BHP Billiton Growth through optionality. Graeme Hunt President, Aluminium UBS Basic Materials Conference London, 6 June 2007

Transcription

1 BHP Billiton Growth through optionality Graeme Hunt President, Aluminium UBS Basic Materials Conference London, 6 June 27

2 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 has been prepared on the basis of a number of assumptions which may prove to be incorrect. This presentation should not be relied upon as a recommendation or forecast by BHP Billiton. Nothing in this release should be construed as either an offer to sell or a solicitation of an offer to buy or sell shares in any jurisdiction. Slide 2

3 Global demand growth continues China India US GDP growth 1.7% for CY26 Forecast 1.2% for CY27 Economy running well GDP growth 9.% for CY26 Forecast 8.2% for CY27 Economic growth remains robust GDP growth 3.3% for CY26 Forecast 2.3% for CY27 Mixed signals, but remaining resilient BHP Billiton sales to China (US$m) 3,999 3,611 2,946 2,47 1,357 1,588 1, FY 2 H1 3 H2 3 H1 4 H2 4 H1 5 H2 5 H1 6 H2 6 H1 7 Japan GDP growth 2.2% for CY26 Forecast 2.3% for CY27 Weak Yen, low inflation supporting growth BHP Billiton sales to India (US$m) Europe GDP growth 2.8% for CY26 Forecast 2.5% for CY27 Growth gaining momentum H1 5 H2 5 H1 6 H2 6 H1 7 Slide 3 Solid global economic growth to continue Long term outlook remains intact

4 The US economy is five times larger than China s Structure of 26 Nominal GDP in US$ Billions 15 US$13.2 trillion US$2.6 trillion Net Trade Consumption Investment -3 USA China Source: Global Insight. GDP at 26 market exchange rates Slide 4

5 China s contribution is strong in terms of incremental growth in GDP stimulated by raw materials-intensive Fixed Investment Change in GDP in US$ Billions in % % Change in: Net Trade Consumption Investment -1 USA China Source: Global Insight. GDP at 26 market exchange rates Slide 5

6 Chinese copper, nickel, aluminium and iron ore demand and its % share of world demand tonnes tonnes 4,5 25% 25 18% 4, 3,5 Chi nese refined copper consumpti on 2% 2 Chinese primary nickel consumpti on 16% 14% 3, 2,5 % share of world refined copper consumption (right hand scale) 15% 15 % share of world primary nickel consumption (right hand scale) 12% 1% 2, 1,5 1% 1 8% 6% 1, 5% 5 4% 5 2% Data: BHP Billiton % Data: INSG, CRU % tonnes million tonnes 1, 3% 35 5% 9, 8, 7, 6, 5, 4, 3, Chinese aluminium consumption % share of global aluminium consumption (right hand scale) 25% 2% 15% 1% Chinese iron ore imports % share of global seaborne iron ore (right hand scale) 45% 4% 35% 3% 25% 2% 15% 2, 1, 5% 5 1% 5% % % Data: Brook Hunt, CRU Data: IISI, China Customs, CRU, Tex, Clarksons & BHP Billiton Slide 6

7 Global consumption Copper consumption (kt) Aluminium consumption (kt) Slide 7 18, 15, 12, 9, 6, 3, Nickel consumption (kt) 1,4 1,2 1, , 3, 25, 2, 15, 1, 5, Energy consumption (mtoe) 1, 8, 6, 4, 2, China USA India Japan Europe Other Source: CRU, Brook Hunt, BP Statistical Review, BHP Billiton

8 Global finished steel consumption Mt 1,25 1, 34% China % 16% 1% USA India Japan Europe 25 Other Slide 8 Source: IISI, BHP Billiton

9 Global seaborne iron ore consumption Mt % China % USA Japan Europe Other Slide 9 Source: IISI, BHP Billiton

10 What if? Industrialisation in the world s emerging markets continues? World demand for major industrial metals persists at 2 3% p.a.? World demand for energy continues to grow at around 1% p.a.? The following charts postulate that if long-term demand growth rates are maintained at these levels, the call on industrial metals (and energy) in the next 25-3 years could be as great as throughout modern history Slide 1

11 World refined copper consumption tonnes Cu Total = 585 Mt Total = 62 Mt* Slide 11 At a hypothetical world average growth rate of 3% p.a. Source of data: CRU

12 World primary aluminium consumption tonnes Al Total = 8 Mt Total = 12 Mt* Slide 12 At a hypothetical world average growth rate of 3% p.a. Source of data: IISI

13 World crude steel production million tonnes Total = 39 Bt Total = 38 Bt* Slide 13 At a hypothetical world average growth rate of 2% p.a. Source of data: IISI

14 World primary energy usage million tonnes of oil equivalent Total = 4 Btoe Total = 3 Btoe* Emerging Markets FSU OECD Slide 14 At a hypothetical world average growth rate of 1% p.a. Source of data: : BP Statistical Review of Energy; Btoe = billion tonnes oil equivalent : Derived from Maddison, UK Select Committee on Economic Affairs. *3 B toe = 45 billion tonnes of hard coal

15 What are the implications of this? The US is not the only driver of global demand Underlying demand remains strong driven by developing economies and solid growth in the OECD The world could consume more copper, aluminium, steel etc in the next 25 years as it has done throughout history A relatively modest 3% growth in demand suggests over 5,t of copper and over 1 million tonnes of aluminium required annually Where will this new supply come from? Supply continues to be constrained where are the new big projects? Slide 15

16 Antamina Projects commissioned since July 21 Tintaya Oxide BROWNFIELD San Juan UG Escondida Phase IV Bream Gas Pipeline Mozal 2 Cerrejon Zona Norte Mt Arthur North Area C Prod & Cap Expansion Hillside 3 WAIO WAIO RGP NWS Train 4 Dendrobium Panda UG BMA Phase 1 Paranam Escondida Norte WAIO RGP2 Escondida Sulphide Worsley BMA Phase 2 CY Typhoon Ohanet ROD Mad Dog Spence Zamzama As at 31 December 26 Size of bubble indicates proposed capital expenditure; bold outer border signifies sanctioned project. $US 2M GOM Minerva Angostura CSG Petroleum Aluminium Diamonds Base Metals Iron Ore Met Coal Energy Coal Slide 16 GREENFIELD

17 Blackw ater CPP Projects in development and feasibility stages Zamzama Phase 2 Koala UG WA Iron Ore RGP 3 Douglas Middelburg BROWNFIELD Yabulu GEMCO Samarco NWS T5 NWS Angel Atlantis North Worsley E&G Alumar As at 3 April 27 Size of bubble indicates proposed capital expenditure; bold outer border signifies sanctioned project. WA Iron Ore RGP 4+ Newcastle Third Port Mt Arthur Coal UG Navajo South Mine Ext $US 2M Kipper CY Atlantis South Neptune Ravensthorpe Maruwai Stage 1 Shenzi Pyrenees Maruwai Genghis Khan Slide 17 Stybarrow Cliffs Nickel Project GREENFIELD Bakhuis CSG Petroleum Iron Ore Aluminium Met Coal Diamonds Manganese SSM Energy Coal

18 BHP Billiton: growth from SANCTIONED projects Iron Ore Sanctioned projects BHP Billiton share of production 46.3mt % of current production 48% Nickel 5kt 29% Copper 34kt 24% Alumina 72kt 17% Petroleum 68mmboe 59% Slide 18

19 Conclusions Demand set to remain strong Chinese industrialisation and urbanisation could continue for at least the next decade India likely to follow The world could consume more copper, aluminium, steel etc in the next 25 years as it has done throughout history BHP Billiton well placed to capture its share of growth in demand through world class assets and outstanding project pipeline Slide 19

20