UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
Form 6-K
REPORT OF FOREIGN PRIVATE ISSUER
PURSUANT TO RULE 13a-16 OR 15d-16
UNDER THE SECURITIES EXCHANGE ACT OF 1934
September 30, 2012
| BHP BILLITON LIMITED (ABN 49 004 028 077) (Exact name of Registrant as specified in its charter) |
BHP BILLITON PLC (REG. NO. 3196209) (Exact name of Registrant as specified in its charter) |
| VICTORIA, AUSTRALIA | ENGLAND AND WALES | |
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NEATHOUSE PLACE, VICTORIA, LONDON, UNITED KINGDOM | |
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Form 20-F ¨ Form 40-F
Indicate by check mark if the registrant is submitting the Form 6-K in paper as permitted by Regulation S-T Rule 101(b)(1): ¨
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| BHP Billiton Limited | BHP Billiton Plc | |||
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| Melbourne Victoria 3000 Australia | London SW1V 1BH UK | |||
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| 30 September 2012 |
Melbourne Victoria 3001 Australia | Fax + 44 20 7802 4111 | ||
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| bhpbilliton.com | ||||
| To: |
Australian Securities Exchange | cc: | New York Stock Exchange | |||
| London Stock Exchange | JSE Limited |
BASE METALS BRIEFING AND CHILEAN SITE TOUR
BHP Billiton advises that there will be a Base Metals briefing on Sunday 30 September. A tour of Escondida will commence on Monday 1 October. The Chilean visit will conclude with a tour of the Spence operation on Tuesday 2 October.
A copy of the Non-ferrous overview by Andrew Mackenzie, Chief Executive Non-ferrous, is attached together with presentations that will be delivered by Peter Beaven, President Base Metals, Margaret Beck, Vice President Finance - Base Metals and Shaun Verner, Vice President Marketing – Base Metals.
The individual Chilean site tour presentations will be available on the BHP Billiton website at www.bhpbilliton.com.
Jane McAloon
Group Company Secretary
| BHP Billiton Limited ABN 49 004 028 077 |
BHP Billiton Plc Registration number 3196209 | |
| Registered in Australia |
Registered in England and Wales | |
| Registered Office: 180 Lonsdale Street Melbourne Victoria 3000 |
Registered Office: Neathouse Place, London SW1V 1BH United Kingdom | |
| The BHP Billiton Group is headquartered in Australia | ||
Escondida
Base Metals briefing and Chilean site tour
Non-ferrous overview
Andrew Mackenzie Chief Executive Non-ferrous
30 September 2012
Disclaimer
Forward looking statements
This presentation includes forward-looking statements within the meaning of the U.S. Private Securities Litigation Reform Act of 1995 regarding future events, conditions, circumstances and the future financial performance of BHP Billiton, including for capital expenditures, production volumes, project capacity, and schedules for expected production. Often, but not always, forward-looking statements can be identified by the use of the words such as “plans”, “expects”, “expected”, “scheduled”, “estimates”, “intends”, “anticipates”, “believes” or variations of such words and phrases or state that certain actions, events, conditions, circumstances or results “may”, “could”, “would”, “might” or “will” be taken, occur or be achieved. These forward-looking statements are not guarantees or predictions of future performance, and involve known and unknown risks, uncertainties and other factors, many of which are beyond our control, and which may cause actual results to differ materially from those expressed in the statements contained in this presentation. For more detail on those risks, you should refer to the sections of our annual report on Form 20-F for the year ended 30 June 2012 entitled “Risk factors”, “Forward looking statements” and “Operating and financial review and prospects” filed with the U.S. Securities and Exchange Commission (“SEC”). Any estimates and projections in this presentation are illustrative only. Our actual results may be materially affected by changes in economic or other circumstances which cannot be foreseen. Nothing in this presentation is, or should be relied on as, a promise or representation either as to future results or events or as to the reasonableness of any assumption or view expressly or impliedly contained herein.
Non-IFRS financial information
BHP Billiton results are reported under International Financial Reporting Standards (IFRS) including Underlying EBIT and Underlying EBITDA which are used to measure segment performance. This presentation also includes certain non-IFRS measures including Attributable profit excluding exceptional items, Underlying EBITDA interest coverage, Underlying effective tax rate, Underlying EBIT margin and Underlying return on capital. These measures are used internally by management to assess the performance of our business, make decisions on the allocation of our resources and assess operational management. Non-IFRS measures have not been subject to audit or review
No offer of securities
Nothing in this presentation should be construed as either an offer to sell or a solicitation of an offer to buy or sell BHP Billiton securities in any jurisdiction.
Reliance on third party information
The views expressed in this presentation contain information that has been 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. This presentation should not be relied upon as a recommendation or forecast by BHP Billiton.
BHP Billiton Base Metals site tour, 30 September 2012 Slide 2
Disclaimer
Mineral Resources
This presentation includes information on Exploration Results (Potential Mineralisation) and Mineral or Coal Resources (inclusive of Ore Reserves). Mineral Resources are compiled by: S O’Connell (MAusIMM) Olympic Dam, J McElroy (MAusIMM) Saskatchewan Potash, L Soto (MAusIMM), M Cortes (MAusIMM) and R Preece (FAusIMM) – Escondida mineral district, J Céspedes (MAusIMM) – Cerro Colorado and Spence, R Preece (FAusIMM) – Antamina and Base Metals North America Pinto Valley, and A Edwards (MAusIMM) – Cannington. This is based on Mineral Resource information in the BHP Billiton Annual Reports for 2008 and 2012 for all assets. All reports can be found at www.bhpbilliton.com.
Exploration Targets (Potential Mineralisation) are compiled by: Olympic Dam: M Carew (MAusIMM); Potash: J McElroy (MAusIMM); Escondida, Spence, Cerro Colorado, Base Metals North America Pinto Valley and Resolution: J des Rivieres (IGI); – (Olympic Dam, Potash and Escondida were previously reported in the BHP Billiton’s Bank of America Merrill Lynch Global Metals, Mining & Steel Conference Presentation, 15 May 2012, and Spence and Cerro Colorado were previously reported in the BHP Billiton’s, Building momentum in Base Metals Presentation, 27 June 2012).
All information is reported under the ‘Australasian Code for Reporting of Exploration Results, Mineral Resources and Ore Reserves, 2004’ (the JORC Code) by the above-mentioned persons who are employed by BHP Billiton and have the required qualifications and experience to qualify as Competent Persons for Mineral or Coal Resources or Exploration Results under the JORC Code.
The compilers verify that this report is based on and fairly reflects the Exploration Targets and Mineral Resources information in the supporting documentation and agree with the form and context of the information presented.
BHP Billiton Base Metals site tour, 30 September 2012 Slide 3
Disclaimer
Mineral Resource classification (100% basis) for each province, where relevant, are contained in Table 1.
Table 1
Measured Indicated Inferred Range of Potential Mineralisation BHP Billiton Province Resource Resource Resource (Bt) interest (Mt) (Mt) (Mt) Low Mid High %
Escondida district FY2012 4,069 @ 0.72% Cu 4,986 @ 0.57% Cu 12,635 @ 0.47% Cu 16 @ 0.4-0.6% Cu 23 @ 0.4-0.6% Cu 43 @ 0.5-0.6% Cu 57.5 FY2008 1,819 @ 0.84% Cu 2,984 @0.70% Cu 4,233 @ 0.53% Cu 57.5 Cerro Colorado FY2012 96 @ 0.66% Cu 317 @ 0.64% Cu 82 @ 0.58% Cu 1.3 @ 0.35-0.45% Cu 1.7 @ 0.35-0.45% Cu 3.2 @ 0.35-0.45% Cu 100 FY2008 135 @ 0.70% Cu 93 @ 0.62% Cu 129 @ 0.56% Cu 100 Spence FY2012 232 @ 0.91% Cu 1,315 @ 0.47% Cu 1,260 @ 0.37% Cu 0.8 @ 0.4-0.5% Cu 1.2 @ 0.4-0.5% Cu 1.9 @ 0.4-0.5% Cu 100 FY2008 196 @ 1.16% Cu 190 @ 0.70% Cu 13 @ 0.43 Cu 100 169 @ 0.83% Cu 990 @ 0.91% Cu 706 @ 0.73% Cu Antamina FY2012 0.6% Zn, 9 g/t Ag 0.6% Zn, 10 g/t Ag 0.4% Zn, 9 g/t Ag 33.75
0.03% Mo 0.02% Mo 0.01% Mo
FY2008 186 @ 0.94% Cu 751 @ 1.01% Cu 585 @ 0.83% Cu 33.75
Base Metals North
America FY2012 63 @ 0.33% Cu 200 @ 0.35% Cu 6 @ 0.21% Cu 3 @ 0.35-0.45% Cu 4 @ 0.35-0.45% Cu 6 @ 0.35-0.45% Cu 100 Pinto Valley
FY2008 515 @ 0.14% Cu 203 @ 0.35% Cu 6 @ 0.21% Cu 100
| 2 |
|
@ 1.4-1.6% Cu 3 @ 1.5-1.7% Cu, 4 @ 1.3-1.5% Cu Resolution FY2012 45 400 ppm Mo 400 ppm Mo 400 ppm Mo |
59 @ 211g/t Ag, 22 @ 119g/t Ag, 17 @ 90g/t Ag,
Cannington FY2012 100
5.8% Pb, 3.3% Zn 3.8% Pb, 2.5% Zn 3.1% Pb, 2.0% Zn 1,474 @ 1.03% Cu, 4,843 @ 0.84% Cu, 3,259 @ 0.70% Cu,
Olympic Dam FY2012 0.30 kg/t U3O8, 0.27 kg/t U3O8, 0.23 kg/t U3O8, 1.2 @ 1.08% Cu 2.4 @ 1.08% Cu 3.6 @ 1.08% Cu 100
0.35 g/tAu 0.34 g/tAu 0.25 g/tAu
Potash FY2012 0.35- 3,320 @ 25.7% K2O 131 @ 26.9% K2O 2.7 5.4 8.1 100
BHP Billiton Base Metals site tour, 30 September 2012 Slide 4
Chilean site tour program
Day 1: Sunday, 30 September 2012
Welcome and safety induction Brendan Harris Non-ferrous overview Andrew Mackenzie Well positioned to deliver low risk copper growth Peter Beaven Base Metals performance overview Margaret Beck Low risk, high return projects Peter Beaven Our confidence in the long term outlook for copper Shaun Verner Coloso Port site tour Pedro Damjanic Chile update Maria Olivia Recart Santiago project hub Carlos Mesquita Examining the broader portfolio Peter Beaven
Day 2: Monday, 1 October 2012
Escondida presentation Edgar Basto Escondida site tour
Day 3: Tuesday, 2 October 2012
Pampa Norte presentation Ivan Arriagada Spence site tour
BHP Billiton Base Metals site tour, 30 September 2012 Slide 5
Key themes
• A strong, experienced and well established management team
• A high quality and uniquely diversified portfolio
• Building strong momentum in our Base Metals business
• Targeting a substantial reduction in costs
• Our longer term development options
BHP Billiton Base Metals site tour, 30 September 2012 Slide 6
Non-ferrous leadership team
Strong, experienced and well established
Products Valle Timothy Cutt
Philip Protocol
Montgomery Stefan Buys
BHP Billiton Base Metals site tour, 30 September 2012 Slide 7
A high quality and uniquely diversified portfolio
Legend
Copper Resource
Potash 100+
Potential Mineralisation
Silver
Ratio (years)
Offices Minerals—minimum mineral inventory life at FY12 production rates
London Note: Includes producing assets, major projects in execution and specific longer term development options. Excludes diamonds as this business is
Saskatoon Jansen
100+ under review.
Project
Base Metals
100+
North America
35+ Marketing Hub Minerals Singapore Exploration Antamina
100+ 30+
Cerro Colorado
100+
Spence Cannington Escondida 100+ Olympic Dam
100+
Adelaide Project Hub Santiago
The Inventory Life is estimated from the mineral inventory (sum of Potential Mineralisation and Mineral Resources) stated on a 100% basis. The detailed breakdown of Mineral Resources for all assets are shown in the BHP Billiton FY12 Annual Report. Potential mineralisation values in the pie charts above is the mid case of a range of values that are presented in the Disclaimer slide of this presentation. The range of Potential Mineralisation is estimated from geological information including boreholes, outcrops and geophysical information. The potential quantity is conceptual in nature, there has been insufficient exploration to define a Mineral Resource and it is uncertain if further exploration will result in the determination of a Mineral Resource. It should not be expected that the quality of the Potential Mineralisation is equivalent to that of the Mineral Resource. The minimum mineral inventory or Inventory Life in years is the mineral inventory divided by the FY12 production rate (for Potash this is the expected FY20 production rate and for Base Metals North America Pinto Valley it is the nominal production rate) and does not imply that any mine planning has been completed. Refer to disclaimer on slides 3 and 4 as presented on 30 September 2012.
BHP Billiton Base Metals site tour, 30 September 2012 Slide 8
Building strong near term momentum
• Low risk, high return brownfield projects and the Copper production growth1 release of latent capacity underpin the strong (index, FY12=100) near term outlook CAGR: +10%
150
(FY12 to FY15) Other Base Metals
• Multiple low risk projects on time and on budget
Escondida
– two projects (Escondida Ore Access and Antamina Expansion) delivered first production in FY12
– low complexity Pinto Valley restart 100 expected by end CY12
– Escondida Organic Growth Project 1 on schedule to be commissioned in CY15
• Total copper production is forecast to grow at a
50
CAGR of +10% to end FY15
– copper production growth of more than 350 ktpa (BHP Billiton share) to end of FY15
0
FY11 FY12 FY13e FY15e
Note: Excludes Uranium CSG.
1. BHP Billiton share.
BHP Billiton Base Metals site tour, 30 September 2012 Slide 9
Targeting a substantial reduction in costs
• Cost inflation continues to impact the global Effective asset utilisation1 in FY12 mining industry (%) 90%
• We are committed to reducing costs in FY13
• We will achieve this by
– diluting our costs over a larger base as substantial latent capacity is released at a number of major operations and recently completed projects ramp-up – reducing general overhead costs and our business development spend – increasing operating and capital productivity Hillsid
e
Escondida
1. Excludes assets where major projects are in commissioning phase or in the process of ramp-up (Worsley, Antamina, WAIO and NSW Energy Coal). Excludes the non-operated Richards Bay Minerals operation, the EKATI diamond mine (both part of the D&SP CSG) and Onshore US (Petroleum CSG). Spence and Cerro Colorado capacity based on forecast annualised production; Manganese Ore and South Africa Coal capacity adjusted for available rail allocation; and Queensland Coal adjusted for the closure of Norwich Park.
BHP Billiton Base Metals site tour, 30 September 2012 Slide 10
Longer term development options
Well placed to meet growing potash demand
• A major presence in the Saskatchewan potash basin Jansen
• The longer term outlook for potash remains attractive
• Two shafts that will support at least an 8 mtpa operation at Jansen will be fully excavated by end FY14
• Regulatory approvals are being progressed
– Saskatchewan Ministry of Environment has approved the EIS
– mining lease conversions are in progress
• Detailed front-end mine planning and engineering for Jansen is well advanced – focus is on reducing project risk and maximising investment returns – expected to operate at the very bottom of the global cost curve in its expanded state – a modular (two phase) development program is likely to reach full capacity within 10 years of final investment approval
• Final investment decision remains subject to Board approval
BHP Billiton Base Metals site tour, 30 September 2012 Slide 11
Longer term development options
Project economics will determine the way forward at Olympic Dam
• Following a major capital review, we decided to study an alternative, less capital intensive design of the Olympic Dam open pit expansion that involves new technologies
• An alternative design has the potential to substantially improve the economics of the project – heap leach and other technological solutions are being studied
• These studies will require extensive analysis
• An investment decision is far from imminent
Our heap leach test program in Adelaide is well advanced
BHP Billiton Base Metals site tour, 30 September 2012 Slide 12
Key themes
• A strong, experienced and well established management team
• A high quality and uniquely diversified portfolio
• Building strong momentum in our Base Metals business
• Targeting a substantial reduction in costs
• Our longer term development options
BHP Billiton Base Metals site tour, 30 September 2012 Slide 13
Escondida
Well positioned to deliver low risk copper growth
Peter Beaven President Base Metals
30 September 2012
Key themes
• Our confidence in the long term outlook for copper
• A leading producer of Base Metals with a world class resource base
• Strong performance in health, safety, environment and the community
• Targeting significant unit cost savings
• Delivering low risk, high return copper growth
• Our valuable longer term development options
• Our extensive and successful brownfield exploration program
BHP Billiton Base Metals site tour, 30 September 2012 Slide 15
Base Metals Executive Committee
An established, experienced and diverse leadership team
Base Metals
Peter Beaven
Alex Jaques Development Carlos Randy Jones Mesquita
BHP Billiton Base Metals site tour, 30 September 2012 Slide 16
Base Metals – an important driver of value
Committed to
Copper remains a particularly attractive industry for BHP Billiton copper
Well Base Metals is well positioned with a diversified portfolio of positioned high quality assets in established and stable geographies
Delivering Strong operating and project capability which is enhanced performance by our Santiago project hub
Operating Our systems and processes represent a major competitive advantage that will excellence underpin low risk, high return copper growth for the Group
“Substantial mineralisation totalling 27.1 bt1 and a significant commitment to Andean copper belt exploration will ensure BHP Billiton remains a leading and highly competitive producer in the long term”
1. BHP Billiton 2012 Annual report. Refer to disclaimer slides 3 and 4 as presented on 30 September 2012.
BHP Billiton Base Metals site tour, 30 September 2012 Slide 17
Geographically diverse Base Metals business
Base Metals CSG operation
Uranium CSG operation
North America – USA
Copper
Execution
Pinto Valley Restart
Singapore
Marketing hub
Antamina—Peru
Copper—Zinc
Pampa Norte—Chile
Cerro Colorado and Spence Cannington—Australia
Copper Silver—Lead—Zinc
Escondida—Chile Santiago—Chile Copper Project hub
Execution
Escondida Oxide Leach Area Project
Santiago—Chile Olympic Dam—Australia
Headquarters Copper—Uranium
Note: Includes producing assets and major projects in execution.
BHP Billiton Base Metals site tour, 30 September 2012 Slide 18
A leading copper producer
A significant producer
• Third largest global copper producer (CY11 contained copper production, mt)
– operator of Escondida, the world’s largest
copper mine BHP Billiton
• Copper production growth over the next three years is significant in the context of the global
industry BHP Billiton growth to FY15
• Over 95% increase in total contained copper 0.0 0.5 1.0 1.5 2.0 resource base since FY081
Substantial footprint for growth1
(% copper equivalent)
• Underpins longer term production profile
2.0
Bubble size represents
• Extensive greenfield exploration land position Resolution size in tonnes
15 .
in the Andean region
Antamina Olympic Dam
1.0
0.5 Spence Escondida
0.0
0 20 40 60 80 100 120 140
Copper equivalent contained
Sources: Wood Mackenzie, Annual Reports, press releases and BHP Billiton FY12 Annual Report. (mt) Refer to disclaimer on slides 3 and 4 as presented on 30 September 2012 for information regarding BHP Billiton resources and potential mineralisation.
1. Based on top 20 copper deposits, information was obtained from the BHP Billiton FY12 Annual Report for BHP Billiton resources and from Brook Hunt data for the remainder.
Resolution is based on the mid case for potential mineralisation, factored for conversion to resources. Grades are inclusive of by-product credits, adjusted for metal recovery. Copper equivalent units based on three month average spot prices. Refer to disclaimer on slides 3 and 4 as presented on 30 September 2012 for reported by-product grades.
BHP Billiton Base Metals site tour, 30 September 2012 Slide 19
Base Metals—a major contributor to BHP Billiton
• Significant component of the BHP Billiton Contribution to BHP Billiton1 portfolio (US$ billion) (EBIT margin %)
• Headquartered in Santiago, employing 32 100
24 75
over 8,000 people in five different countries 16 50
| 8 |
|
25 |
• Over the last five years Base Metals has
0 0 contributed FY08 FY09 FY10 FY11 FY12
– US$25 billion of Underlying EBIT1, Base Metals Total BHP Billiton EBIT representing 20% of total Base Metals EBIT margin BHP Billiton Underlying EBIT
Production2
– US$20.6 billion of net operating
(five year average, copper equivalent units, %) cash flow1 representing 19% of total BHP Billiton net operating cash flow Base Metals
16%
– 16% of total BHP Billiton copper equivalent production
1. Excludes Uranium CSG and includes third party products.
2. Excludes Uranium CSG and third party products. Copper equivalent units based on FY12 average prices where available.
BHP Billiton Base Metals site tour, 30 September 2012 Slide 20
Strong performance in health, safety, environment and the community
Health
• Focus on reducing exposure to silica, noise and acid mist
• Monitoring and managing fatigue
Safety
• Material Risk Management Escondida
• Job Safety Observation
• Field leadership
Environment
• Reduce environmental footprint (energy and water efficiency)
• Abatement curves for energy, water and carbon
Cerro Colorado
Community
• Focus on improving quality of life indicators
• Escondida Foundation
• Antamina Fund
• Invested in excess of US$250 million in local communities over the last five years
Japan School – Antofagasta
BHP Billiton Base Metals site tour, 30 September 2012 Slide 21
Safety is a core value for BHP Billiton
Total Recordable Injury Frequency (TRIF)
(number of recordable injuries per million hours worked)
9
BHP Billiton Base Metals¹
| 6 |
|
| 3 |
|
0
FY06 FY07² FY08² FY09 FY10² FY11 FY12 FY13²³
1. Excludes Uranium CSG.
2. Indicates fatalities occurred in the Base Metals Customer Sector Group during the reporting period.
3. TRIF up until 31 August 2012.
BHP Billiton Base Metals site tour, 30 September 2012 Slide 22
Strong recovery underway at Escondida
• Strong operating performance over past five Strong operating performance years, however in FY12 Escondida was (asset utilisation1, %) affected by temporary challenges including 90% industrial action and wet weather – the reversal of one-off events expected Cannington in FY13
• Recovery in ore grade and milling rates at Escondida illustrated by the sharp increase in
Spence
production in the June 2012 quarter – continued improvement in volumes consistent with the mine plan will benefit unit costs in FY13 Cerro Colorado – low cost, high margin volume growth associated with expansion projects will further leverage economies of scale throughout FY13 Escondida
Five year average FY12
1. Antamina is not shown as the expansion project in FY12 was in the process of ramp-up. Spence and Cerro Colorado capacity based on forecast annualised production.
BHP Billiton Base Metals site tour, 30 September 2012 Slide 23
Base Metals performance overview
Margaret Beck VP Finance
30 September 2012
A high margin business with strong returns
• EBIT contribution from assets diversified by Strong and stable margins and returns1 product, country and process (%)
150
• Over the last five years Base Metals has generated 100 – an average EBIT margin of approximately 50% 50 – an average EBIT RoC of over 75%
0
FY08 FY09 FY10 FY11 FY12
• In FY12 Base Metals contributed 14% of
EBIT return on capital EBIT margin
BHP Billiton’s Underlying EBIT despite:
– being negatively affected by industrial FY12 EBIT contribution by asset action and wet weather (Underlying EBIT2) – copper grades at Escondida reaching an Cannington 20% inflection point in the mine plan; and – a more than US$900 million reduction in
Escondida 42%
the contribution associated with Antamina
provisional pricing (and Pinto Valley) 19%
1. Excludes Uranium CSG and third party trading activities. Pampa Norte orte 19%
2. Excludes exploration and business development and divisional activities.
BHP Billiton Base Metals site tour, 30 September 2012 Slide 25
Underlying EBIT analysis
EBIT variance
(FY12 versus FY11, US$ billion)
8.0
Uncontrollable (1.5) Controllable (1.1)
6.5
6.0
0.1 5.0
(1.5) (0.1) 0.0
(0.1) 3.9
0.0
4.0 (0.5)
(0.5)
2.0
0.0
Y11 ice¹ nge tion otal me² sts² ash sts² ajor and ther Y12—t o c ons² F Pr—co M O F
Infla Sub Voluc
Excha Cash Non outages disrupti
Note: Excludes Uranium CSG.
1. Includes net impact of price-linked costs.
2. The impact of wet weather and industrial action at Escondida has been excluded from Volume, Cash costs and Non-cash costs variance; included in Major outages and disruptions.
BHP Billiton Base Metals site tour, 30 September 2012 Slide 26
Unit costs affected by one-off events and a heated labour market
• Copper unit cash costs increased by 20% in Chilean labour cost by industry
FY12 (index, 2000=100)
200 182%
• Higher costs driven by
150
– pressure on labour costs due to tight market in Chile 100 – increased acid and fuel prices
50
– higher strip ratio at Spence 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 Mining Manufacture
– impact of lower volumes on a substantial Electricity, gas and water Construction fixed cost base
Source: COCHILCO; Fundacion Chile; Brook Hunt.
› industrial action at Escondida Base Metals Chilean copper assets breakdown
› lower grade at Escondida (FY12 cash costs, %)
Local
41% Fixed Variable 42% US$ 58% 59%
BHP Billiton Base Metals site tour, 30 September 2012 Slide 27
Targeting significant unit cost savings
• Economies of scale benefits Escondida’s average copper grade
– Escondida Ore Access will underpin higher (% copper) average grades 2.0 – debottlenecking projects will improve throughput
1.5
• Reversal of one-off costs incurred in FY12
– industrial action 1.0
0.5
– crushing and conveying maintenance
– reduction of study and exploration costs 0.0
FY08 Q4 FY08 FY09 Q4 FY09 FY10 Q4 FY10 FY11 Q4 FY11 FY12 Q4 FY12
• A substantial reduction in operating costs and non-essential expenditure is targeted in FY13
– improvements identified through benchmarking Grade has a significant influence on unit costs with plans in place to close the gaps (index, FY08=100)
250
• However, challenges remain
200
– continued tight labour market in Chile
150
– high power costs due to dependence on imported fossil fuels 100 – cost of water will increase with transition to 50 desalinated water 0
FY08 FY09 FY10 FY11 FY12 FY13e FY14e Cash cost per tonne of material mined Cash cost per tonne of copper
BHP Billiton Base Metals site tour, 30 September 2012 Slide 28
Continued investment in high return growth
• Investment in growth to accelerate in FY13 Increasing Base Metals capex supports as high return projects (OGP1 and OLAP) production growth1 progress (investment, US$ billion)
3.0
• Sustaining capital spend is predictable
– due to focus on downstream processes 2.5 – targeting a reduction in FY13
2.0
• Exploration expense peaked in FY12 – significant brownfield exploration success 1.5 – focused greenfield exploration program
1.0
– overall reduction targeted in FY13
0.5
0.0
FY08 FY09 FY10 FY11 FY12 FY13e
Exploration Sustaining and other Growth capex
1. Excludes Uranium CSG.
BHP Billiton Base Metals site tour, 30 September 2012 Slide 29
Low risk, high return projects
Peter Beaven President Base Metals
30 September 2012
Delivering low risk, brownfield volume growth
Projects completed and in execution1
• Two projects achieved first production in FY12
(capital expenditure, US$ billion)
– Antamina Expansion increased processing
US$501m-
? US$250m ? US$500m
capacity by 38% to 130 ktpd US$5bn
Escondida Laguna
– Escondida Ore Access enables the mine plan Ore Access Seca Deb. to access to high grade ore (+1% copper)
FY12 FY13 FY14 FY15 FY16
• Laguna Seca Debottlenecking was completed at
Pinto Oxide
the end of September 2012 and increases Antamina Escondida
Valley Leach
processing capacity by 15 ktpd at Escondida Exp OGP1
• Low risk projects in execution will sustain strong (timing of first production) momentum Copper production growth2
– Escondida Oxide Leach substantially extends (index, FY12=100) CAGR: +10%
(FY12 to FY15) 150
cathode production Other Base Metals
– OGP1 sustains an elevated level of copper Escondida production at Escondida over the remainder 100 of the decade – low complexity Pinto Valley restart will deliver 50 60 ktpa of copper in concentrate
0
FY11 FY12 FY13e FY15e
1. Relates to projects in execution highlighted on slide. Note some projects are completed.
2. BHP Billiton share.
BHP Billiton Base Metals site tour, 30 September 2012 Slide 31
Valuable longer term development options
• Progressing pre-feasibility studies for the Spence
Spence
Hypogene project
– exploitation of an extensive hypogene resource of more than 2 bt ore1 – potential development of 95 ktpa concentrator to deliver 150—200 ktpa of low cost copper production over the first ten years
• Cannington open-cut studies underway – significant near surface resource of 22 mt2 – could extend mine life by more than 20 years
• Escondida post OGP1
– substantial resources support additional concentrate and cathode production
• Antamina further debottlenecking
– existing SAG capacity of 210 ktpd compared to current throughput of 140 ktpd
1. Open pit limit for declared Sulphide Mineral Resource as reported in BHP Billiton 2012 Annual report. Refer Table 1 on slide 4 as presented on 30 September 2012.
2. Cannington open cut Mineral Resources of 22 mt is included in Table 1 on slide 4 as presented on 30 September 2012.
BHP Billiton Base Metals site tour, 30 September 2012 Slide 32
Significant brownfield exploration success
• Extensive brownfield exploration program at all BHP Billiton’s contained copper resource base of our sites has increased by over 95% since FY081
(mt) – approximately 1.5 million metres drilled over the past five years 100
• Successful exploration has increased our resource base
80
– 95% increase in total contained copper since FY081
– discoveries converted into resources at 60 Pampa Escondida, Escondida Este, Cerro Colorado, Spence hypogene and Antamina – doubling in Escondida mineral district 40 resource at a discovery cost of US$0.001 per pound
– 388% increase in Pampa Norte resource at 20 a discovery cost of US$0.003 per pound
• High quality resource base with 27.1 bt @
0.55% copper2 0
FY08 FY12
1. After depletion. Excludes Cannington and Uranium CSG.
2. BHP Billiton 2012 Annual report. Refer to disclaimer slides 3 and 4 as presented on 30 September 2012.
BHP Billiton Base Metals site tour, 30 September 2012 Slide 33
Focused commitment to greenfield exploration
• Extensive Andean greenfield exploration land Chilean and Peruvian landholding position in the most prospective areas – approximately 17,000 km2 in Chile – approximately 11,000 km2 in southern and central Peru
• Ramping up activity on a number of multi-year exploration programs aimed at testing porphyry copper targets
• Diverse exploration portfolio, with a range of target types and exploration maturity
• More than 50,000 metres of drilling planned during FY13
• Ongoing generative activities aimed at sustaining and building long term exploration pipeline, including third party commercial deals and title applications
200 km
BHP Billiton Base Metals site tour, 30 September 2012 Slide 34
Key themes
• Our confidence in the long term outlook for copper
• A leading producer of Base Metals with a world class resource base
• Strong performance in health, safety, environment and the community
• Targeting significant unit cost savings
• Delivering low risk, high return copper growth
• Our valuable longer term development options
• Our extensive and successful brownfield exploration program
BHP Billiton Base Metals site tour, 30 September 2012 Slide 35
Our confidence in the long term outlook for copper
Shaun Verner Vice President Base Metals Marketing
30 September 2012
A centralised approach
• Marketing is centralised across commodities providing a coordinated view. Our responsibilities include – selling our products and purchasing all major raw materials – managing the supply chain for our products, from asset to market; and raw materials, from suppliers to asset – managing credit and price risk associated with the revenue line – achieving market clearing prices for our products – defining our view of long term market fundamentals
• Marketing volumes in FY12 (contained metal) – copper concentrates: 710 kt – copper cathodes: 760 kt – lead (silver) concentrates: 240 kt – zinc concentrates: 110 kt
BHP Billiton Base Metals site tour, 30 September 2012 Slide 37
Demand drivers are diverse across both
geography and sector
• Copper demand is dominated by Demand by key sector 2011
construction, power and electrical (mtpa)
applications which have low substitution risk 9
• Demand is driven by both investment and 6
consumption led growth
| 3 |
|
– urbanisation
– floor space per capita 0
– consumables ding ction and com ture strial port mer bles oling ical/ strip ther
Buil tele c Indu ment Trans dura Co Electr O ment
– replacement demand constru Power infrastru equip Consu electronic equip
• China is the most significant market, however
Demand by region 2011
growth is geographically diverse
– developing economies need copper in Other 23%
metals intensive construction and China 37%
infrastructure investment phase
– developed economies need copper North America 9%
across a wide range of applications in
consumption phase North Asia 11%
Europe 20%
Source: ICA; CRU International; IWCC.
BHP Billiton Base Metals site tour, 30 September 2012 Slide 38
Demand evolves with economic development
• Emerging economic growth will transition Copper semis intensity per capita from being investment to consumption led (kg/capita)
GDP elasticity of copper 35 consumption per capita
• Copper plateaus later in the industrialisation 1980-2011 cycle when compared with the infrastructure 30
China 1.3
driven commodities
India 1.1
25
• China and India are still in the early stages of development 20
15
• Chinese semis1 intensity per capita driven by increasing urbanisation, increasing wealth 10 and replacement demand
| 5 |
|
• Intensity per capita driven primarily by domestic consumption but exports continue 0
0 10 203040 50
to play a part
GDP per capita
(2005 real US$’000, PPP basis)
USA 1950-2011 Japan 1950-2011 Germany 1950-2011 Korea 1971-2011 China 1980-2011 India 1980-2011 China 2012-25 India 2012-2025
1. Semi fabricated products. Source: BHP Billiton; World Bank; CRU.
BHP Billiton Base Metals site tour, 30 September 2012 Slide 39
Long term drivers of demand remain intact
• Global population growth has continued, Urbanisation is the key driver of global demand as has growth in the share of urban (billion people) population 9
Rural population Urban population
• Urban population is expected to grow 6
60%
globally from 3.6 billion (2010) to 4.3 billion 52% (2020) to
5.0 billion (2030) 3
34%
• Rural population is expected to remain flat 0
from 2010 1950 1960 1970 1980 1990 2000 2010 2020 2030
• Per capita wealth increases more quickly Copper intensity increases with urbanisation in urban environments (index value)
400
• Commodity demand growth is set to 300 continue as urban populations increase
200
• Chinese copper intensity doubles from 100 rural to smallest urban centre; and more
0
than triples from rural to large urban centre China rural <0.5 1.5—5.0 5.0—10.0 >10.0
China urban city population size
(million people)
Source: United Nations (Population Division, Department of Economic and Social Affairs).
BHP Billiton Base Metals site tour, 30 September 2012 Slide 40
Strong primary demand growth expected despite increasing secondary supply
• Total semis demand expected to grow at Copper semis demand
3% CAGR over the next decade (index, 2000=100)
200
• Primary drivers will be China at 2% CAGR (2000–10) 3% CAGR (2010–20) approximately 5% CAGR and India at approximately 10% CAGR
Exchange 160 inventories
• Rest of world demand growth is increased balanced between developing 330kt Rest of economies in Asia, Africa and Latin 120 world America and maturing demand profiles in Europe and North Asia Primary
demand
• Despite increasing secondary supply, 80
India
primary demand growth remains robust
40
China
0
CY00 CY02 CY04 CY06 CY08 CY10 CY12 CY14 CY16 CY18 CY20
Source: ICA, CRU; Wood Mackenzie.
BHP Billiton Base Metals site tour, 30 September 2012 Slide 41
Secondary supply is increasing, but China remains short copper units
• While the size of the future scrap pool has Scrap contribution to global copper supply increased significantly, the contribution of (mt) secondary units to global copper supply has
28
only experienced modest growth Primary
• Secondary supply from recycling is a function Total scrap
24
of product life-cycle, collection ollection rates and recovery rates
20
• In China the recycling rate is already higher than the rest of the world due to a lower cost base and extensive collection infrastructure 16
• Chinese collection and recovery rates are expected to increase marginally over the coming 12
decade 1.6% CAGR (CY00 to CY11)
• This is offset by an extension to life-cycles in 8 power infrastructure and construction applications 4
• Despite an increasing share of demand satisfied by secondary supply, China remains short 0 copper units and primary supply is required 2000 2005 2011
Source: Wood Mackenzie; CRU.
BHP Billiton Base Metals site tour, 30 September 2012 Slide 42
Copper: a material of choice and substitution risk is lower in key market sectors
• Overall substitution tonnage loss remains Substitution losses by product small at approximately 2% of the global (% share of product market lost in 2011) market
2% Electric motors
• Limited impact in high volume sectors
(wire, cable and electrical applications) 1% Industrial power cable
• Even at a price ratio of 4:1 between 2% Non-insulated uses of wirerod copper:aluminium, substitution has not significantly increased penetration 7% Plumbing tube
• Copper is the material of choice 4% Utility power cable – it is energy efficient and carbon sensitive in a rising energy cost 14% Telecom cable environment
3% Alloy rod and bar
• Detailed analysis shows that the copper industry is also evolving to defend market 4% Commercial tube share
0 20 40 60 80
Substitution tonnage loss in 2011
(thousand tonnes)
Source: ICA; CRU International.
BHP Billiton Base Metals site tour, 30 September 2012 Slide 43
Exchange stocks are low, Chinese bonded stocks fill the gap
• Exchange stocks are at historically low Copper exchange/bonded stocks versus price levels as a percentage of demand, (kt) (US$/t) representing less than two weeks of 1,500 12,000 global consumption
1,000 10,000
• The historical relationship between
500 8,000
exchange stocks and price has broken down 0 6,000
Dec 09 Jun 10 Dec 10 Jun 11 Dec 11 Jun 12
• Shanghai bonded stocks have become China bonded Asia Europe
more prominent as USA LME price (RHS)
– China’s proportion of global demand Underlying Chinese demand is strong has increased (index, 2000=100)
450 12% CAGR
spot demand versus long term 350 (CY00 to CY11) contract demand in other regions has decreased 250
150
• Stocking and de-stocking cycles both 50 drive and respond to the SHFE/LME (50) price arbitrage 2000 2005 2011
Domestic mine Concentrate imports Cathode imports Other imports Scrap Inventory change
Source: LME; SHFE; Comex; NBS; China Customs.
BHP Billiton Base Metals site tour, 30 September 2012 Slide 44
Short term cyclical stock changes are not indicative of long term demand trends
• Chinese refined metal purchasing Chinese inventory cycle creates short term volatility patterns are volatile (% change YoY, 3 month moving average)
80
• Refined supply from domestic production Semis output and imports tend to peak and trough on
Refined supply
downstream demand expectations, often
60
amplifying short term inventory flow
• China is the most active spot market globally, but long term contracts are now 40 more prevalent
• Consumers, traders and producers have 20 different drivers for activity
• The long term demand trend for copper
0
units is very positive, but short term volatility will continue
| (20) |
|
Feb 09 Nov 09 Aug 10 May 11 Feb 12
Source: NBS; China Customs; BHP Billiton analysis.
BHP Billiton Base Metals site tour, 30 September 2012 Slide 45
Concentrate availability is recovering but disruptions and delays will continue
• The global copper concentrate market is Concentrate production Concentrate surplus/deficit
transitioning from a period of structural deficit (% primary smelter capacity) relative to optimal (88%)
primary smelter capacity
towards a more balanced market (kt)
98% Concentrate surplus/shortfall @ 88% 1,000
• TCRCs have more recently been driven by
scarcity of concentrate smelter utilisation after disruption Concentrate production as % of
• Key sensitivity relates to potential for supply capacity (LHS) disruptions (average ~800 ktpa lost production over past five years) 88% 0
• Forecast surplus continues to decline and be deferred as supply growth falls short of expectations
78% (1,000)
• China remains the location for lowest cost smelting but they continue to rely on approximately 3 mtpa of copper cathode
• Concentrate qualities are becoming more
68% (2,000)
complex and premium concentrate such as 2004 2006 2008 2010 2012 2014 Escondida will become increasingly valuable
Source: Wood Mackenzie, CRU
Note: The Wood Mackenzie methodology for deriving the outlook is the added or subtracted requirement for copper-in-concentrate over and above the base case plus highly probable plus an allocation from probable projects.
BHP Billiton Base Metals site tour, 30 September 2012 Slide 46
Structural challenges remain in the longer term despite the short term potential for the market to rebalance
• In addition to the strong near term volume A selection of growth projects growth expected in our own portfolio, (average incremental production, ktpa) higher prices have incentivised a supply 500 response from the industry Greenfield
Brownfield
– a number of new projects have or are 400 scheduled to deliver new production in the short term 300
• This could lead to the curtailment of higher cost operations or an increase in exchange 200 stocks
100
0
HalesI/II Deep Tolgoi Gorda Tenke assets¹ Restart Restart tailings Bronces enavista n tro V aserones yu S alobo tapaccay Grasberg ollahuasi speranza ra ola r zi Billito Los Minis KO C O An Bu C E Sier Konk Mina Frontie Kolwe BHP
Source: Wood Mackenzie. BHP Billiton assets shown on 100% basis.
1. BHP Billiton Base Metals Assets, 100% basis for Escondida and Antamina.
BHP Billiton Base Metals site tour, 30 September 2012 Slide 47
Supply-side challenges: grade decline a major constraint
• Copper grades have declined at an Industry average head grade average rate of 2.8% per annum over (% copper in process feed) the last decade 1.2
• Lower grades have an impact on Historical Forecast productivity, increasing costs as 1.0 production decreases
• New discoveries have not been able to 0.8 reverse the long term trend
• At the same time new technologies and 0.6 improved processes have unlocked value in lower grade resources but at a higher cost 04 .
0.2
0.0
1980 1989 1998 2007 2016 2025
Source: Wood Mackenzie, Q2 2012 update.
BHP Billiton Base Metals site tour, 30 September 2012 Slide 48
Resource depletion infers that significant inducement of new supply is required
• Current production will continue to Copper mine production decline due to depletion of resources (mt) and lower ore grades 35
• Resource nationalisation, environmental regulations, capital and 30
Possible projects
operating expenditure escalation, infrastructure constraints and 25 Demand taxation/royalty increases continue to challenge the supply response 20
• Substantial investment in brownfield
Probable projects
and greenfield capacity will be required 15 to cover the demand gap Highly probable
projects
• Therefore, on average, prices will need 10 to remain high enough to induce new Base case supply 5
0
CY10 CY15 CY20 CY25
Source: Wood Mackenzie, Q2 2012 update.
BHP Billiton Base Metals site tour, 30 September 2012 Slide 49
South America will provide the majority of additional supply, albeit with greenfield risk
Europe copper supply North America copper supply (mined copper, kt) (mined copper, kt) 18,000
18,000 Asia and Australia copper supply
(mined copper, kt)
12,000 18,000
12,000
6,000 12,000 6,000
0 6,000
0 2010 2015 2020 2025 2010 2015 2020 2025 0
2010 2015 2020 2025
South America copper supply
(mined copper, kt) Africa and Middle East copper supply
18,000 (mined copper, kt)
18,000 12,000 12,000 6,000 6,000 0
2010 2015 2020 2025 0 Base supply 2010 2015 2020 2025 Brownfield projects Greenfield projects
Source: Wood Mackenzie, Q3 2012 update.
BHP Billiton Base Metals site tour, 30 September 2012 Slide 50
Base Metals key themes
• A strong, experienced and well established management team
• A high quality and uniquely diversified portfolio
• Building strong momentum in our Base Metals business
• Targeting a substantial reduction in costs
• Our longer term development options
BHP Billiton Base Metals site tour, 30 September 2012 Slide 51
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.
| BHP Billiton Limited and BHP Billiton Plc | ||||||
| Date: September 30, 2012 |
By: |
/s/Jane McAloon | ||||
| Name: | Jane McAloon | |||||
| Title: |
Group Company Secretary | |||||