Bhp Group Ltd · ASX:BHP
Bhp — BHP Billiton — Investor Presentation (June 2006)
37 slides from Bhp's investor presentation, June 2006
Slide 1: Investor Presentation
Investor Presentation Mahomed Seedat – President, Energy Coal June 2006
Slide 2: Disclaimer
Disclaimer The views expressed here contain information 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 information. Any forward looking information in this presentation ha
Slide 3: Agenda
Agenda • Energy Coal CSG overview • HSEC • Markets • Financials • Ingwe 3
Slide 4: Energy Coal CSG overview
Energy Coal CSG overview
Slide 5: Our Energy Coal business
Our Energy Coal business 14,000 + People 10 Operating assets 4 Continents 84,000,000 tonnes Coal produced, more than 2,000PJ 850,000,000 tonnes Dirt moved 30 products to 100+ customers via 300+ marketing contracts 5
Slide 6: BHP Billiton Energy Coal Position (2001 → 2005)
BHP Billiton Energy Coal Position (2001 → 2005) 33 Mtpa (56%) ≈3 Mtpa 26 Mtpa New NewMexico Mexico (2%) 12→→ 15 12 15Mtpa Mtpa (42%) Colombia Colombia 44→→ 99Mtpa Mtpa Pt PtArutmin Arutmin 9.8 → 9.8 → 14.5 14.5Mtpa Mtpa QLD/NSW QLD/NSWCoal Coal 33→→ 44Mtpa Mtpa Ingwe Ingwe Hunter HunterValley Valley
Slide 7: Energy Coal organisation
Energy Coal organisation President PresidentEnergy EnergyCoal Coal Mahomed MahomedSeedat Seedat Chief Asset AssetLeader ChiefCommercial Commercial President President&&COO COO President President&&COO COO Colombia Leader President President&&COO COO Officer Officer New NewMexi Mexico coCoal Coal Mt
Slide 8: Energy Coal Reserves
Energy Coal Reserves Distribution of Marketable Reserves by Asset Total Reserves Mt New 12000 Mexico 17% Hunter Ingwe 879Mt Valley Colombia 13% 10000 NMC 304Mt HVEC Other MAC 231Mt MAC Colombia 8000 NMC 19% Colombia 334 Mt Ingwe Ingwe Other 51% Ingwe Ops 6000 1000 Export and Domestic Split 4000 Dome
Slide 9: BHP Billiton Strategic Framework
BHP Billiton Strategic Framework Leverage Global Brand and Footprint Global Capabilities, Local Presence Cross-CS G Collaboration Opportunity Discovering/Capture Technology Growth Options Opportunity Retention Project Execution Project Definition Market Driven Project Pipeline Project Prioritisation
Slide 10: Energy Coal Strategy: Strategic Pillars
Energy Coal Strategy Strategic Pillars BHP Billiton’s “Black Diamond” 4. Extend Our 5. Address 3. Grow and Marketing Longer Optimise Advantage Term Dis- the Portfolio (“The continuities Perfect Cut”) 2. Well Run Operations 1. Engaged People and Enhanced Organisational Capabilities 10
Slide 11: HSEC
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Slide 12: The HSEC journey
The HSEC journey Energy Coal – where we have come from Focus on leading and lagging indicators 20 18 18 16 Fatalities 15 KPI 10 9 6 6 5 TRIFR Reduction 5 3 0 1 0 Behaviour Based Safety Systems 0 PL4 near miss reporting 96 97 98 99 00 01 02 03 04 05 06 FY FY FY FY FY FY FY FY FY FY FY Fatal Risk Cont
Slide 13: Financial performance
Financial performance
Slide 14: Energy Coal EBIT by Business Unit
Energy Coal EBIT by Business Unit Half year ended 31 December (US$M) Dec 2005 Dec 2004 % % Change Change Ingwe - 124 -100 New Mexico 44 44 - Hunter Valley 20 36 -44 Colombia 99 97 +2 Divisional Activities (6) (7) +14 Total from Operations 157 294 -47 Third party products 48 2 Energy Coal (total) 205
Slide 15: EBIT Trends
EBIT Trends Unfavorable Unfavorable price/ price/ Favorable Favorable price, price, Favorable Favorable price price variance variance partially partially 700 FX/inflation FX/inflation and and portfolio portfolio volume volume andand cost cost offset offsetby by FX FX and and inflationary inflationar
Slide 16: Operations and Growth
Operations and Growth
Slide 17: Portfolio actions to build long term performance
Portfolio actions to build long term performance BHP Billiton Merger Klipspruit mini- Anticipated NCIG wins tender Lake Mines pit approved for Newcastle 3rd Koornfontein divestment Port sale Sales of Delmas to MAC South Pit Middelburg Black Empowerment Expansion Middlings plant Feasibility approved
Slide 18: Energy Coal project pipeline
Energy Coal project pipeline Brownfield expansions/projects Greenfield expansions/projects Cerrejon Optimal Optimum Project Cerrejon Leandra Douglas/MMS to 32Mtpa NSW Port Optimisation Naudesbank Project MAC South New Mexico Pit Expansion Coal MAC Underground Klipspruit Feasibility Execution a s i b
Slide 19: Ingwe - Location
Ingwe - Location Middelburg Type O/C mine Capacity 15 Mtpa (84% ) Life 29 yrs Optimum Richards Ingwe Operations Type O/C mine Bay Capacity 14.9 Mtpa Klipspruit Life 10 yrs Type O/C mine Capacity 1.5 Mtpa PRETORIA Central Complex Life Refer project Klipspruit Middelburg Project JOHANNESBURG Koornfont
Slide 20: Ingwe - key issues
Ingwe- key issues • Ingwe Recovery Plan • Eskom contracts • Ingwe growth projects • Portfolio optimisation 20
Slide 21: Ingwe Recovery Plan
Ingwe Recovery Plan • Safety first • Started with Optimum • Now being rolled out to the rest of the operations • Key challenges – Significant management changes on all sites – Abnormal unseasonal rainfall – Exposure of coal chain weaknesses • Opportunities: – Significant cost reduction – Revenue imp
Slide 22: Ingwe – Eskom Contracts
Ingwe – Eskom Contracts Eskom Sale Volumes (Mtpa) and Prices (ZAR) Contracted volumes 16 70 14 • Duvha 8.4Mtpa (10Mtpa 100%) 12 65 supplied by Middelburg until the end of 10 60 calendar 2014. Customer's option to 8 extend for two additional 10 year periods 6 55 to 2034. 4 50 2 • Hendrina 6.5Mtpa sup
Slide 23: Ingwe – Eskom Contracts cont.
Ingwe – Eskom Contracts cont. • Ingwe’s fixed price contracts (Hendrina and Duvha) are subject to PPI and CCI (“Cost of Coal”) inflation indices with an efficiency factor, as well as a bonus/penalty structure dependent on quality parameters • As a result, the prices achieved lag the long term inflat
Slide 24: Ingwe Growth Projects
Ingwe Growth Projects Ingwe Project Status Total volume 49mtpa 18 Export and Domestic Split 16 Domestic Concept 14 Export Feasibility 12 10 8 6 Pre-feasibility 4 2 0 DMO Optimum Leandra Klipsruit Naudesbank Feasibility Pre-feasib ility Concept 24
Slide 25: Ingwe Portfolio Optimisation
Ingwe Portfolio Optimisation • Douglas and Middelburg to be combined • ZAC divested • Koornfontein sale process currently underway (BEE transaction) • Significant other transactions completed around reserve/resources sales (11) and others in process (4) 25
Slide 26: Hunter Valley Energy Coal
26 Hunter Valley Energy Coal amt Arthur Coal aS Sp —Kiver Port Hunter F NEWCASTLE ake Macquarie Tuggerah Lake Pacific Richinon s ale Pe Ocean Port Jackson SYDNEY odé bhpbilliton
Slide 27: Mt Arthur Coal Growth Opportunities
Mt Arthur Coal Growth Opportunities Mined Out Open Cut Areas 27
Slide 28: Mt Arthur Coal Growth Opportunities
Mt Arthur Coal Growth Opportunities Mined Out Open Cut Areas Focus on Process Improvement Open Cut Reserve Area - 33 Yr 28
Slide 29: Mt Arthur Coal Growth Opportunities
Mt Arthur Coal Growth Opportunities South Pit project Mined Out Open Cut Areas Small capital investment Low cost incremental tonnes Open Cut Reserve Area - 33 Yr Incremental Growth - Open Cut Area 29
Slide 30: Mt Arthur Coal Growth Opportunities
Mt Arthur Coal Growth Opportunities Mt Arthur U/G Mined Out Open Cut Areas Early assessment phase Very long life Low cost highwall access Open Cut Reserve Area - 33 Yr Incremental Growth - Open Cut Area Major Growth – Mt Arthur Underground Reserve Area 30
Slide 31: NSW Infrastructure
NSW Infrastructure • Infrastructure constraints • In CY 2004, a quota system was introduced by Port Waratah Coal Services (“PWCS”) • Establishment of the Newcastle Coal Infrastructure Group (“NCIG”) • NCIG proposal to lift coal loading capacity successful • Rail constraints are being addressed by th
Slide 32: Caroona Coal Project – Gunnedah Basin
Caroona Coal Project – Gunnedah Basin • 350km 2 Exploration Area • 260km to Newcastle Port • BHP Billiton won competitive tender from NSW Government • Too early for JORC resource number • Exploration and assessment 4 to 5 years • Initial coal quality – 6300kcal/kg ar – 10% ash – <0.5% Sulphur – Some
Slide 33: New Mexico Coal
New Mexico Coal COLORADO NEW MEXICO ARIZONA UTE MOUNTAIN UTE San INDIAN RESERVATION SanJuan NAVAJO INDIAN ta Juan a Pl a d La LaPlata Plata RESERVATION Mine L roa Mine a ul Mine Mine er H aRiv la t San Juan P La Generating DEEP LEASE Shiprock Station DEEP LEASE EXTENSION PILOT MINE Farmington r as R
Slide 34: Desert Rock Energy Project
Desert Rock Energy Project • Desert Rock Energy Project – up to 1500 MW mine-mouth power plant. • Navajo Coal Company (BNCC) will be the coal supplier. • Sithe Global’s schedule shows financial close in late Q2 of CY2007, start- DREP up of first 750 MW unit in June 2010 and second 750 MW unit in Jun
Slide 35: Cerrejón - Location
- Location on Cerre Caribbean Sea 2. Bi Ci iS : & Pacific Occan bhpbilliton 35
Slide 36: Cerrejón Expansion to 32 Mtpa
Cerrejón Expansion to 32 Mtpa • Estimated Total Cost of US$127M (100% terms) • Major Mining Equipment – 3 Komatsu PC8000 Hydraulic Excavators – 14 Euclid-Hitachi EH5000 Haul Trucks – 5 Caterpillar 789 Coal Trucks • Locomotive & Railcars – 2 GE Locomotives – 80 Railcars • Railway Upgrade – 0.3 km ext
Slide 37: Cerrejón Coal Optimal Expansion Capacity
Cerrejón Coal Optimal Expansion Capacity • Expansion Schedule – Expansion to 45Mtpa – Prefeasability Study to be completed CY 2006 – BHP Billiton execution approval to be completed Late 2007 – Optimal Expansion production possible by 2010 • Mine Infrastructure, Rail, and Port Facilities • Key Enviro