BHP Billiton Carbon Steel Materials Meeting the China Challenge JP Morgan Mining & Metals Sydney Conference 17 November 2003 R.W. Kirkby President Carbon Steel Materials
BHP Billiton - The largest company in a consolidating sector CVRD A lcan Barrick Norilsk Anglogold Amplats Gold Fields Placer Dome Impala Xstrata Inco Pechiney Phelps Dodge Freeport Alumina Newmont Alcoa Rio Tinto Anglo American BHPB 45 40 35 30 25 20 15 10 Market Cap. on 22/08/03 (US$Bn) 5 Market value of minerals industry US$306 bn Value of Top Five US$141 bn Value of BHP Billiton US$ 42 bn 0 Source: Datas tream
A global footprint Petroleum Aluminium Base Metals Carbon Steel Materials Diamonds & Spec Prod Energy Coal Stainless Steel Materials
BHP Billiton Carbon Steel Materials
BHP Billiton Carbon Steel Materials The world s largest supplier of steelmaking raw materials Impressive portfolio of long-life, high-quality and low-cost iron ore, metallurgical coal and manganese assets World class supporting infrastructure Ranked number one in the seaborne supply of metallurgical coal and manganese and number three in iron ore
Carbon Steel Materials 27% of BHPB EBIT Customer Sector Group EBIT: Stainless Steel Materials Base Metals 4% 8% Diamonds & Spec. Prod. 10% Carbon Steel Materials 27% Aluminium 15% Energy Coal 5% Petroleum 31% Data for year ended 30 June 2003
Carbon Steel Materials Assets WA Iron Ore (85-100%) Prod: 77Mtpa Years of Life: 35 No 3 Seaborne supplier QLD Coal (50 80%) Prod: 52Mtpa Years of Life: 50 No 1 Seaborne supplier Boodarie Iron (100%) Prod: 1.7Mtpa Samarco Iron Ore (50%) Prod: 15Mtpa Years of Life: 40 Low cost pellet producer Manganese (60%) Prod: Ore 4.1Mtpa Alloy etc 0.7Mtpa Years of Life: Aust 25 SA 30 No 1 Supplier Illawarra Coal (100%) Prod: 7Mtpa Years of Life: 45 Niche supplier 100% nominal production capacity
China A Key Opportunity For Carbon Steel Materials
China A Key Opportunity For CSM Global steel production was >900Mt in 2002 with China the driving force Over the past decade Chinese steel production has grown by 8.4% per annum This rate has doubled since 2000 China is now the world s number one producer of steel with production expected to exceed 210Mt in 2003
Chinese Crude Steel Production 350 300 250 Mt 200 150 100 50 0 CY1980 CY1985 CY1990 CY1995 CY2000 CY2005 Crude Steel Production CAGR CY82-92 8.1% CY92-02 8.4%
Chinese Crude Steel Production - % Change YOY 25 YTD y-o-y change % change yoy 20 15 10 5 0-5 CY1980 CY1985 CY1990 CY1995 CY2000 CY2005 Average
Chinese Iron Ore Imports Mt 350 300 250 200 150 100 50 0 CY1980 CY1985 CY1990 CY1995 CY2000 CY2005 YTD (30 September 03)
Chinese Metallurgical Coal Imports Mt 4.0 3.5 3.0 2.5 2.0 1.5 1.0 0.5 0 CY1997 CY1999 CY2001 CY2003 CY2005 YTD (30 September 03)
Chinese Manganese Ore Imports 4.0 3.0 Mt 2.0 1.0 0 CY1989 CY1993 CY1997 CY2001 CY2004 CY2007 YTD (30 September 03)
China Carbon Steel Materials Ready to Meet the Challenge
BHP Billiton Exports to China Iron Ore 16,000 000wmt 12,000 8,000 Jan 03 Sep 03 14.5 Mwmt 4,000 0 CY1998 CY1999 CY2000 CY2001 CY2002 CY2003
BHP Billiton Exports to China Metallurgical Coal 000wmt 900 800 700 600 500 400 300 200 100 0 CY1998 CY1999 CY2000 CY2001 CY2002 CY2003 Jan 03 Sep 03 840 kt
BHP Billiton Exports to China Manganese Ore 700 600 500 000wmt 400 300 200 100 0 CY1998 CY1999 CY2000 CY2001 CY2002 CY2003 Jan 03 Sep 03 650 kt
CSM Meeting the China Challenge China Impact on CSM High Value, Low Cost Expansions Customer-Focussed Marketing
Queensland Coal Expanded Capacity Dalrymple Dalrymple Bay Bay Coal Coal Terminal Terminal contract contract +3.0Mtpa +3.0Mtpa additional additional capacity capacity Riverside Goonyella Additional prestripping contracts Sth Walker Creek Moranbah Peak Downs Saraji Dysart Crinum Norwich Park Gregory MACKAY DBCT Hay Point Hay Hay Point Point Coal Coal Terminal Terminal low low cost cost expansion expansion options options identified identified Queensland Queensland Rail Rail contract contract +2.0Mtpa +2.0Mtpa additional additional capacity capacity Broadmeadow Underground Underground 3.6Mtpa 3.6Mtpa US$67 US$67 million million BMA BMA Mines Mines further further high high value value expansion expansion options options identified identified Blackwater RG Tanna Coal Terminal Barney Point Coal Terminal
Dendrobium Accelerated Ramp-Up & Expanded Production Targeting Targeting longwall longwallstart-up early early CY2005 CY2005 (3 (3 mths mthsahead of of schedule) schedule) Expanded Expanded production production + + 1.0Mtpa 1.0Mtpa average average (ROM) (ROM) Appin West Cliff Illawarra Illawarra Coal Coal further further high high value value expansion expansion options options identified identified Dendrobium Holdings Boundary Mined Are a Proposed Mining Pit Tops Elouera Pt Kembla Coal Terminal
Western Australian Iron Ore System Capacity: Area C & PACE 100Mt Finucane Island Boodarie Iron PORT HEDLAND Nelson Point PACE Nimingarra Yarrie Conveyor + OHP OHP (+3mt) (+3mt) US$27m US$27m Area Area C 15Mt 15Mt US$213m Yandi Mine PACE- PACE- Tertiary 95Mt 95Mt export export + 5Mt 5Mt HBI HBI Tertiary Tertiary crushing, crushing, scr screening, stockpiling screening, & shipping US$351m stockpiling & shipping HAMERSLEY RANGE NEWMAN 22 Rakes Rakes 33 Sidings Sidings Additional MAC MAC ore ore processing Mt Mt Whaleback accel. accel. pre pre strip strip US$50m US$50m Jimblebar WA WA Iron Iron Ore Ore further further high high value value expansion expansion options options identified identified
CSM Meeting the China Challenge China Impact on CSM High Value, Low Cost Expansions Customer-Focussed Marketing
Customer Focussed Marketing Response to China Opportunities Consolidating and building our capabilities in China: Five offices to two Employed specialists in various disciplines Upgraded systems Established WOFE Leveraging our position
China - Challenges Remain Maintaining supply to traditional markets Preparing for the inevitable downturn Appreciating A$ and SA Rand impact on margins
Conclusion Carbon Steel Materials is in a unique position to take advantage of meteoric Chinese growth: Low cost, low risk expansion options Flexible supply Diverse product range World class resource base Proximity to key markets
Carbon Steel Materials The premier supplier of raw materials to the global steel making industry