Bhp Group Ltd · ASX:BHP
Bhp — BHP Billiton — Corporate Update (March 2007)
60 slides from Bhp's corporate update, March 2007
Slide 1: Analysts / Investors Visit to South America
ESPACIO FOTOGRAFIA (Opcional) Presentation Analysts / Investors Visit to South America March 2007
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: Presentation Content
Presentation Content • General Overview • Production • Water & Energy • Key Financials 3
Slide 4: Escondida's Strategy Builds on its Strengths to Maximize Long Term Value
Escondida’s Strategy Builds on its Strengths to Maximize Long Term Value World World’’s World’s Largest Largest Strong Strong Copper Copper Mine Mine Strong Strong Cash Cash Credit Credit Flow Flow Ratings Ratings Strong Low Low Cost Cost Strong Sponsors Producer Producer Sponsors Diversified Divers
Slide 5: Escondida Vision
Escondida Vision • Be the leading copper mine in the world, creating value and sustainability through superior performance in the industry in safety, production, and unit costs. • Achievement reached by: – Working as a team to create a business of excellence – Consistently meeting our operating comm
Slide 6: Key Strategic Objectives FY08 – F12
Key Strategic Objectives FY08 – F12 • Improving and strengthening sustainable development (Zero Harm): Health, Safety, Environment and Community • Develop a High-Performance Organization with competent, highly productive, innovative employees committed to obtaining outstanding results • Manage the C
Slide 7: World's Premium Copper Region
World’s Premium Copper Region BOLIVIA Tocopilla Chuquicamata Northern Chile’s Atacama Desert, 160 km south east of Antofagasta. Calam a CHILE Mejillones •Spence Antofagasta Cerro Colorado Coloso Zaldivar Quebrada Blanca Monturaqui Collahuasi El Abra Escondida Radomiro Tomic ARGENTINA Chuquica mata M
Slide 8: Escondida site layout map
Zaldivar Leach Pads Escondida Norte Pit Zaldivar Pit ESPACIO FOTOGRAFIA Los Colorados (Opcional) Concentrator Escondida Pit Oxide Sulphide Leach Leach Pads Pads Hamburgo Tailings Dam N Laguna Seca 2 km Concentrator
Slide 9: Coloso Filter & Port Facilities
Coloso Filter & Port Facilities 9
Slide 10: Development since the beginning
Development since the beginning Sulphide Leach MEL MEL MEL MEL MEL MEL ESCONDIDA NORTE Start-up Phase I Phase II Phase III Phase 3.5 Phase IV FY1990 FY1992 FY1993 FY1996 Oxide FY2002 FY2005 FY2006 FY1998 Prod.Payable (kt) 316 370 636 831 741 1159 1283 10
Slide 11: Capital Investments
Capital Investments 6,000 5,379 5,000 4,723 4,083 3,877 4,000 US$ (000´s) 3,703 3,090 3,000 2,574 2,681 2,142 2,000 1,640 1,479 1,165 1,000 710 721 726 730 0 91 92 93 94 95 96 97 98 99 00 01 02 03 04 05 06 19 19 19 19 19 19 19 19 19 20 20 20 20 20 20 20 Fiscal Years 11
Slide 12: World's Largest Copper Mine
World’s Largest Copper Mine Leading Copper Minesites Escondida Chuquicamata KGHM Polish Copper PT Freeport Indonesia Collahuas i Morenci El Teniente Norilsk A ntamina Los Pelambres Cerro Verde Radomiro Tomic 0.0 250.0 500.0 750.0 1000.0 1250.0 1500.0 MEL Copper Production CY 2006: 1,255,559 Containe
Slide 13: Escondida Minesite cost curve
2007 Production League Ranked on C1 Cash Cost by Minesite (Pro – Rata Costing) 200.0 Escondida Minesite 150.0 US c/lb 100.0 50.0 0.0 0 5000 10000 15000 20000 25000 30000 Cumulative Product ion (Mlbs) Source: Brook H unt, Copper Costs: Mines & Proj ects 2006 editi on Pro-rata Costing i n which cost a
Slide 14: Diversified Customer Base
Diversified Customer Base Sales by Destination - 2006 Copper Cathode 11% Othe rs 10% USA 13% Japan 4% It aly 5 % Kore a 5% Trade rs 16% Canada 6% Net herlands 7% Chile 11 % Me xico 6 % China 7% Franc e 9% Copper Concentrate 89% Ge rmany 5% South Ko rea 9% Jap an 21% Oth ers 15% India 18% Chile 15% C
Slide 15: Sponsored By World's Premier Metals & Mining Houses
Sponsored By World’s Premier Metals & Mining Houses Mitsubishi Corporation 70% BHP Billiton Limited International Finance Rio Tinto Plc Mitsubishi Materials Corp 10% Corporation 100% 100% Nippon Mining & Metals Co Ltd 20% 2.5% Rio Tinto Japan Escondida BHP Escondida Inc Escondida Limited Corporation
Slide 16: MEL Organization
MEL Organization Presidente Bert Nacken Manager Legal Alejandro Canut de Bon Manager AACC Manager Business Excellence Pedro Correa Luis Kessra Vicepresidencia Vicepresidencia Vicepresidencia Vicepresidencia SS Vicepresidencia Vicepresidencia Vicepresidencia HSE Minería Procesos Operacionales RRHH Fi
Slide 17: Human Resources
Human Resources Antofagasta Coloso Mina Santiago Total MEL Expatriates 2 2 Operators 68 1.996 2.064 Technical & 17 4 131 152 Admin. Professional / 63 27 589 5 684 Mgrs. Total MEL 80 99 2.718 5 2.902 Permanent Contractors 3.317 Capital Projects 1.618 Total Contractors 4.935 Note: As of January, 2007
Slide 18: Number of injuries by category
Total Recordable Injuries Frequency Rate (TRIFR) Escondida & Contractors (3 & 12 month rolling) 9 4,5 8 4 7 3,5 Number of injuries by category . 3 6 3 5 2,5 1 3 4 2 3 2 2 2 1,5 5 1 1 3 1 2 2 1 1 3 3 1 1 3 3 1 2 2 2 2 2 2 2 2 2 2 0,5 1 1 1 1 1 1 1 1 0 0 05 5 06 06 5 5 5 5 5 5 5 6 6 6 06 6 6 6 6 06 7
Slide 19: Community Engagement Approach
Community Engagement Approach Priorities (1,2) Approach Social Capital Development Reputation Area Minera 1 2 Long term, politically neutral, Education, Health, Social Execution of social projects with beyond the operation's life Escondida development, Indigenous high and sustainable community time.
Slide 20: Main Community Projects - FY07
Main Community Projects - FY07 Corporate Affairs • 2010 No Slums; Antofagasta Region. Alliance with Ministry of Housing and “A Roof for Chile” NGO, with the purpose to provide a permanent housing for 1048 families currently living in slums in cities of the Antofagasta II Region. • Programme for Prof
Slide 21: Main Community Projects - FY07
Main Community Projects - FY07 Minera Escondida Foundation • Playgrounds (3) and Nursery Houses (12) construction at Antofagasta and Calama. Alliance with National and Local Government and National Council of Playground Facilities for 528 Childs from lower income families. This project is being supp
Slide 22: Escondida Mine Pit
Escondida Mine Pit Cperads far 3HF E liHon
Slide 23: FINAL (Main Pit) Dimensions
FINAL (Main Pit) Dimensions DIMENSIONES PIT FINAL (KMS) EW 3.5 NS 4.8 H 0.84 Distance EW 3.5 km Distance NS 4.8 km Deep 840 m (Initial Bench 3255, Final Bench 2415) 23
Slide 24: FINAL (Escondida Norte) Dimensions
FINAL (Escondida Norte) Dimensions DIMENSIONES PIT FINAL (KMS) EW 2.7 NS 2.6 Distance EW 2.7 km H 0.795 Distance NS 2.6 km Deep 795 m (Initial Bench 3410, Final Bench 2615) 24
Slide 25: Resources as at end June 2006
Resources as at end June 2006 Resources as at end June 2006 Escondida Measured (A) Indicated (B) Inferred (C) Total (A+B+C) Ore Type Cut-off Tonnes TCu Tonnes TCu Tonnes TCu Tonnes TCu millions % millions % millions % millions % Sulphide Variable 556 1.18 987 0.97 575 0.82 2,119 0.98 Sulphide leach
Slide 26: Reserves as at end June 2006
Reserves as at end June 2006 Ore Reserves As at June 2006 Escondida Proved (G) Probable (H) Total (G+H) Ore Type Cut-off Tonnes TCu Tonnes TCu Tonnes TCu m illions % millions % m illions % Su lphide Variable 555 1,18 846 1,00 1.401 1,07 Sulphide leach Variable 592 0,51 994 0,51 1.586 0,51 Oxide 0.2
Slide 27: Escondida Mining Fleet - Dec 2006
Escondida Mining Fleet - Dec 2006 • Electric Rope Shovels – Total 17 - Shovel (73 yd Dipper) 5 - Shovel (67 yd Dipper) 2 - Shovel (55 yd Dipper) 9 - Shovel (30 yd Dipper) 1 • Haul Trucks – Total 122 - Trucks (240 mt) 73 - Trucks (380 mt) 49 • Front End Loaders – Total 5 - (23 yd Bucket) • Drills – T
Slide 28: MEL Future Growth Options
MEL Future Growth Options MEL is developing studies in three areas: • Improve the performance of actual facilities through optimization and small expansions such as pre-crushing and additional grinding capacity, • Increase throughput by adding new facilities, such as a new/additional concentrator to
Slide 29: Presentation Content
Presentation Content • General Overview • Production • Key Financial Numbers • Water & Energy 29
Slide 30: General Diagram
General Diagram Concentrator Plants Crusher Main Pit Pit Escondida Norte Copper Concentrate Puerto Coloso Waste Oxide Mix Ore Sulphide Crusher Stock Sulphide Dumping Stock Mix Ore SX Sulphide Copper Stock Cathodes Óxide Crusher Oxide Puerto Antofagasta 30
Slide 31: Copper Production – 000s of tons of copper Payable
Copper Production – 000s of tons of copper Payable 1400 1,283 1,159 116 1200 '000s Tonnes of Production of Cu Payable 1,047 152 967 1000 866 867 151 831 847 151 56 741 800 145 137 151 592 600 1,167 87 1,008 831 896 400 810 817 702 730 591 505 200 0 1998 1999 2000 2001 2002 2003 2004 2005 2006 YTD De
Slide 32: Mine earth movement – '000s TPD
Mine earth movement – ‘000s TPD (ex-Pit) 1200 1026 1009 1000 901 906 835 814 834 800 725 '000s Tonnes per Day 678 681 600 400 200 0 1998 1999 2000 2001 2002 2003 2004 2005 2006 YTD Dec 06 Fiscal Years 32
Slide 33: Copper Production in Concentrate & Head Grade
Copper Production in Concentrate & Head Grade Material Milled, Headgrade and Copper Production 1. 400 3,50% Tonnes milled (00 000t) Production (Cu Contained) (kt) Headgrade (%) 1. 200 3,00% 1. 000 2,50% 800 2,00% 600 1,50% 400 1,00% 200 0,50% 0 0,00% FY91 FY 92 FY93 FY94 FY95 FY96 FY 97 FY98 FY99 FY
Slide 34: Los Colorados Concentrator Plant
Los Colorados Concentrator Plant 34
Slide 35: Concentrator Plants
Concentrator Plants Water SAG Mills Ore Water Pebbles Ball Mills Flotation Rougher Tailings Recovery Water Agua Thickener Tailings Remill Flotación Cleaner Scavenger Thickener Tailings 2° Cleaner Flotation Concentrator Thickener Recovery Water Concentrator to Coloso 35
Slide 36: Los Colorados Production – '000s TPD milled
Los Colorados Production – ‘000s TPD milled 140 120 100 '000s Tonnes per Day 80 60 125 125 118 119 122 116 115 108 103 107 40 20 0 1998 1999 2000 2001 2002 2003 2004 2005 2006 YTD Dec06 Fiscal Years 36
Slide 37: Laguna Seca Concentrator Plant
Laguna Seca Concentrator Plant 37
Slide 38: Laguna Seca Production – '000s TPD milled
Laguna Seca Production – ‘000s TPD milled 140 120 100 '000s Tonnes per Day 80 60 118 109 114 97,7 40 51,5 20 0 2002 2003 2004 2005 2006 YTD Dec06 Fiscal Years 38
Slide 39: Coloso Filter and Port Facilities
ESPACIO FOTOGRAFIA (Opcional) Coloso Filter and Port Facilities
Slide 40: Coloso Port – Concentrate Shipped
Coloso Port – Concentrate Shipped (000s of tons) 4000 3500 3000 '000s Tonnes Shipped 2500 2000 3,425 1500 2,994 2,617 1000 2,073 2,145 2,105 2,056 1,813 1,682 1,465 500 0 1998 1999 2000 2001 2002 2003 2004 2005 2006 YTD Dec 06 Fiscal Years 40
Slide 41: Escondida SX-EW Oxide Plant
Escondida SX-EW Oxide Plant 41
Slide 42: Flowsheet (Oxide & Sulphide Leach)
Flowsheet (Oxide & Sulphide Leach) Mine Raffina te Mine Ac id Primar y Stock pile Crusher Lea ching Water Air PLS Se cundar y Tertiar y Crushing Cr us hing Acid Wa te r Silo Ra ffinate PLS E Agglome ration Ra ffinate ILS Loaded Solv ent Str ippe d A cid Extra ction Lea ching Or ga nic Organic Wate r
Slide 43: Production – '000s Tonnes of Cathodes
Production – ‘000s Tonnes of Cathodes 160 140 120 100 '000s Tonnes 80 151 151 152 145 151 36 137 60 116 40 56 51 20 0 1999 2000 2001 2002 2003 2004 2005 2006 YTD Dec06 Oxide S.Leach 43
Slide 44: Sulphide Leach Cu production in FY07
Sulphide Leach Cu production in FY07 Sulphide Leach Cu Production in Tonnes 40000 35000 Copper Production cummulative 30000 25000 20000 15000 10000 5000 0 Jul-06 Aug-06 Sep-06 Oct-06 Nov-06 Dec-06 Month 44
Slide 45: Key Challenges
Key Challenges • Safety (MEL and Contractors), • Labor Relationship • Increase the availability of mine equipment (trucks) • Productivity ( increase productivity, contractor management) • Supply of new Tyres • Supply of new mine equipment • Water • Energy 45
Slide 46: Presentation Content
Presentation Content • General Overview • Production • Water & Energy • Key Financial Numbers 46
Slide 47: Water Strategy
WATER STRATEGY Five focus areas 1. Base Case: desalination expansion. 2. “Water Market” as supply option. 3. Optimization of current water resources 4. Water Recovery Projects & Studies. 5. Water Exploration 47
Slide 48: SING Generation in the near future (2006 - 2010)
SING Generation in the near future (2006 - 2010) Power MW Installed 3000 -- Generation GAS 3,600 MW GAS 2,100 MW 2,100 MW Gas or Diesel 2000 -- generation Dual-Diesel needs 800 MWmax D-F.O. Diesel-F.O. 300 MW 300 MW BHPBilliton 1 1 1 2100 2,120 MW New Coal 1000 -- SING 7 8 9 Without MW Plant Demand
Slide 49: Natural Gas Restriction (2004 – 2007)
Natural Gas Restriction (2004 – 2007). N AT URA L GAS R EST RI CT ION S 100% 90% 80% 70% 60% 50% 40% 30% 20% 10% 0% 04 4 4 5 5 5 5 6 6 06 06 7 -0 -0 0 0 -0 0 -0 -0 -0 - b- - - o- v- go go eb eb ay ov ay ov ay o Fe Ag N N N A A M M M F F %DEMAND % RESTRICT IONS •Natural Gas Price (Aver.): Mar. ’04: 2
Slide 50: BHP Billiton's Strategy – Short & Long Term
BHP Billiton’s Strategy – Short & Long Term. Considering the gas fired power generation installed in the SING and the uncertainty in the natural gas supply, BHP Billiton defined a strategy to ensure electricity supply at the lowest possible cost: Interim Solution (2007-2010): Running pre-feasibility
Slide 51: Presentation Content
Presentation Content • General Overview • Production • Water & Energy • Key Financial Numbers 51
Slide 52: Net Profit
Net Profit $Million 7,000 3.5 1400 1283 1159 1200 1047 3.09 6,000 3.0 1000 800 2. 80 592 600 5,000 2.5 400 4,560 200 0 4,000 FY 2004 FY 2005 FY 2006 Dec 06 YTD 2.0 Payabl e Pro duction 3,000 1. 51 1.5 2,456 1. 15 1, 896 2,000 1.0 1,111 1,000 0.5 0 0.0 FY 04 FY05 FY06 YTD Dec 06 Net P rofit Copper Pr
Slide 53: Profit & Loss
Profit & Loss FY 04 FY 05 FY 06 YTD Dec 06 Gross Revenue 2.726 3.935 8.069 4.150 Refining / Treatment / Shipping (378) (508) (912) (418) Net Return on Sales 2.349 3.427 7.158 3.732 Cost of Sales (691) (809) (947) (555) Gross Profit 1.657 2.618 6.211 3.177 EBITDA 1.610 2.546 5.903 3.193 Depreciation
Slide 54: C1, C2 & C3 Cost Components
C1, C2 & C3 Cost Components Cost C1 + Cash Cost - Deferred Stripping inventor y increase + Inventor y movements (Concentrate + Cathodes) + Treatment & Refining Charges + Concentrate Shipment Charges + Cathode Shipment Charges - Gold and Silver revenue Cost C2 + Total C1 Costs + Depreciation + Deferr
Slide 55: C1 Costs
C1 Costs 0.80 0.70 0.609 0.60 0.565 0.50 cUS$/lb Cu 0.40 0.680 0.30 0.592 0.479 0.20 0.425 0.10 0.00 FY04 FY05 FY06 YTD Dec 06 C1 55
Slide 56: Business Excellence Benefit
Business Excellence Benefit 000' US$ 150,000 119,272 120,000 45,633 90,000 74,951 60,000 32,442 51,847 41,116 73,639 25,200 30,000 19,726 42,905 21,490 26,647 0 FY04 FY05 FY06 YTD Dec 06 Revenue Cost 56
Slide 57: Cash Flow before Funding & Dividends
Cash Flow before Funding & Dividends $m US$Millions 4,000 3,447 3,500 2,982 3,000 2,500 Cash Flow 2,000 Capex 1,500 1,280 1,080 1,000 713 652 500 206 173 0 FY04 FY05 FY06 YTD Dec 06 57
Slide 58: Taxes Paid
Taxes Paid 2,500 2,000 US$5.676m. Million US$ Taxes paid since Escondida 1,500 start up 1,000 500 0 1990 1991 1992 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 TOTAL 0 3 129 71 138 155 253 331 119 165 182 84 39 118 617 861 2,411 Royalty 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 266 WH
Slide 59: Debt Maturity Profile
Debt Maturity Profile Maturity Profile as at 31 Dec 2006 ($Millions) $ 400 Capital Markets $ 350 ECA Debt $ 300 Bank Debt $ 250 $ 200 $ 150 $ 100 $ 50 $0 FY06 FY07 FY08 FY09 FY10 External Debt Instruments 31 Dec 06 Chile Bond $40m Outstanding Syndicated Bank Debt $440m Outstanding Export Credit Agen
Slide 60: Thanks
THANKS 60