Bhp Group Ltd · ASX:BHP
Bhp — BHP Billiton — Investor Presentation (November 2007)
71 slides from Bhp's investor presentation, November 2007
Slide 1: BMA: Taking the lead to deliver value and growth
BMA: Taking the lead to deliver value and growth John Smith CEO BHP Billiton Mitsubishi Alliance Analyst Visit - October/November 2007
Slide 2: Important Notices
Important Notices Reliance on third party information The views expressed here contain information that have been derived from publicly available sources that have not been independently verified. No representation or warranty is made as to the accuracy, completeness or reliability of the informatio
Slide 3: Presentation Structure
Presentation Structure BMA Overview Deliver Safety Production Cost management Lead Resource position Product range Grow Key enablers (people, water, infrastructure) Growth options BMA – Analyst Visit October/November 2007 3
Slide 4: BMA Overview: Key facts
BMA Overview Key facts 9 Mines (7 OC and 2 UG) 44 Mtpa Hay Point plus other port options 4,800 employees 3,000 contractors 750 Mbcm total overburden 58 Mt production (100%) US$1.1 B EBIT (BHP Billiton share) BMA – Analyst Visit October/November 2007 4
Slide 5: BMA Overview: Equipment snapshot
BMA Overview Key facts Equipment Snapshot Overburden removed `34 draglines FY07 `28 shovels and large excavators 750 Mbcm total (531 Mbcm prime) `107 rear dump trucks to produce `35 haul trucks 80 Mt Raw coal `108 dozers to produce `135 other mobile equipment 58 Mt Product coal BMA – Analyst Visit O
Slide 6: Mission and Strategic Objectives
BMA Overview Mission and Strategic Objectives Our Strategy RDP OUR STRATEGY RDP v3 To create value through the mining, productionand high marketing quality coal of OUR MISSION resources, and the provision of innovative customer -focused and mark solutions et . O ur St r at egyRDP Strategic O bjectiv
Slide 7: Deliver Full Potential From Existing Business
BMA Overview Mission and Strategic Objectives Deliver Full Potential From Existing Business BMA – Analyst Visit October/November 2007 7
Slide 8: Deliver: Safety
Deliver Safety Total Recordable Injury Frequency Rate Number of incidents per million hours worked 45 14 per cent reduction in TRIFR 40 in 2006/07 35 Health and Safety Strategic Plan 30 developed 25 Fatigue Management a focus 20 Contractor Management 15 procedure developed and being 10 rolle
Slide 9: Continual production growth
Deliver Continual production growth 60 Total Production (Mt) 55 50 45 40 2003 2002 2004 2005 2006 2007 FY Project Delivery Broadmeadow Stage 1 Expansion Stage 2 Expansion Poitrel HPX2 BW CHPP BMA – Analyst Visit October/November 2007 9
Slide 10: Cost performance
Deliver Cost performance ~25% One off ~50% Heated market A$/t product ~25% Sticky 2004 2007 BMA – Analyst Visit October/November 2007 10
Slide 11: Cost Management
Deliver Cost Management FY07 Cost Breakdown Other Entity Costs G&A <1% Bulk of operating costs Other site 1% 3% are in earth moving and Offload & Stockpile 1% increasing strip ratios Rail Freight Focus on lowest cost stripping options and 10% maximising coal recovery Processing Stripping 12% 50%
Slide 12: BMA Stripping Study
Deliver BMA Stripping Study Current Target Study completed to identify lowest cost stripping solutions Continuous Opportunities identified are being Haulage carried forward: BMA Dragline Strategy T&S* T&S* Site specific continuous haulage studies DRE^ DRE^ * T&S = Truck and Shovel ^ DRE = Dr
Slide 13: Last Drop
Deliver Last Drop Placement of charge within ±0.5m Locate TOC 9 Reduces coal loss Accurate placement 9 Extensive trials at Peak Variability in Hard Downs proving findings Cap 9 Hardcap protects coal from blast influence of blast Prioritised program of rollouts has been Hardcap protects coal fr
Slide 14: Reinforce Industry Leadership Position
BMA Overview Mission and Strategic Objectives Reinforce Industry Reinforce Industry Leadership Position Leadership Position BMA – Analyst Visit October/November 2007 14
Slide 15: Resource base to support ongoing sales growth
Lead Resource base to support on going sales growth 60 Poitrel 50 South Walker Creek Total Sales (Mt) 100% Gregory 40 9.2% CAGR Norwich Park 30 Saraji Peak Downs 20 Riverside Goonyella 10 Sth Blackwater Blackwater 0 2007 1969 1.7 Bt Marketable Reserves (850 M attributable to BHP Billiton) 9.8 Bt
Slide 16: Resource Position
Lead Resource Position Notes • Poitrel, South Walker Creek and Wards Well are BMC assets. • Total resource and reserve numbers exclude the Ridgeland and Humboldt properties BMA – Analyst Visit October/November 2007 16
Slide 17: Product range
Lead Product range Coal Type Coals HQHCC Peak Downs ~ 53% Goonyella Saraji HCC Norwich Park ~ 15% Gregory Crinum SHCC Blackwater ~ 8% Poitrel PCI South Walker Creek Price ~ 5% Poitrel SSCC Blackwater ~ 9% Note: thermal coal accounts for remaining 10% of production BMA – Analyst Visit October/Novembe
Slide 18: Risk profile advantage
Lead Risk profile advantage FY07 Queensland HCC and SHCC Sales Origin 100% Underground 50% Open Cut 0% Source: BMA Analysis BMA Managed Queensland Competitors BMA’s higher proportion of open cut sales delivers a lower risk and less volatile EBIT stream BMA Resource is expected to sustain >80% op
Slide 19: Manage for Future Growth and Volatility
BMA Overview Mission and Strategic Objectives Manage for Future Growth and Volatility BMA – Analyst Visit October/November 2007 19
Slide 20: People – a key enabler
Grow People – a key enabler We need to attract and retain good people to deliver Ongoing training and development of the workforce a priority The focus of our community programs is to improve the quality of life in our towns BMA – Analyst Visit October/November 2007 20
Slide 21: Water supply – a key enabler
Grow Water supply – a key enabler Burdekin Dam Eungella Dam Goonyella Riverside Mine Broadmeadow Mine SWC Mine Braeside Moranbah region Poitrel Mine Borefield Peak Downs Mine Saraji Mine Dysart Norwich Park Mine Gregory Crinum Mine Selma Weir Emerald Bedford Weir Bingengang Weir Blackwater Blackwate
Slide 22: Logistics – a key enabler
Grow Logistics – a key enabler ABBOT POINT 14 / 21 / 35 Bowen 0 100km Collinsville Newlands System Mackay DBCT 60 / 68 / 85 HAY POINT 44 / 55-57.5 Northern Missing Link Moranbah Goonyella System Key XX / XX / XX Blackwater System Current Capacity (Mt) Rockhampton Committed Capacity (Mt) Emerald Blac
Slide 23: Deep inventory of projects and future options
Grow Deep inventory of projects and future options Proposed capex as at Nov 2007 $<0.5B $0.5–1B >$1B Greenfield Brownfield BW UG SRX GRX 3 Mtpa BMA GRX Incremental Kennedy 5 Mtpa Daunia HPX2 Poitrel HPX 3 PDX 8 Mtpa BW CHPP Red Hill Wards UG Well Feasibility Execution Pre-Feasibility Future Options
Slide 24: Goonyella Expansion
Grow Goonyella Expansion Goonyella Expansion • BMA ownership • Brownfield Expansion • 5-8 Mtpa HCC • Open cut (dragline and truck shovel) ± Underground (longwall) • New CHPP capacity & supporting infrastructure BMA – Analyst Visit October/November 2007 24
Slide 25: Peak Downs Expansion
Grow Peak Downs Expansion Peak Downs Expansion • Moving toward feasibility • BMA ownership • Mix of Brownfield & Greenfield Expansion • Up to 8 Mtpa HCC • Open cut (dragline and truck shovel) • New CHPP capacity & supporting infrastructure BMA – Analyst Visit October/November 2007 25
Slide 26: Daunia
Grow Daunia Daunia • Concept • BMA ownership • Greenfield Expansion • WCC / Thermal • Open cut (truck shovel) • New CHPP capacity & supporting infrastructure BMA – Analyst Visit October/November 2007 26
Slide 27: Some other options
Grow Some other options Wards Well • Concept, BMC ownership • Underground HCC Red Hill • Pre-concept, BMA ownership • Underground HCC Saraji Expansion • Concept, BMA ownership • Open cut HCC Blackwater Underground • Pre-concept, BMA ownership • Underground HCC / WCC Kennedy • Concept, BMA ownership
Slide 28: Summary
Summary Current assets performing strongly – priority is safety, production and cost performance Large, high quality resource base with growth options Strong infrastructure positioning Diverse portfolio to deliver reliability & quality to our customers BMA – Analyst Visit October/November 20
Slide 29: Mark Chambers, General Manager, Blackwater Mine
Mark Chambers General Manager, Blackwater Mine Analyst Visit - October/November 2007
Slide 30: Important Notices
Important Notices Reliance on third party information The views expressed here contain information that have been derived from publicly available sources that have not been independently verified. No representation or warranty is made as to the accuracy, completeness or reliability of the informatio
Slide 31: Presentation Topics
Presentation Topics Overview Safety (Zero Harm) Geology Coal quality Mining equipment and production Mine site cost break-up Innovation / improvements BMA – Analyst Visit October/November 2007 31
Slide 32: Overview – key statistics
Overview – key statistics Operations commenced 1967 BWM and SBC merged 2001 Annual production and sales approx. 13 Mt (Met + Thermal) 90% of sales in the seaborne export market Export coal is railed 300 km to ports at Gladstone for shipping Approx 800 employees 600 FTE contractors 17
Slide 33: Overview
Overview Coal extracted by open cut methods Multi Seam operation with operating strike length of almost 60 km Coal processing will be centralised at new Coal Handling & Processing Plant Site product & dedicated port stockpile capacities of approx 450 Kt and 1 Mt tonnes respectively BMA – Ana
Slide 34: Overview – strategic planning process
Overview – strategic planning process BMA Mission To create value through the mining, production and marketing 5 YEAR BUSINESS PLA N 2008-2012 v3 OUR MISSION W E VALUE O URTHEME 17 Oct. ‘06 To crea te va ul et hrou gh th e mi ni ng, produc ti on and ma rke ti ng of hig h qual ti y • S afet y& t he •
Slide 35: Safety (Zero Harm)
Safety (Zero Harm) Total Recordable Injury Frequency Rate 60 FRCP Hazard awareness/identification 50 Near miss reporting/analysis 40 Accident/incident investigation 30 Fatigue management 20 Contractor Management (CMS) 10 Safe Leadership program 0 2002 2003 2004 2005 2006 2007 BMA – Ana
Slide 36: Geology – resources & reserves
Geology – resources & reserves FY07 Marketable Reserve (256Mt) FY07 Measured, Indicated, 19 and Inferred (1,832Mt) Mine Life Based on 19 Marketable Reserve (yrs) BMA – Analyst Visit October/November 2007 36
Slide 37: Geology - selective mining
Geology - selective mining Due to relatively flat dipping nature of deposit and good seam thicknesses coal seams maybe selectively mined or split This provides processing flexibility plus ability to react to product type requirements Central and Southern Pit Areas Top Seam Northern Pit Areas (0.
Slide 38: Coal Processing
Coal Processing M L17 7 1 Industrial Town of Blackwater P Facility M L M L1 792 17 CAPRICORN HIGHWAY 62 ML M L1 1 86 600 ML ML MDL155 70 1907 10 73 ML 3 17 67 ML ML 17 70139 ML 1800 ML 17 59 ML 17 72 ML70091 ML70091 North ML1812 M L18 29 ML 1760 ML 70104 Plant South Plant Thermal New Plant CHPP ML70
Slide 39: Mining Equipment
Mining Equipment Equipment Snapshot 8 draglines 1 shovel and 2 large excavators 15 rear dump trucks 11 haul trucks 22 dozers 31 other mobile equipment BMA – Analyst Visit October/November 2007 39
Slide 40: Production
Production Thermal 14% Blackwater Coking 37% Blackwater Weak 49% 2007 Production – 12.276 Mt BMA – Analyst Visit October/November 2007 40
Slide 41: Mine site cost breakdown – FY07
Mine site cost breakdown – FY07 Other Offload & 3% Stockpile Rail Freight 1% 15% Processing 10% Stripping 57% Coal Mining 14% BMA – Analyst Visit October/November 2007 41
Slide 42: Improvements - CHPP project
Improvements - CHPP project Feasibility completed October 2003 Project Approval January 2004 Commissioning from April 2007 Full production from late 2007 Commissioning underway early indications suggest improved yield, increased efficiency and cost management New technology Health and
Slide 43: Improvements - Dragline project
Improvements - Dragline 41 project Purchased by BMA in 2005 74,000 hrs of operation Significant upgrade and overhaul of machine during reassembly Additional dragline to offset more truck and shovel stripping costs Dragline operating at 120% RSL but upgrade will permit 125% RSL First prod
Slide 44: Improvements - Low density explosives
Improvements - Low density explosives Trials nearing completion 2 Products Loadex (Dry hole product) XLoad (Wet hole product) Results so far favourable Potential for BMA wide replication LOADEX XLOAD BMA100 Emulsion BMA100 Emulsion Rice Hulls EPS Polystyrene ANFO ANFO BMA – A
Slide 45: Improvements - Last Drop
Improvements - Last Drop Technical Studies and geological investigation - start of 3rd Qtr FY08 Introduction of blasting methodologies to create “hard caps” - 3rd Qtr FY08 Implementation (Removal of hard caps) - FY09 Implementation reduces pit advance rate and maximises resource, improves co
Slide 46: Summary
Summary Large mine and resource base with long life Important asset for BMA in the long term Range of coal products Flexibility to respond to demand due to infrastructure platform Business improvement initiatives delivering improved cost management BMA – Analyst Visit October/November 2007
Slide 47: Sam Bonanno, VP Operations, Ports & Business Improvement
Sam Bonanno VP, Operations, Ports & Business Improvement Analyst Visit - October/November 2007
Slide 48: Important Notices
Important Notices Reliance on third party information The views expressed here contain information that have been derived from publicly available sources that have not been independently verified. No representation or warranty is made as to the accuracy, completeness or reliability of the informatio
Slide 49: Presentation Topics
Presentation Topics Safety Environment & Community Overview Capabilities Competitive Advantages Expansion Capability BMA – Analyst Visit October/November 2007 49
Slide 50: Safety (Zero Harm)
Safety (Zero Harm) Total Recordable Injury Frequency Rate FRCP 60 Hazard awareness/identification 50 40 Near miss reporting/analysis 30 Accident/incident investigation 20 Fatigue management 10 Contractor Management (CMS) 0 Safe Leadership program 2002 2003 2004 2005 2006 2007 BMA – Ana
Slide 51: Environmental and Community Strengths
Environmental and Community Strengths Dust Noise Spillage Water management BMA – Analyst Visit October/November 2007 51
Slide 52: Overview of Operations
Overview of Operations 17 primary products and 22 blends 64 customers in 21 countries Hay Point – 24 hr x 365 days Inloading ~ 4,000 trains Outloading ~ 900 parcels on 400 ships “Quality Terminal” not just a “Throughput Terminal” Responsibility for the quality of all cargoes loaded, as
Slide 53: Our advantages
Our advantages Strategic asset enabling control of the whole logistics chain Linked and responsive to mine production and delivery Capability to co-ordinate trains Control the scheduling and berthing order of vessels BMA – Analyst Visit October/November 2007 53
Slide 54: Stockyard allows flexibility
Stockyard allows flexibility Our flexibility allows for options when confronted by variability Designated stockpiles to minimise cross-contamination Over 1,000 combinations available for efficient coal delivery Stockyard Capacity with 14-16 Coal Types Dry Season 1.45 Mt Wet Season 1.0 Mt B
Slide 55: Stacking and Reclaiming
Stacking and Reclaiming 5 Stacker Reclaimers, all capable of 6,000 tph automatic or manual stacking Reclaim capacities of 2 x 6,000 tph, 1 x 5,000 tph and 2 x 3,500 tph Flow splitters on each transfer point and yard machine to facilitate blending and maximise flow rate and direct loading oppor
Slide 56: Functional Unit Capacities
Functional Unit Capacities Rail contracts are sufficient to meet current needs Ongoing negotiation to meet growth profile Nominal inloading capacity >50 Mtpa Stockyard throughput capacity >50 Mtpa Shiploading capacity of 43 - 45 Mtpa dependant on ship size and blending requirements BMA – Analys
Slide 57: Shiploading Capability
Shiploading Capability Maximum Ship Size: Berth1: 175 k DWT, Berth2: +200 k DWT Largest ship loaded: “Iron Pacific” (230,000 DWT) Largest cargo : 207,769 t on “Iron Pacific” Average Cargo Size : Approx 95,000 t BMA – Analyst Visit October/November 2007 57
Slide 58: Cargo Destinations
Cargo Destinations Over 64 Customers 21 Countries For FY07 Parcels sold 830 Ships loaded 370 Full Cape (100 – 230 kt) 33% Part loaded Cape 12% Panamax (55 – 100 kt) 35% Europe Korea Handysize (< 55 kt) 20% Middle East Japan China India Taiwan South America South Africa BMA – Analyst Visit October/No
Slide 59: Competitive advantage
Competitive advantage Unique quality smoothing capability through the coal tracking system BMA – Analyst Visit October/November 2007 59
Slide 60: Coal tracking
Coal tracking Visual representation of the individual stockpile BMA – Analyst Visit October/November 2007 60
Slide 61: Competitive advantage
Competitive advantage Coal tracking - New High Resolution Quality View BMA – Analyst Visit October/November 2007 61
Slide 62: Our advantages: Total Terminal Cost Index
Our advantages Low cost position versus all other coal exporting terminals Total Terminal Cost Index 2.50 2.00 Cost Index/tonne 1.50 1.00 0.50 0.00 HPCT BMA – Analyst Visit October/November 2007 Source: Barlow Jonker 62
Slide 63: Competitive advantage: Tonnes per employee
Competitive advantage Hay Point productivity versus all other coal export terminals 300000 250000 Tonnes/Employee 200000 150000 100000 50000 0 Coal Export Terminals HPCT BMA – Analyst Visit October/November 2007 Source: CETOA 63
Slide 64: Demurrage – Ships at anchor
Demurrage – Ships at anchor BMA – Analyst Visit October/November 2007 Source: Coalsync Operations 64
Slide 65: Expansion Execution Capability
Expansion Execution Capability HPX1 & 2 – Project plan - completed BMA – Analyst Visit October/November 2007 65
Slide 66: Expansion Execution Capability
Expansion Execution Capability Completed HPX1 & 2 - on budget and in acceptable time frame After Before BMA – Analyst Visit October/November 2007 66
Slide 67: Expansion Execution Capability: Tonnes shipped v capacity
Expansion Execution Capability We are shipping at expanded capacity Tonnes shipped v Capacity 11 10 9 Tonnes (Million) 8 7 6 Capacity 5 Actual 4 3 2 1 0 Qtr June 07 Qtr Sept 07 Quarter BMA – Analyst Visit October/November 2007 67
Slide 68: Expansion Capability
Expansion Capability HPX3 could deliver 55-57.5 Mtpa total nominal capacity BMA – Analyst Visit October/November 2007 68
Slide 69: Summary
Summary Summary Summary Hay Point Coal Terminal is a strategic asset for BMA: allows us to manage the whole logistic chain from pit to customer competitive advantages – low cost, high productivity, increased quality control capacity to expand and a history of delivering on expansion activiti
Slide 70: Dave Murray, President Coal
Dave Murray President Coal Analyst Visit - October/November 2007
Slide 71: Summary: In conclusion
Summary In conclusion Strong market driven by demand from India, China and Brazil Product quality key - portfolio biased to premium end of the market Premier assets in the world’s best metallurgical coal basin Large, long life, high margin, expandable resource base Strong portfolio of grow