal use only Developed economies OECD forecast energy demand (Btoe) (index, 1980=100) • Per capita energy consumption has shown 12 180 limited growth and is projected to decline as 9 150 energy efficiency measures intensify 6 120 • In
Slide 24: The developed world will continue to push the productivity frontier
The developed world will continue to push the productivity frontier For personal use only • Research and development continues to be Research and development spending in 2010 driven by developed economies (US$ billion, 2005 PPP) • The developed world is home to some of the China 160 most innovative
Slide 25: China's growth model is in transition
China’s growth model is in transition For personal use only • The share of investment in China’s economy Share of investment 2012 is high (share of GDP, %) 50 • This is in part driven by a high savings rate 40 that generates significant funds for 30 investment 20 10 • Over time, the savings rate wil
Slide 26: The government in China is driving reform
The government in China is driving reform For personal use only • The outcome of the 3rd Plenary Session of Share of investment by state-owned enterprises the 18th Communist Party of China Central (%) Committee was positive with a list of 60 comprehensive reforms announced 40 • The role of markets a
Slide 27: India has lost momentum in the short term
India has lost momentum in the short term For personal use only • GDP growth has slowed in recent years GDP growth however it remains within the historical range (year-on-year % change) 12 • The slowdown is attributable to capacity 9 constraints and inflation 6 • Despite slower growth the economy ha
Slide 28: India still has significant long term potential
India still has significant long term potential For personal use only • India’s current wealth per capital is similar to Per capita GDP relative to US China in 2000 (US = 100) 20 China India • Demographics are favourable for growth 15 • The industrial sector will be key to India’s 10 development 5 –
Slide 29: ASEAN members are performing well and will play a key role in future growth
ASEAN members are performing well and will play a key role in future growth For personal use only • South East Asia has displayed strong growth GDP growth between 2002 - 2012 over the past decade (% CAGR) 12 • The largest four countries by population in 8 ASEAN represent over 500 million people 4 •
Slide 30: Global energy consumption will be driven by electrification and transport
Global energy consumption will be driven by electrification and transport For personal use only Population with access to electricity Passenger car penetration (billion people) (number of vehicles per thousand population) 9 800 US 8 700 +1.7 1.0 No access 7 Billion 600 1.5 Other Australia 1.3 6 Germ
Slide 31: Asia represents the bulk of energy consumption growth
Asia represents the bulk of energy consumption growth For personal use only • Primary energy demand is expected to grow Primary energy demand growth by region by 1.3% p.a to 2030, presenting opportunities (Btoe, index 2010 = 100) across multiple sectors, fuels and regions 140 1.3% CAGR • Energy dema
Slide 32: Substitution within the energy complex has allowed for a diverse base of supply
Substitution within the energy complex has allowed for a diverse base of supply For personal use only Economic drivers of the energy mix Global energy mix (%) • Technology factors have influenced demand 100 and supply 90 – electricity has substituted for biomass 80 – hydraulic fracturing has altered
Slide 33: Choice of energy is influenced by availability of domestic resources
Choice of energy is influenced by availability of domestic resources For personal use only Energy balances by region (Btoe) Europe Former Soviet Union North America 2010 2030 2010 2030 Asia Pacific Middle East 2010 2030 2010 2030 renewables uranium Africa thermal coal South America 2010 2030 natural
Slide 34: Choice of energy is also influenced by the type of end use consumption
Choice of energy is also influenced by the type of end use consumption For personal use only • Types of end use consumption influence the Energy balance in emerging Asia in 2010 selection of fuels – transport is reliant on oil Other Total consumption – certain industries are limited to direct Buildi
Slide 35: Uncertainties exist in the energy complex
Uncertainties exist in the energy complex For personal use only • A number of economic and policy decisions IEA energy scenarios will significantly influence demand (global growth in consumption of energy to 2030, Btoe) 5.0 – such as demographics and the rate of economic growth 4.0 • Supply conditio
Slide 36: BHP Billiton possesses a uniquely diversified energy portfolio
BHP Billiton possesses a uniquely diversified energy portfolio For personal use only Revenue by product Revenue by region Revenue by sector 2% 18% 24% 39% 26% 31% 46% 8% 28% 35% 37% 6% oil thermal coal US Asia transformation¹ buildings natural gas uranium Europe rest of World industry transport Glob
Slide 37: Oil and gas form the foundation of the energy complex
Oil and gas form the foundation of the energy complex For personal use only • Global energy demand growth is strong Primary energy supply by commodity enough to drive increased consumption for (Btoe) CAGR all energy fuels 18 (2010-2030) • Along with renewable electricity, natural gas 15 is one of th
Slide 38: Key themes
Key themes For personal use only • Global GDP growth will be driven by the emerging economies • China’s growth model is in transition and evidence of progress is building • India’s economic growth will be cyclical and its energy demand will be significant • Substitution in the energy complex allows
Slide 39: For personal use only
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Slide 40: Petroleum markets
For personal use only Petroleum markets Brett Langley Vice President, Marketing 9 December 2013
Slide 41: Key themes
Key themes For personal use only • Global crude market fundamentals remain robust • US crude production growth will be absorbed by domestic refinery capacity • Global gas markets will continue to converge over time • Positive demand outlook for US gas and differentiated cost curve will support price
Slide 42: Global crude fundamentals remain robust
Global crude fundamentals remain robust For personal use only • We forecast global liquids demand CAGR of Global liquids demand 0.9% to 2030 (MMbbl/d) 120 – current consumption of 90 MMbbl/d 90 – over 100 MMbbl/d forecast by 2030 60 – underpinned by a significant increase in 30 Asian transport fuel
Slide 43: US refinery complex well positioned to manage increased shale oil supply
US refinery complex well positioned to manage increased shale oil supply For personal use only • Shale oil development has underpinned a US crude supply substantial recovery in US crude production (MMbbl/d) 12 – forecast to increase from a low of 9 5 MMbbl/d in 2008 to 7.5 MMbbl/d in 2016 6 • Produc
Slide 44: Fundamental change to the WTI-Brent spread
Fundamental change to the WTI-Brent spread For personal use only • WTI historically traded at a premium to Brent to Locational crude prices reflect transport costs from Gulf Coast to Cushing Cushing, OK (WTI) • WTI traded at a discount from 2011 as growth in US production led to an oversupply at Cus
Slide 45: We target refinery configurations that match our crude portfolio
We target refinery configurations that match our crude portfolio For personal use only • Regional crude pricing reflects quality and Regional crude prices locational differentials (US$/bbl differential to WTI) 30 – Australian crudes are indexed to Brent 20 – Gulf of Mexico crudes are primarily 10 in
Slide 46: Strong global gas demand outlook
Strong global gas demand outlook For personal use only • Global gas demand CAGR of 2.3% forecast Global natural gas demand by region to 2030 (bcf/d) 500 – current consumption of 320 bcf/d 400 – 480 bcf/d forecast by 2030 300 200 • Asian demand forecast to double to 125 bcf/d 100 by 2030 0 2012 2014
Slide 47: The US is the largest gas market in the world
The US is the largest gas market in the world For personal use only • The US is the largest, most traded gas US natural gas demand by sector market in the world (bcf/d) 80 – currently consumes 70 bcf/d 60 – over 95 bcf/d forecast by 2030 Commercial 40 • Current domestic consumption is evenly 20 spre
Slide 48: Power generation provides gas price support
Power generation provides gas price support For personal use only • US energy policy continues to favour gas Forecast US coal retirements fired power generation over coal (cumulative, GW) 50 • Substantial retirements of sub-optimal coal 40 plants are expected 30 20 – ~47 GW out of 340 GW to be retir
Slide 49: A resurgence is underway in the industrial sector
A resurgence is underway in the industrial sector For personal use only • Industrial gas demand declined by 4 bcf/d US industrial gas demand between 2002-2009 (bcf/d) 30 • The current gas price environment has 25 incentivised a resurgence in industrial activity 20 – incremental industrial demand of
Slide 50: New markets provide further demand upside
New markets provide further demand upside For personal use only • Natural Gas Vehicle (NGV) demand growth NGV gas demand of ~4 bcf/d is forecast by 2030 (bcf/d ) 4 • The majority of demand growth is expected 3 from heavy duty vehicles 2 – 40% of the heavy trucking market could 1 potentially switch t
Slide 51: As well as the emergence of US gas exports
As well as the emergence of US gas exports For personal use only • Five US LNG non-FTA export projects have DoE approved LNG export capacity been approved by the Department of Energy (bcf/d) (DoE) 8 – total of 6.77 bcf/d approved 6 4 – four are subject to Federal Energy Regulatory Commission (FERC)
Slide 52: Continued investment required to meet demand
Continued investment required to meet demand For personal use only • The largest US gas supply sources include US gas delivered inducement cost curve - 2025 Basin supply Marcellus, Haynesville and Fayetteville (bcf/d) Marcellus Haynesville • Supply cost differentiation driven by a Fayetteville 37 29
Slide 53: Our US shale gas resources are well positioned to access key markets
Our US shale gas resources are well positioned to access key markets For personal use only • The US gas market consists of multiple Regional gas flows supply and demand centres Canada • Given their proximity to key southern and export markets our resources have a location advantage New York Rockies
Slide 54: US exports will impact Asian LNG price formation
US exports will impact Asian LNG price formation For personal use only • Asian LNG demand CAGR forecast of 4.5% Asian LNG demand to 2030 (bcf/d) 60 – supply will be met by a variety of competing sources 40 • US LNG export projects are targeting Asian 20 customers 0 – up to 5.8 bcf/d of DoE approved
Slide 55: Australian gas increasingly connected to LNG markets
Australian gas increasingly connected to LNG markets For personal use only • LNG exports from Eastern Australia to Eastern Australian gas demand commence in 2014 (bcf/d) 10 – over 70% of Eastern Australian supply to 8 be exported by 2020 6 – 90% of Western Australian supply to be 4 exported by 2020
Slide 56: US NGL supply growth is incentivising a demand response
US NGL supply growth is incentivising a demand response For personal use only Eagle Ford NGL yield • NGLs consist of ethane, propane, butane, US NGL price 9% 8% iso-butane and natural gasoline (% of WTI) 7% 150 51% 25% – used for plastic production, refinery blending, fuel and as a heavy oil diluent
Slide 57: Key themes
Key themes For personal use only • Global crude market fundamentals remain robust • US crude production growth will be absorbed by domestic refinery capacity • Global gas markets will continue to converge over time • Positive demand outlook for US gas and differentiated cost curve will support price
Slide 58: For personal use only
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