Wesfarmers Limited · ASX:WES
Wesfarmers — CSBP — Commonwealth Securities Mining Services Industry Conference 2007
47 slides from Wesfarmers's conference presentation, Oct 8, 2007
Slide 1: CSBP Leveraged to Resources
CSBP Leveraged to Resources Commonwealth Securities Mining Services Industry Conference 8 October 2007
Slide 2: Disclaimer
Disclaimer • This presentation has been prepared by CSBP Limited. The information contained in this presentation is for information purposes only and does not constitute an offer to issue or arrange to issue, securities or other financial products, nor is it intended to constitute legal, tax or acco
Slide 3: Agenda
Agenda • History of CSBP • CSBP’s mining chemical businesses • Ammonia • Ammonium Nitrate • Sodium Cyanide • Outlook, Opportunities and Issues • Summary 3
Slide 4: Corporate History
Alf csBP Corporate History
Slide 5: Corporate History
Corporate History • Cumming Smith and Mt Lyall Mining established independent fertiliser operations in Bassendean and North Fremantle in 1910 • CSML established in 1927 following merger of Cumming Smith’s and Mt Lyall Mining’s fertiliser assets • CSML acquired Cresco Fertilisers in 1928 • Mt Lyall’s
Slide 6: Corporate History
Corporate History Merger of Cumming Wesfarmers acquires majority Wesfarmers Cumming Smith Smith & Mt Lyall KNC established interest acquires BP’s Superphosphate, Mining fertiliser by BP (80%) and 33% interest Bassendean assets to form CSML CSBP (20%) 1910 1927 1964 1968 1979 1984 1986 Mt Lyall Minin
Slide 7: Corporate History
Corporate History Construction of 30,000t Ammonia Tank QNP Joint Venture facility with Dyno Nobel $25m investment in Sodium Cyanide $165m investment Plant No. 1 in Ammonia Plant 1987 1989 1991 1996 1998 2000 2001 2007 $83m investment in $14m investment in Ammonium Nitrate $320m investment Chlor Alka
Slide 8: EBITA and EBITA/Capital Year Trend
EBITA and EBITA/Capital 5 Year Trend EBITA EBITA /Capital $m % 120 20 18 100 16 14 80 12 60 10 8 40 6 4 20 2 0 0 2002 2003 2004 2005 2006 2007 First HY EBITA Full Y ear EBITA EBITA /Capital (R12)
Slide 9: CSBP Earnings Distribution
CSBP Earnings Distribution 100% 90% 80% 70% 60% 50% 40% 30% 20% 10% 0% 2003 2004 2005 2006 2007 2008 2009 2010 2011 Chemicals Fertilisers 9
Slide 10: CSBP's Mining Chemical Businesses
CSBP’s Mining Chemical Businesses
Slide 11: CSBP Chemicals
CSBP Chemicals • Manufacturer of mining & processing chemicals – Ammonia: Nickel refining – Ammonium nitrate: Explosives – Sodium cyanide: Gold extraction • Also distributes a range of imported industrial chemicals (urea, Caustic soda, sulphuric acid etc) • Acquired AVC, PVC manufacturing business i
Slide 12: CSBP - Chemicals brands
CSBP - Chemicals brands IG : nlG CSBP Chemicals Ale QiNiP
Slide 13: Plant locations
Plant locations QUICK FACTS 618 employees 4 $830m revenue 19 operational manufacturing plants 5 8 CONTRIBUTION TO GROUP EBITA ■ CSBP chemicals 2 7% Manufacturing plants 14 ■ CSBP fertilisers Manufacturing plants 5 Other distribution points 11 13
Slide 14: CSBP Kwinana
CSBP Kwinana 14
Slide 15: Queensland Nitrates (QNP)
Queensland Nitrates (QNP) 15
Slide 16: Australian Vinyls
Australian Vinyls 16
Slide 17: Ammonia
Ammonia
Slide 18: Ammonia
Ammonia • Sole local supplier to south west WA • 270,000 tpa plant constructed in 2000 • 40,000 tonnes import / export storage terminal • External customers: primarily nickel industry and exports • Internal customers: ammonium nitrate, sodium cyanide and fertilisers • Demand growth driven by iron or
Slide 19: Ammonia / Ammonium Nitrate
Ammonia / Ammonium Nitrate Natural Natural Gas Ammonia Ammonia sales Gas AmmoniaPlant Plant to nickel industry Nitric and export Water NitricAcid Acid Water Plant Plant Air Air AN AN Solution ANSolution Solution sales to Dyno Plant Plant for explosives Prilling AN Prill sales Prilling Plant to Dyno
Slide 20: Australian Nickel Production
Australian Nickel Production Thousand tonnes 200 160 Rest of Australia 120 Western Australia 80 40 0 1970 1975 1980 1985 1990 1995 2000 2005 Source: DoIR and ABARE 20
Slide 21: Ammonia Supply Balance
Ammonia Supply Balance 350,000 300,000 250,000 200,000 Tonnes 150,000 100,000 50,000 0 1978 2007 2017 Forecast Demand Production CSBP Estimates 21
Slide 22: Ammonium Nitrate
Alf csBP Ammonium Nitrate
Slide 23: Ammonium Nitrate
Ammonium Nitrate • Sole WA manufacturer • 235,000 tpa capacity commissioned in 1996 • $320m duplicate NA/AN to be commissioned 2007 • Distribution for mining explosives via Dyno Nobel; and post 2007 via Orica and Rio Tinto direct • UAN liquid fertiliser consumes balance of production • 180,000 tpa Q
Slide 24: Australian Iron Ore Production
Australian Iron Ore Production Million tonnes 300 250 200 Rest of Australia Western Australia 150 100 50 0 1950 1955 1960 1965 1970 1975 1980 1985 1990 1995 2000 2005 Source: DoIR and ABARE 24
Slide 25: WA EGAN Supply Balance
WA EGAN Supply Balance 550,000 500,000 450,000 400,000 350,000 Tonnes 300,000 250,000 200,000 150,000 100,000 50,000 0 1978 2007 2017 Forecast Demand Production CSBP Estimates 25
Slide 26: Forecast EGAN Usage
Forecast EGAN Usage 500 450 400 350 Thousand tonnes 300 250 200 150 100 50 0 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 CSBP Estimates Iron Ore Gold Coal Othe r 26
Slide 27: Growth Drivers
Growth Drivers • Current mining developments • Long-term mineral demand – As indicated by BHP Billiton 27
Slide 28: Growth Drivers
Growth Drivers IG CSBP Global steel production has maintained s ae | piety since the “pick up” ~2000, with growth rates of 5%pa from 1996 and 7.6%pa from 2001 1250 7 Global Stee! Production (Mt) +6% Mt - Oil Shocks +7% 1000 + 1150 | |] The 1087 | | v i / China 1013 i Effect 750 Rise of ; f 1 Japan i
Slide 29: Growth Drivers
Growth Drivers China will continue to be the growth engine of the global steel industry in the short to medium term. India has the potential to provide further medium to long term growth. 600 5 Chinese Crude Steel Production Million tonnes w S o T T T 1 0- T T T T T T T 2000 2001 2002 2003 2004 2005
Slide 30: Growth Drivers
Growth Drivers India’s role remains uncertain due to its own potential growth needs Seaborne Iron Ore Supply Capacity 1200 1000 + O Others en 800 B Canada - @ Sweden oS c 6007 B South Africa = OB India ~ 400 O Brazil B Australia 200 5 0 r ' : r : 2005 2006 2007 2008 2009 2010 Calendar Year Page 10 1
Slide 31: Growth Drivers
Growth Drivers As at31 December 2005 Size of Dube Indicates proposed capial expencimre; Dold OUEr Corder signifies sancioned project Worsley E&G Newcastle . Gos) Ant 4 Third Port Blackw ater C) : WA Iron Ore NWS RGP 4+ WA Iron Ore Angel Kipper RGP 3 CY2007 2010 2011 Atlantis South Cliffs Nickel een
Slide 32: AN2 Construction Photographs
AN2 Construction Photographs 32
Slide 33: Sodium Cyanide
Sodium Cyanide
Slide 34: Sodium Cyanide
Sodium Cyanide • Australian Gold Reagents - sole WA manufacturer • Major input to $3.1 bn gold extraction industry • Strong Australian market position • 25,000 tpa solution consumed domestically (pre-Boddington) • Growing solid export business • 30,000 tpa solid produced for export market; Africa, S
Slide 35: Sodium Cyanide
Sodium Cyanide Natural Sodium SodiumCyanide Cyanide Natural Solution Gas Gas Solution Solution sales Plants Plants11&&22 to WA gold mines Ammonia Ammonia Caustic Caustic Soda Soda Sodium SodiumCyanide Cyanide Solid sales to Solids SolidsPlant Plant Australian and overseas gold mines
Slide 36: Australian Gold Production
Australian Gold Production tonnes 350 300 250 Rest of Australia Western Australia 200 150 100 50 0 1890 1900 1910 1920 1930 1940 1950 1960 1970 1980 1990 2000 Source: DoIR and ABARE 36
Slide 37: WA NaCN Supply Balance
WA NaCN Supply Balance 80,000 60,000 Tonnes 40,000 20,000 0 1978 1989 2007 2017 Forecast CSBP Estimates Demand Production Excess production capacity post 2001 converted to solid NaCN for export markets 37
Slide 38: WA NaCN Supply Balance
WA NaCN Supply Balance W A G o ld P r o d u c t io n ( t p a ) C S BP Na C N P r o d u c t io n a n d S a le s ( t p a ) 2 40 70,000 2 10 60,000 1 80 50,000 1 50 40,000 1 20 30,000 90 20,000 60 10,000 30 0 0 1990 1993 19 96 1999 2002 20 05 20 08 2011 2014 201 7 W A G o ld Pr o d u c tio n CS B P Na
Slide 39: Outlook for NaCN Demand
Outlook for NaCN Demand Source: Orica Limited, JP Morgan Conference Presentation 25 Sept 2007 39
Slide 40: NaCN Growth Drivers
NaCN Growth Drivers • Ongoing capital expenditure by major domestic customers – Newmont $2.0bn Boddington project – KCGM ongoing – Goldfields $135m at Agnew and St Ives • Emerging new gold provinces for exports – West Africa – Latin America – South East Asia • Reduced capacity in expanding market 40
Slide 41: Outlook, Opportunities and Issues
Outlook, Opportunities and Issues
Slide 42: Outlook
Outlook • BHPBilliton – Committed US$1.85bn to RGP 4 – Production increasing from 120mtpa to 155mtpa to 300mtpa • Rio Tinto/Pilbara Iron – Committed $0.5bn to increased drilling – Production increased from166mtpa (2006) to 220mtpa (2007) to 320mtpa • Fortescue – Committed $2.5bn to phase 1 (45mtpa)
Slide 43: Outlook
Outlook • Boddington – $2.0bn expansion producing 1.0m oz of gold per annum • WA Projects are – Large scale – Low cost – Brownfields developments (low risk) • Weight of capital expenditure – Exposure to volumes, but not prices 43
Slide 44: Opportunities
Opportunities • Domestic gas reservation policy • Acceptance of ‘pass through’ contracting arrangements • Geographic expansion • Mid-west iron ore province • Extending along the value chain • Constrained global supply environment – Ammonium nitrate – Sodium cyanide 44
Slide 45: Issues
Issues • Cost and availability of gas feedstock • Availability of labour • Escalating construction costs • Shipping costs • Infrastructure restrictions – Road – Port – Pipeline 45
Slide 46: Summary
Summary • WA plays a significant role in supplying energy and minerals to fuel the growing global economy • CSBP has made major capital investments to supply products which service the escalating demand for natural resources – >$700 million in investments in the last 20 years in ammonia, ammonium ni
Slide 47: www.csbp.com.au
Alf csBP www. csbp. com. au
CSBP — Commonwealth Securities Mining Services Industry Conference 2007 on 6ix