Bhp Group Ltd · ASX:BHP
Bhp — RIO Tinto — Merger or Acquisition (January 2008)
41 slides from Bhp's merger presentation, Jan 3, 2008
Slide 1: Rule 425 filing notice
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 and Rio Tinto Limited Commission File No.: 000-20122 The following are slides comprising an investor presentation that was first giv
Slide 2: BHP Billiton and Rio Tinto: A Matter of Value
BHP 12 December Billiton and 2007Rio Tinto A Matter of Value
Slide 3: Disclaimer
Disclaimer combination The presentation Subject no or connection of from Neither jurisdictions This Markets (iii) Information about views Certain cost lives looking risks forward-looking Billiton Pageotherwise securities reliance are directors and document presentation and, and any such 2BHP held st
Slide 4: Disclaimer (Continued)
Disclaimer There results Billiton transaction, additional combinations forward-looking year-ended Report disclaims undertaking events, None earnings actual The extract. terms investors Goldman responsible referred shareholders jurisdiction of (10) In the by relevant US PROSPECTUS AMENDMENTS If websi
Slide 5: Agenda
Agenda 1. BHP Billiton: Superior shareholder value creation 2. BHP Billiton: World class growth assets 3. BHP Billiton’s proposal to Rio Tinto Page 4
Slide 6: 1. BHP Billiton: Superior shareholder value creation
1. BHP Page 5 Billiton: Superior shareholder value creation
Slide 7: Superior market capitalisation growth
Superior Market 240 (US$B) 150 180 210 30 US$31B 60 90 120 2 0 Source: Note: US$11.4B Page 9-Jun-2001 US$24B BHP Rio 6Market capitalisation Datastream Tinto market Billiton and28-Jun-2002 capitalisation CAGR: Rio value CAGR: Tinto and29% growth financial undertook 37% 30-Jun-2003 based US$122B US$23
Slide 8: BHP Billiton's track record of value creation
•BHP – Page Track Translates Ownership Total Continued Execution Delivering Earnings Dividend Billiton’s 7 shareholder record per per to on investment of production of share drivers share time a portfolio return and growth growth ofin growth on value of development budget Tier 1 assets throughout th
Slide 9: Total capital expenditure on completed projects
Total (US$B BHP 3.0 0.5 Nil (a) Page2.5 0.0 Nil CY2001Billiton 8capital Source: Note: Growth 2007. [GRAPHIC 2.0 since Total BHP1.5 expenditure Jul-2001) Total has CY20021.0invested delivered capital APPEARS = US$11.2bn Billiton since CY2003 onmore completed expenditure and HERE] July Rio CY2004 2001
Slide 10: Strong major project execution
Strong Major Over Ahead Budget Under 80% 100% 120% Behind Cost Mozal 0% 20% 40% Schedule 60% Hillside Escondida Mount Spence Mining Products Ravensthorpe RGP2 Notes: for budget Pagethe9Budget minerals 2of a) Arthur status execution and Area 3& Selected Phase Norte Sulphide 136% Capacity C of(forecas
Slide 11: Superior production growth
Superior Excl. 160 150 4% Incl. (Index: 170 140 Rio 120 130 FY01 100 110 Source: Note: and Tinto PageCAGR Tinto BHP 160 production 10 production includes Production FY02 FY2001 Rio 150 production Billiton 2%Tinto FY03 CAGR production from production from shown estimates. 8% 5% production FY04 growth
Slide 12: Superior earnings growth
Superior Earnings (Index: 800 500 600 300 CAGR 400 F 0 Source: BHP Rio Page Y2002 Tinto Tinto’s 200 Billiton Billiton’s 11FY2002 BHP 100 FY2003 EPS per 37% EPS share Billiton 700 growth EPS = calendarised FY2004 50% 100; represents and CAGR US$) Rio FY2005 to Tinto reported year FY2006 annual ending
Slide 13: Superior declared dividend growth
Superior Declared (Index: BHP 400 Rio 200 300 F 0 100 Source: Note: undertook Page Y2002 Tinto Billiton 12 Rio FY2002 BHP FY2003 dividend ordinary 11% Tinto’s share Billiton 29% CAGR buybacks =FY2004 ordinary growth 100; dividends CAGR and US$) Rio FY2005 of dividends per US$4.7B Tinto share FY2006
Slide 14: Superior total shareholder return
Superior (Index: BHP 600 400 500 J200 0 100 Total – Source: received Page un-01 BHP Rio • Billiton Rio 13 shareholder 300 Tinto Billiton May-02 Jun-2001 IRESS. Tinto by total Ltd Ltd: BHP Ltd 30% shareholder 23% Ltd Ltd: Apr-03 TSR a) A$37,612 Billiton and =return: As CAGR TSR CAGR 100) A$53,317 23%
Slide 15: 2. BHP Billiton: World class growth assets
2. BHP Page 14Billiton: World class growth assets
Slide 16: Simplicity, scale and quality of growth projects
Simplicity, Petroleum CSG As Proposed <US$500m Blackwater Turrum Alloy Canadian WFG Thebe Nimba Angostura Kennedy UG Hallmark Goonyella Expansions Ore Browse Sands WA RGP Line Shenzi Nth Olympic Expansion 3 CMSA Gabon Scarborough CW Wards Exploration Stage Sth Bakhuis Worsley Cliffs E&G Kipper Dougl
Slide 17: BHP Billiton: World class growth assets
•BHP – Page Pilbara Olympic Nickel Petroleum A Mineralisation Multi-stage Significant Double History Strong tier world major Billiton: 161historical growth iron digit asset of global class Dam exploration brownfield growth ore expansion World volume resource profile positions producer financial clas
Slide 18: Pilbara iron ore resources and infrastructure
Pilbara •– Page Very Resource High Large First Neither Total Rail17 Port: system: class low level Inner Outer-Harbour potential iron high company cost and project infrastructure ore: of grade Harbour can equity mineralisation curve Tier port be ore needs development 1capacity position expanded owner
Slide 19: Pilbara reserves, resources and mineralisation
(Billion Pilbara BHP 8.0 Rio Targeted 20-30 14.2 Notes: The geophysics, define subject b) c) Page Chart Source: 14.2 Tinto Potential Billiton 18 (c) aa) iron Reserves totonnes, Mineral areas additional Source: Pilbara the Reserves ore: known Pilbara Rio notes Mineralisation showing 100% Mineralisati
Slide 20: Pilbara targeted mineralisation
Pilbara ~ 7 Targeted (Billion 16 15 BHP Notes: b) The geophysics, define subject c) 26-Nov-2007, Annual d) Page 11Source: BHP - potential 27 23 Billiton 19aa) iron Reserves to Report, Billiton tonnes, Mineral additional Bar the Reserves ore: known (b) Mineralisation size notes “Delivering and equity
Slide 21: Pilbara BHP Billiton resources and infrastructure
Pilbara Port Dampier Deposit BHP 0.5bt 1.0bt 2.0bt Reserves Billiton’s Notes: distribution, Page Hedland Billiton 20Bubble iron size Cape and keyore: and scale Reserves Resources infrastructure, sizes Lambert BHP may (equity are not Billiton’s / calculated Resources ofrepresent share) 7bt facilitati
Slide 22: Pilbara combined resources and infrastructure
Pilbara Port Dampier Deposit Rio 0.5bt 1.0bt 2.0bt -•BHP Source: a) owned Tinto’s b) distribution, Bubble Page Enable Reduce BHP Rio Combining Rio Bubble Tinto Hedland Billiton 21 Tinto’s Tinto Billiton’s (see Resources iron sizes Rio size faster Cape development operating Identified sizes Note ore:
Slide 23: New third port at Port Hedland
New Third Port •BHP Notes: Study Page Total Clear Port: Strong CanHedland Existing Billiton’s Billiton 22 be Party Phase Inner Outer-harbour a) potential growth Government expanded Alannah Berths harbour 2,rail Berths Stockyards harbour channel path August Pilbara port system MacTiernan, tocapacity
Slide 24: Pilbara iron ore production growth
Pilbara (Index: Production 1,200 600 Actual 200 CY1999 400 C 0 BHP Rio CY1990 Sources: growth”; capacity Page Y1990 Tinto CY2009 Billiton 23Forecast iron 100 of CY1995 – Rio Production Total Organic CY2018 Historical 420mt =ore: ore Tinto Organic 1990 Growth production Production CY2000 for Growth I
Slide 25: Olympic Dam: world class resource
mtTeniente(a) 4th 160 el The 2500 Olympic ~1100 5th 200 Witwatersrand Carlin Sources: Note: a) Page Based Copper largest 140 150 largest 24 2000 Witwatersrand -1050 Newmont 120 100 Company on Dam: Dam copper gold kt 1500 uranium reported 1000 100 50 U3O8 Chuquicamata(a) Elkonsky Complex Adeposit 010
Slide 26: Olympic Dam contained copper
Contained 160 Copper 2.0 Olympic BHP Source: using a) b) stake Page Resolution Rio 1.5 140 Billiton 25 in GSJBW Tinto’s 1.0 equivalent BHP the 120 Dam copper 0.5 project 100 Billiton interests mineralisation current long relative Resolution 0.080 equivalent grade diluting term 60estimates exposure R
Slide 27: Olympic Dam: exposure to nuclear demand growth
Olympic Existing Operational Notes: Nucelara)Safety operational Dam: Location (power Centre Exposure ofplants) power reactors at ANL, to–plants strong 439 that Aug-2005 reactors(c) and are nuclear planned, future (www.insc.anl.gov/pwrmaps/world_map.pdf). demand Planned development under growth (reac
Slide 28: Olympic Dam staged expansion
Olympic Mining 9mtpa (500ktpa +3Mtpa Underground +18Mtpa 18mtpa +18mtpa Open (800ktpa +20mtpa pit Stages CONCEPTUAL Market Cu O 0 1.1 Modify 600 3 Note: feasibility Page ptimise concentrator U308 underground 227 +20mtpa Unless concentrator, 0mtpa Output Concentrating 50mtpa smelter +2Mtpa Dam: con)
Slide 29: Nickel: top global producer and growth pipeline
Nickel: Top (ktpa, 0 BHP Vale Jinchuan Xstrata Eramet Development Project Hallmark Yabulu MKO Leach 33 Expansion KNS Execution US$501m Notes: Page 50rd& 10 100 Billiton(c) 28 2006 Talc Line a) global CMSA Eastern & Sumitomo A150 purchases Source: major 4US$2B+ Feasibility CMSA Ravensthorpe saleable
Slide 30: Nickel: growth options
Nickel: Mining Power 1Mtpa Ferronickel mine Ore 3Mtpa +20 Nickel Heap Mine Note: The Stages CONCEPTUAL Cont’d 0 L3,4 HL1 HL2 + Page Current Further mined conceptual ktpa Build Expand 29 leach Unless plant Output +3Mtpa 50 6Mtpa Nickel Cerro Processing Nickel growth 50 ktpa greenfield processing smel
Slide 31: Petroleum: volume growth
Petroleum: •Volume * Source BHP (Attributable 10.5% 180 140 150 160 170 FY2006A 100 110 .PAtlantis age Train Stybarrow Zamzama Neptune Shenzi Pyrenees Total 130 Billiton 30CAGR 52P : growth 120 BHP –NWS –FY2007A –Reserves: Start –Strong Online, –Start –Start MMboe, estimated Second Billiton Online,
Slide 32: Petroleum: significant growth pipeline
Petroleum: Significant Major – Development Thebe Angostura Shenzi Kipper NWS Feasibility Scarborough * Source >200 (mmboe) Page Trinidad West Total 4Deep Colombia Malaysia East South Falklands Deep 31 50-200 WFG Nth near Coast Australia Nth Turrum 2P :Water Africa BHP Water Macedon Reserves –Gas Fut
Slide 33: BHP Billiton: Superior growth assets
•BHP – Page Pilbara Olympic Nickel Petroleum Already With Similar Large Not Production One Significant Strong Rapidly Supplemented Billiton: 32 constrained of an ore history iron the targeted exciting 3rd increasing Dam bodies world’s brownfield growth ore Superior largest of byby additional growth
Slide 34: 3. BHP Billiton's proposal to Rio Tinto
3. BHP Page 33Billiton’s proposal to Rio Tinto
Slide 35: Relative value and prospects
•Relative – Notes: Billiton b) Page From On Growth BHP We BHP Based measures 34 believe Billiton’s a) Billiton’s aissued value similar on Based prospects publicly Rio we ordinary on asset conclusions size track Tinto’s consider BHP are in available portfolio record clearly June shares Billiton share
Slide 36: Why combine BHP Billiton and Rio Tinto?
•Why – Notes: “Further Full Page Ability Material Combined US$1.7B US$2.0B Other Enhanced Greater Optimised Maintenance Intended run a a) 35combination combination rate to details Estimated diversity quantifiable initial deliver nominal additional ability entity capital synergies ofonUS$30B BHP will
Slide 37: Exchange ratio and premium
BHP 2.9x 3.00 3.1x Rumours Exchange potential 2.40 Rio 2.1x Page 1-Jan 1.9x Tinto’s Tinto Source: Note: Plc data a) last Billiton Offer offer shares date as 36 4-Mar 2:4 at 2.3x of Rumours ratio lower a15-May for proposal: Datastream represents prior BHP 31-Oct-2007. to and to relative Billiton of a
Slide 38: Terms of the proposal
BHP the •– a) Notes: A$109.20 and Ltd) b) closing c) share Treasury d) price e) details f) g) Page The Under So Immediate Overall 3.0 41% Ongoing Intended CGT This Premium Implied Estimated With Calculated synergies(c),(d) A$45.77 far, as Billiton’s 37 cash BHP prices transaction share on may rollov
Slide 39: Summary
•Summary We Page As The BHP Proposed Our believe an 38 benefits proposal Billiton’s all share US$30B in the of includes creates proposal, shares this combination. buyback combination wealth have a significant wedelivered and for are It all offering must progressive cannot shareholders premium outsta
Slide 40: BHP Billiton and Rio Tinto: A Matter of Value
BHP Billiton Page 39 and Rio Tinto A Matter of Value
Slide 41: Appendix: completed projects capital expenditure
Appendix: BHP Tintaya 114 Typhoon CY2001 752 2,228 33.75% Antamina 99.9% San 543 944 Bream 143 Mozal 34 68 Area 40 38.5% Zamzama 311 660 47.1% Mt 171 201 Hillside Cerrejon 464 1,031 Ohanet 411 Aluminium Energy Products 99 33.3% 266 313 NWS 94 Caesar/Cleopatra 192 533 36.0% ROD 252 1,509 16.7% 132 60