Bhp Group Ltd · ASX:BHP
Bhp — BHP Billiton Mitsubishi Alliance (BMA) — Investor Presentation (June 2002)
39 slides from Bhp's investor presentation, Jun 6, 2002
Slide 1: Analyst Presentation
Analyst Presentation June 2002
Slide 2: Industry Background: Coking Coal - Overview
Industry Background Coking Coal - Overview
Slide 3: The Hard Coal Market
The Hard Coal Market Production Production3639 3639Mt Mt Thermal Thermal Coking Coking 3132 3132Mt Mt 508 508Mt Mt Domestic Domestic Export Export Domestic Domestic Export Export 2750 2750Mt Mt 382 382Mt Mt 315 315Mt Mt 193 193Mt Mt HCC SSCC PCI Seaborne Land HCC SSCC PCI Seaborne LandTrade Trade 29
Slide 4: Coal Properties
Coal Properties Coke Coke Strength Strength Plasticity Plasticity (CSR) (CSR) (CSN, (CSN, Fluidity, Dilation) Fluidity, Dilation) ll Coke Coke strength strength isis an an indicator indicator of of physical physical ll Plasticity Plasticity refers refers to to the the melting melting and and bonding
Slide 5: Classification of Coking Coal
Classification of Coking Coal Hard coking coal and weak/semi-soft coking coal are used in the coke ovens, whereas PCI is used only in the blast furnace as a replacement for coke. Relationship between Coking Coal types, Plasticity l Hard coking coals are a necessary Rank and Fluidity Hard Hard Coking
Slide 6: The Blast Furnace Process
The Blast Furnace Process Coke has three key functions in the blast furnace - reducing agent to separate oxygen from iron, energy source to melt the ore and porous material that suspends ore in the furnace while allowing upward passage for hot gases Sinter Plant Iron ore is combined with coke and li
Slide 7: Coking Coal Demand in the Steel Making Process
Coking Coal Demand in the Steel Making Process External Predominately China Gas Credits K Key Raw Materials Coking Coke Coke E Minor Raw Material Coal Oven Output Making Y Gas Pulverised Natural Credits Coal Injection Gas Oxygen Coking Coke Coal Oven Blast Basic Blast Furnace Furnace Oxygen Furnace
Slide 8: Coking Coal Demand in the Steel Making Process
Coking Coal Demand in the Steel Making Process External Predominately China Gas Credits K Key Raw Materials Coking Coke Coke E Minor Raw Material Coal Oven Output Making Y Gas Pulverised Natural Credits Coal Injection Gas Oxygen Coking Coke Coal Oven Blast Basic Blast Furnace Furnace Oxygen Furnace
Slide 9: Steel Industry Dynamics
Steel Industry Dynamics Global Steel Production by Process CAGR 2000- (million tonnes) 2005 (%) 1000 l BOF penetration is expected to fall from 58% 900 (5.3) Other in 2000 to 56% in 2005 800 700 3.9 l However the technology EAF shift is expected to slow as 600 EAF economics come 500 under pressure f
Slide 10: Historical Seaborne Demand
Historical Seaborne Demand Global Met Coal Supply (million tonnes) 600 CAGR % 1978-2000 500 Total: 0.0 Seaborne Exports Landborne Exports 3.9 400 Domestic supply trend (2.6) 300 Domestic Supply 200 (1.1) 100 0 1978 1980 1982 1984 1986 1988 1990 1992 1994 1996 1998 2000 Source: IEA Coal Information 2
Slide 11: Seaborne HCC Demand by Region
Seaborne HCC Demand by Region Declining Japanese demand for HCC is expected to be offset by significant growth in India, Western Europe and Latin America Seaborne HCC Demand by Region (million tonnes p.a.) 160 Historical Forecast 140 Eastern Europe 120 Africa & M.East Other Asia 100 South Korea Lati
Slide 12: Seaborne WCC / PCI Demand by Region
Seaborne WCC / PCI Demand by Region India, Latin America and Western Europe are expected to drive the demand for WCC/PCI Seaborne WCC/PCI Demand by Region (million tonnes p.a.) 80 Historical Forecast 70 India 60 Eastern Europe Other Asia 50 Latin America South Korea 40 Western Europe 30 20 Japan 10
Slide 13: Forecast Met Coal Export by Country
Forecast Met Coal Export by Country Australia and China are expected to fill the demand-supply gap resulting from higher seaborne demand and decline of US exports Met Coal Seaborne Exports by Country * (million tonnes) 160 Historical Forecast Australia 140 120 100 80 60 40 Canada China 20 US South A
Slide 14: Forecast Regional Supply by Product Type
Forecast Regional Supply by Product Type Australia is expected to grow tonnage and share in HCC yet loose share in WCC/PCI, despite an increased absolute volume Projected Export Volumes by Product Type (million tonnes p.a.) Hard Coking Coal Weak Coking Coal/PCI 160 160 140 140 120 120 100 100 80 80
Slide 15: Major Seaborne Trade Flows Met Coal – 1997 to 2001
Major Seaborne Trade Flows Met Coal – 1997 to 2001 Change -2 13 Change -24 7 25 Change +7 27 8 56 15 20 2 6 11 2 13 3 107 5 Change +23 6 Total Seaborne Met Coal Trade 180Mt Australia and China are the only regions in which coking coal production has significantly increased over the last 20 years 15
Slide 16: Coking Coal Industry Cost Curve
Coking Coal Industry Cost Curve 120% 120% FOB Cost (Percentage of Maximum Realised) FOB Cost (Percentage of Maximum Realised) 100% 100% 80% 80% 60% 60% 40% 40% 20% 20% 0% 0 20 40 60 80 100 120 140 0% Cumulative Tonnes (Millions) 0 20 40 60 80 100 120 140 Cumulative Tonnes (Millions) Australia Canada
Slide 17: Coking Coal - Industry Structure
Coking Coal - Industry Structure 17 Date – 06-June-2002 File Reference – BMA Analyst Presentation – 2002 – Revision 8
Slide 18: Seaborne Exporter Product Mix
Seaborne Exporter Product Mix BMA-BHPB is well positioned in all product segments, especially the low vol market Met Coal Export Mix: Largest Seaborne HCC Exporters 2001 CNIEC Peabody BMA-BHPB Fording Rio Anglo MIM Teck RAG Luscar Other 100% 90% 80% Weak 70% Hard HV Hard MV % of exports 60% Hard LV
Slide 19: Price Trends: Historical and Forecast Pricing
Price Trends: Historical and Forecast Pricing Real prices of met coal are forecasted to decline slowly Historical Historical(and (andforecast) forecast) numbers numbersdiffer differbetween between experts expertsdue dueto todifferent different Met Coal FOB Prices: 1982 to 2010 benchmark benchmarkcoa
Slide 20: Seaborne Met Coal Market and BMA Outlook: Overview
Seaborne Met Coal Market and BMA Outlook: Overview BMA enjoys a strong position in an attractive industry which is expected to see some medium term trade flow changes Market • Continued growth in HCC and WCC/PCI, on the order of 1 to 2% p.a., driven by increased steel output and declining domestic m
Slide 21: BMA Business
BHP Billiton Mitsubishi Alliance BMA Business
Slide 22: Location of Assets
Location of Assets Darwin MAP AREA Brisbane Perth Adelaide Sydney Canberra Melbourne 22 Date – 06-June-2002 File Reference – BMA Analyst Presentation – 2002 – Revision 8
Slide 23: BHP Billiton Met Coal Business
BHP Billiton Met Coal Business BHPBilliton BHP Billiton Mitsubishi Mitsubishi 50% BMAOwners Owners 50% IllawarraCoal Coal BMA Illawarra Council Council CQCA JV: Gregory JV: Marketing; Peak Downs Mine Goonyella Mine Gregory Mine Singapore Norwich Park Mine Saraji Mine Crinum Mine Brisbane Blackwater
Slide 24: Carbon Steel Materials - BHP Billiton Context FY2001
Carbon Steel Materials - BHP Billiton Context FY2001 % of Group Sales % of Group EBIT 17% = US$3,370M 25% = US$895M 22% ex BHPS 27% ex BHPS 24 Date – 06-June-2002 File Reference – BMA Analyst Presentation – 2002 – Revision 8
Slide 25: Contribution to BHP Billiton - Carbon Steel Materials earnings
Contribution to BHP Billiton - Carbon Steel Materials earnings (ytd) 400 2001 EBIT (US$ -Millions) 300 2002 200 100 0 -100 IO rco e al WA on es Co ma ss e Ir an ine ra Sa ng ari wa us od Ma Illa lB Bo oa tC Me % 50 25 Date – 06-June-2002 File Reference – BMA Analyst Presentation – 2002 – Revision 8
Slide 26: Hard Coking Coal Market
Hard Coking Coal Market World Seaborne Queensland HCC HCC Market Exports Other QLD Suppliers 37% BMA 28% Other Suppliers 72% BMA 63% 26 Date – 06-June-2002 File Reference – BMA Analyst Presentation – 2002 – Revision 8
Slide 27: Group Historical Sales by Type
27 Sales (Tonnes 000's) YE M 88 -A ct ua l 10,000 20,000 30,000 40,000 50,000 60,000 0 YE M 89 -A ctu al YE M 90 -A ct ua YE l M 91 -A ctu al YE M 92 -A ctu al YE M 93 -A ct ua YE l M 94 -A HCC ct ua l YE 95 - Ac tu al Date – 06-June-2002 YE M 96 -A SSCC / WCC ct ua YE l M 97 -A ct ua YE l M Thermal
Slide 28: BMA Coal Sales
BMA Coal Sales 28 Date – 06-June-2002 File Reference – BMA Analyst Presentation – 2002 – Revision 8
Slide 29: BMA Business – Key Statistics
BMA Business – Key Statistics • Annual Sales YEM90 (FY02 – Projected) • HCC 25.7Mt 35.2Mt • WCC 3.1Mt 9.5Mt • Thermal 1.2Mt 5.3Mt • Total 30.0Mt 50.0Mt • Employees (FY02) 8,629 3,012 • Marketable Reserves • Operating Undeveloped • 1,860Mt 151Mt • Equipment Draglines Electric Shovels Haul Trucks Coal
Slide 30: BMA Business
BMA Business Eungella Dam MACKAY Dalrymple Bay Coal Terminal Glenden Hay Point Coal Sarina Terminal Sth Walker Creek O/C Riverside O/C ~3Mtpa ~4Mtpa Nebo AREA OF MAP Goonyella O/C ~8Mtpa Moranbah Peak Downs O/C ~8Mtpa Saraji O/C ~5Mtpa Dysart Norwich Park O/C ~4Mtpa Clermont Tieri Capella Bingegang
Slide 31: Safety - LTIFR
31 Frequency Rate (per Million Manhours) YE - M 96 5 10 15 20 25 -A ctu YE al M 97 19.4 -A ct ua YE M l 98 13.7 -A ct ua YE M l 99 8.5 -A ctu YE al J0 5.2 Safety - LTIFR 0- Ac tu al FY 01 -A 8.5 ct ua l FY 7.6 02 (Y TD Date – 06-June-2002 FY ) 4.1 02 (T ar ge FY t) 4.0 03 (T ar ge FY t) 3.3 04 (T ar
Slide 32: Environment
Environment • Water Management • Downstream quality focus • Examining technology to remove salt for re- use • Mine Re-hab / Closure Planning • Long term focus to minimise impact • Change in re-hab from grazing to bushland • Dust Suppression at Port • Sampling program to initiate real time controls •
Slide 33: Human Resources
Human Resources FY02 Industrial Turmoil EBA Agreement Finalised Capability Organisation Performance Mindset/Culture • Capability gap • BMA Operating • Performance • Alignment with identification model management Charter • Talent • Organisation • OD/IR • Employee management design and performance rel
Slide 34: Cost Focus
Cost Focus Cash Cost (US$/T) 0 20 40 60 80 100 120 140 Cumulative Tonnes (Millions) HCC FOB Cost per Tonne BMA HCC Operations Illawarra Coal Operations 34 Date – 06-June-2002 File Reference – BMA Analyst Presentation – 2002 – Revision 8
Slide 35: Universal Dragline (UDD)
Universal Dragline (UDD) • 32 Draglines • ~70% of total material movement • Current Dragline Movement • 330 Million BCM’s pa • ~ 700 Million tonnes pa • Projected 20% productivity improvement • Potential Improvement • Equivalent to 6 additional draglines • Equivalent to new 10Mtpa mine at 1/3 capita
Slide 36: Success from Operating Excellence
Success from Operating Excellence YEJ01 – 4 completed projects (Increased plant yield, drill improvement (2 projects), dragline rope life projects) Actual Annualised Savings US$0.57M US$0.87M Revenue Increase US$1.08M US$4.34M FY02 – 11 completed projects, (Overburden drills, coal blasting, pre-stri
Slide 37: Projects
Projects •Goonyella Underground • Development of low-capital, low-risk punch longwall in GMS • Equipment ex:Kenmare (3,000 tph) • Flexible production – “Coal on Tap” • Gain experience in north Bowen Basin longwall mining Proposed •Blackwater Project Industrial Facility New CHPP ML 17 7 1 COOKCPP COO
Slide 38: Summary
Summary • BMA enjoys a premier position in an attractive, growing met coal industry • BMA’s position is particularly strong in HCC given its superior asset base and the limited remaining undeveloped high quality assets globally • Continuing strong focus on operational efficiency, innovation and exce
Slide 39: End of Presentation
End of Presentation Thank you
BHP Billiton Mitsubishi Alliance (BMA) — Investor Presentation (June 2002) on 6ix