BHP Billiton. Affival Nordic Cored Wire & Alloy Market Seminar. 7 September 2006

Transcription

1 BHP Billiton Affival Nordic Cored Wire & Alloy Market Seminar 7 September 2006

2 Manganese Industry Overview Manganese Value System Overview Manganese End Use Markets Crude Steel Manganese Alloy Industry Manganese Ore Industry BHP Billiton Manganese Page 2

3 But First, a Little About BHP Billiton

4 Structure driven by customer needs Petroleum Aluminium Base Metals Carbon Steel Materials Diamonds & Spec Prod Energy Coal Stainless Steel Materials Page 4

5 Strategic drivers Our core purpose is to create long-term value through the discovery, development and conversion of natural resources, and the provision of innovative customer and market-focused solutions. Growth Options Project Pipeline Financial Strength and Discipline The BHP Billiton Way (Value Added Processes) World Class Assets Licence to Operate People Page 5

6 Deep inventory of growth projects BROWNFIELD BMA Phase 2 Blackw ater CPP Zamzama Phase 2 Douglas Middelburg Koala UG Yabulu WA Iron Ore RGP 3 Atlantis North Alumar GEMCO Samarco NWS T5 NWS Angel As at 30 June 2006 Size of bubble indicates proposed capital expenditure; bold outer border signifies sanctioned project.. Worsley E&G $US 200M WA Iron Ore RGP 4+ CY Spence Neptune Stybarrow Shenzi Pyrenees Atlantis South Ravensthorpe GREENFIELD Page 6 Alumina Base Metals Iron Ore Met. Coal Mn Ore Diamonds Energy Coal Nickel Petroleum Maruwai

7 Manganese Industry Overview

8 Manganese Industry Overview Manganese Value System Overview Manganese End Use Markets Crude Steel Manganese Alloy Industry Manganese Ore Industry BHP Billiton Manganese Page 8

9 The Manganese Value Chain Mining Crushing and screening (sizing, lumpy and fines) Dense Media Separation (mineral from gangue) Sintering (increase Mn unit value per ton) Reductive smelting (alloying) & casting increase Mn unit value per ton further) Any one or more of these steps may be bypassed if the grade is high enough Logistics Page 9

10 Manganese Industry Overview Manganese Value System Overview Manganese End Use Markets Crude Steel Manganese Alloy Industry Manganese Ore Industry BHP Billiton Manganese Page 10

11 Manganese End Use Markets End Use Purpose 94% Bulk Alloying Capacity Crude Steel Ore Producers 6% Specialty Processing Chemical and other uses of Mn metal Page 11 Source: Roskill

12 Effect of Mn on Steel Product Properties Use of Manganese in steel results in increased: Strength Hardness Toughness/impact resistance Wear resistance (e.g. rail steels) Machinability Ability to be heat treated for superior strength and hardness Page 12

13 Manganese Industry Overview Manganese Value System Overview Manganese End Use Markets Crude Steel Manganese Alloy Industry Manganese Ore Industry BHP Billiton Manganese Page 13

14 Global Steel Production Continues in New Golden Age New age of steel firmly established, parallels between post 1945 and post 1995 industrialization of China New golden age 1000 Oil Shocks Fall of Berlin Wall Million Tonnes The emerging age pre %pa The golden age %pa The efficiency age %pa The China age. Followed by BRICS Page 14 Source IISI, BHP Billiton

15 Chinese Steel Import / Export Kt 5,000 4,000 3,000 2,000 1,000 Net Flat Imports Net Finished Imports Net Long Imports Net Pipe Imports China Steel Imports and Exports Imports Exports Exports 0-1, Page 15 Data source: CMMA, BHP Billiton calculations

16 Steel and Raw Material Impact of Non-China Growth In addition to China steel growth will be driven by other countries, with a majority favouring the BF route. Low cost steel producer Major steel exporter Domestic steel demand increasing Domestic iron ore ore Domestic met coal Russia New steel capacity planned Large importer (50Mtpa) Strong demand growth Imported iron ore ore Domestic met coal India SE Asia Low per per capita steel consumption Low cost steel production base, export semis Domestic iron ore ore Imported met coal Page 16 Brazil Low steel per per capita 35kg 50+ Mt Mt capacity planned Construction/automotive/ consumer growth Domestic iron ore ore Imported met coal

17 Steel Process Trends (Mt) EAF 34% OH 8% 2000 BOF 58% 2001 EAF 31% OH EAF BOF OH 3% 2005 BOF 66% 2006Fcst BOF maintaining share of total global steel production OH declining, being replaced by BOF, EAF EAF growing in industrialised countries. BOF primary growth in developing countries Page 17 Source CRU f

18 Manganese Industry Overview Manganese Value System Overview Manganese End Use Markets Crude Steel Manganese Alloy Industry Manganese Ore Industry BHP Billiton Manganese Page 18

19 Manganese Alloy Products Chemical Formula %Mn Produced in EAF Produced in BF Comments High Carbon Ferromanganese HCFeMn FeMn 65%-79% Requires high % of high grade ore Silicomanganese SiMn 60%-77% Can be produced from lower grade ore Refined MCFeMn, LCFeMn 80%-81% Produced from HCFeMn via OBC* route or SiMn via electrothermic route * Oxygen Blown Converter Page 19

20 World Manganese Alloy Production 2005 Product Split ~ 10.6 Million tons HCFeMn 33% SiMn 57% MCFeMn 10% Page 20 Source: IMnI

21 World Manganese Alloy Production 2005 ~10.6 million tons Refined SiMn HCFeMn Mt Europe Mt China Mt 406 CIS Asia Other Americas Africa/MEast Mt Mt Mt Mt India Page 21 Source: IMnI, BHP Billiton

22 Manganese Alloy Production China Other Nikopol Eramet BHP Billiton Privat CVRD India Assmang Kt Page 22 Source: IMnI & other industry sources

23 Manganese Alloy Uses In Steel Mainly used in Crude / Mild steel Desulphurisation / strengthening 5-10kg Mn/mt steel Consumed in the form of : FeMn SiMn MCFeMn % Mn Tons high grade ore / ton alloy Electricity (kwh/mt) 78% % % Page 23 Source: Roskill, CRU

24 Manganese Alloy Uses In Steel 100% 80% 60% 40% 20% 0% 2% 12% 38% 42% 32% 81% 30% 56% 49% 32% 9% 17% Integrated Minimill Flat Minimill Long Speciality HCFeMn SiMn MCFeMn Page 24 Source: Monitor

25 Manganese Alloy Supply/Demand Strong growth in Mn alloy demand on the back of strong growth in crude steel production 12,000 Mn Alloy (Kt) Demand Supply 10,67110, ,777 10,554 10,000 9,115 9,179 8,000 7,519 7,388 8,188 8,210 6,000 4,000 2, Page 25 Source: IMnI

26 Impact of Crude Steel Industry Dynamics On Manganese Use The steel industry is continually changing due to the impact of new technology, ongoing capacity rationalisation and shifts in customer demand. Drivers that will impact on Manganese demand: Changes in steel making technology Type of steel making process being used integrated steel plants Vs mini mills New steel grade designs Page 26

27 Manganese Alloy Industry Alloy Production Cost Structure While ore is the dominant cost component, processing costs which vary by location are also significant. The location of alloy plants relate directly to both electricity and labour costs. Direct Costs Other Costs Rail Costs 3% Other Costs 12% Labour 13% Electricity 20% Other Raw Materials 14% Ore 38% Trade barriers Tariffs Anti-dumping duties Social dimensions Environmental costs Socio-political factors Average cost structure across major alloyers Page 27 Source: CRU

28 Comparative Electricity Prices mill = US$0.1/KWh Kazakhstan Russia RSA Norway Australia USA Ukraine Poland Macedonia China Romania Japan Mexico SKorea India US mills/kwh Page 28 Source: CRU

29 $2,000 $1,800 $1,600 $1,400 $1,200 $1,000 $800 $600 $400 $200 Q1-95 Q4-95 Q3-96 Q2-97 Q1-98 Q4-98 Q3-99 Q2-00 Q1-01 Q4-01 Q3-02 Q2-03 Q1-04 Q4-04 Q3-05 Q2-06 Manganese Alloy Industry Pricing Trends US Dealer Fob Warehouse $/t (Nominal) HCFeMn SiMn Page 29 Source: CRU

30 Manganese Industry Overview Manganese Value System Overview Manganese End Use Markets Crude Steel Manganese Alloy Industry Manganese Ore Industry BHP Billiton Manganese Page 30

31 World Manganese Ore Supply 25.5 Mt ore In > 29.8 Mt ore in 2004 > 44%Mn >30% and <44% Mn < 30%Mn Americas 13, , 000 9, 000 7, 000 5, 000 3, 000 1, 000-1, , , 000 8, 000 6, 000 4, 000 2, Africa/MEast , , 000 9, 000 7, 000 5, 000 3, 000 1, 000-1, ,000 11,000 9,000 7,000 5,000 3,000 1,000-1,000 CIS India 13,000 11,000 9,000 7,000 5,000 3,000 1,000-1, , , 000 9, 000 7, 000 5, 000 3, 000 1, 000-1, 000 China Asia Other* *Australia, Burma, Indonesia, Phillipppines, Taiwan, Vietnam, Korea Page 31 Source: IMnI

32 Manganese Ore Supply/Demand 000 tons Mn contained 12,000 Demand Supply 11,801 10,78410,715 10,749 10,000 8,000 7,389 7,881 7,687 8,133 8,637 8,619 6,000 4,000 2, Page 32 Source: IMnI

33 Manganese Ore Industry Price Trends $/mtu (Fob, 48% Mn) $4.50 $4.00 $3.50 $3.00 $2.50 $2.00 $1.50 $1.00 $0.50 $ '00 '04 Japan FY Page 33 Source: Tex report

34 Manganese Industry Overview Manganese Value System Overview Manganese End Use Markets Crude Steel Manganese Alloy Industry Manganese Ore Industry BHP Billiton Manganese Page 34

35 Management Structure BHP Billiton Anglo American Samancor Ltd Samancor Manganese Mines Alloys MMC Vessels Mamatwan Gemco Metalloys Temco Marketing Page 35

36 Business Overview Samancor Operations Ore Ferroalloy Metalloys HOTAZEL FeMn 390ktpa SiMn 100ktpa GEMCO 3.2Mtpa Advalloy Mamatwan 2Mtpa Wessels 1Mtpa MC FeMn 75ktpa TEMCO SiMn 120ktpa FeMn 130ktpa Sinter 330ktpa Page 36

37 Business Overview South African Operations AFRICA Hotazel. Johannesburg Meyerton LEGEND Towns Mines Ports Mn Field Railway lines RSA Wessels Mine Hotazel Hotazel Saldanha Bay Mamatwan Mine Kuruman ±. 900 km. Port Elizabeth ± km km. Durban Metalloys Smelter Advalloy Smelter Page 37

38 Business Overview Australian Operations GROOTE EYLANDT TEMCO Page 38

39 Mn Resource base June 2005 CSM Manganese deposits JORC resources (Mt) JORC reserves (Mt) Reserve life (years) GEMCO (Australia) Wessels (South Africa) Mamatwan (South Africa) LOM based on ROM tonnes: GEMCO 6.6Mtpa, Wessels (HG only) 0.7 Mtpa, Mamatwan 3.0 Mtpa Page 39

40 Metalloys / Advalloy Temco Metalloys / Advalloy Temco 7 Furnaces 82MVA SiMn (4F) 2x75MVA FeMn 1x81MVA FeMn MC Converter Capacity 390,000tpa FeMn 100,000tpa SiMn 75,000tpa MCFeMn 4 Furnaces 33MVA FeMn/SiMn 36MVA FeMn/SiMn 54MVA SiMn 3x15MVA SiMn 1000tpd Sinter Plant Capacity 130,000tpa FeMn 120,000tpa SiMn 330,000tpa Sinter Page 40

41 In conclusion. BHP Billiton via Samancor is: A producer of High Grade Manganese Ore An Integrated Alloyer supplying the global market with high quality Manganese alloy products, such as MCFeMn, HCFeMn & SiMn over the long term Backed by long life reserves providing a sustainable future Page 41

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