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BHPBill -- sale of Pinto Valley
BHPBill has signed a definitive agreement to sell its Pinto Valley mining operation (Pinto Valley) and the associated San Manuel Arizona Railroad Company (SMARRCO) to Capstone Mining Corp (Capstone) for an aggregate cash consideration of USD650 million. The transaction is subject to regulatory approval, and other customary conditions, and is expected to be completed in the second half of the 2013 calendar year.
Under the terms of the agreement, Capstone will assume the business's environmental liabilities. BHPBill employees working at Pinto Valley and SMARRCO will become employees of Capstone as part of the transaction. Further information on BHPBill can be found at: www.bhpbilliton.com.
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BHPBill prices EUR750 million bond
BHPBill has priced a Euro bond under its Euro Medium Term Note Programme. The Euro bond issue comprises EUR750 million 3.125% bonds due 2033. The proceeds will be used for the refinancing of current debt maturities.
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BHPBill terms of retirement for incoming CEO
The Board of BHPBill today announced the terms of employment for incoming Chief Executive Officer (CEO), Andrew Mackenzie. The contract will be effective from 10 May 2013 when Mr Mackenzie commences as CEO.
The key components are:
- A base salary of USD1 700 000 per annum (an increase from Mr Mackenzie's current base salary of USD1 200 000 per annum);
- A pension of 25 per cent of base salary (a decrease from 36 per cent for Mr Mackenzie);
- A short term incentive target opportunity of 160 per cent of base salary, with a maximum opportunity of 240 per cent of base salary (maximum reduced from 320 per cent previously);
- A long term incentive award for 2013 of 400 per cent face value of base salary (subject to shareholder approval);
- Dividend equivalent payments on vested shares made in the form of shares (made in cash previously); and
- Minimum shareholding requirement of five times base salary (previously three times base salary).
Mr Mackenzie's actual remuneration is linked substantially to business outcomes and shareholder returns with the "at-risk" component (comprising short and long term incentives) set at 72 per cent of his total remuneration (at fair value). Fixed remuneration (base salary and pension) comprises 28 per cent of the total.
The performance period under the long term incentive plan remains at five years and vesting remains subject to the same performance requirements applied to previous awards. The Board and Remuneration Committee will hold an overriding discretion to reduce the number of long term incentive awards that would otherwise vest to Mr Mackenzie where they consider such vesting would be inappropriate.
In exercising that discretion, the Board and Remuneration Committee will decide if the value at the time of vesting is consistent with the overall performance of the company, the CEO's individual performance and the prevailing remuneration levels in the relevant market.
Further information on BHPBill can be found at: www.bhpbilliton.com.
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BHPBill terms of retirement for outgoing CEO
The Board of BHPBill today announced the terms of retirement for outgoing Chief Executive Officer (CEO), Marius Kloppers. As previously announced Mr Kloppers will step down as CEO, a member of the Group Management Committee and a Director of the company on 10 May 2013, and will retire from the Group on 1 October 2013.
Mr Kloppers will work through the applicable notice period and accordingly no severance payment will be made. He will receive his base salary and pension entitlement to the date of his retirement, namely, 1 October 2013.
Other aspects of Mr Kloppers' remuneration will be handled in accordance with the shareholder approved plans. In summary:
- Any short term incentive payment under the Group Incentive Scheme (GIS) for the 2013 financial year can only be assessed by the Remuneration Committee after year end. That payment will be pro rated to reflect his period of service as CEO during the 2013 financial year (namely, 1 July 2012 to 10 May 2013).
- Awards granted in previous years under the Long Term Incentive Plan (LTIP) will be pro- rated in accordance with the company's usual practice. They will vest only if the performance hurdle is met at the end of each five year performance period; and
- Mr Kloppers will be entitled to the value of the pension and superannuation funds that he has accumulated over his 20 years with the company.
Further information on BHPBill can be found at: www.bhpbilliton.com.
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BHPBill announces new senior management team
Following the appointment of Andrew Mackenzie as Chief Executive Officer (CEO), BHP Billiton today announced its new senior management team which will take effect from 10 May 2013.
The Group Management Committee (GMC) will comprise:
- Chief Executive Officer, Andrew Mackenzie
- President, Copper, Peter Beaven
- President, Petroleum and Potash, Tim Cutt (from 2 July 2013)
- President, Coal, Dean Dalla Valle
- Chief Legal Counsel, Geoff Healy (from 3 June 2013)
- President, HSEC, Marketing and Technology, Mike Henry
- Chief Financial Officer, Graham Kerr
- President, Aluminium, Manganese and Nickel, Daniel Malchuk
- President, Governance and Group Company Secretary, Jane McAloon
- President, Iron Ore, Jimmy Wilson
- President, People and Public Affairs, Karen Wood
Mike Yeager will retire from the GMC and the company on 1 July 2013. Tim Cutt will join the GMC as President, Petroleum and Potash on 2 July 2013. He will retain responsibility for the Potash development option.
Mike Henry, Graham Kerr and Karen Wood remain as GMC members ensuring a strong balance of existing and new membership of the team. Both Mike and Graham will assume enhanced responsibilities.
Alberto Calderon, previously Chief Executive, Aluminium, Nickel and Corporate Development will leave the GMC but remain as an advisor to the CEO.
Marcus Randolph, previously Chief Executive Ferrous and Coal, is currently on a period of sick leave and is not expected to return to the company until the middle of this calendar year. He will leave the GMC on 10 May 2013.
The five business leadership roles will be filled by executives with deep operational experience.
- Jimmy Wilson will retain his responsibilities for the Iron Ore business.
- Peter Beaven's role as President, Copper, will include all of his current responsibilities for the assets under the former Base Metals business.
- Dean Dalla Valle, formerly President, Energy Coal, will assume responsibility for the whole of BHP Billiton's coal assets with the consolidation of the Metallurgical and Energy Coal businesses.
- Daniel Malchuk, formerly President, Minerals Exploration, will assume responsibility for the assets that form part of the Aluminum, Manganese and Nickel businesses.
- Tim Cutt, currently President, Diamonds and Specialty Products will re-join the Petroleum business as President following Mike Yeager's retirement from the company on 1 July 2013. Before joining the Diamonds and Specialty Products business as President in 2011, Tim led the production activities in Petroleum after joining the Company from ExxonMobil in 2007.
The new GMC will also have a strong emphasis on functional excellence with the addition of two roles. Geoff Healy, currently a Partner of Herbert Smith Freehills, will join the GMC as Chief Legal Counsel and Jane McAloon will join the GMC as President, Governance and will retain her responsibilities as Group Company Secretary.
Biographies for the new members of the GMC are attached.
The announcement of the new structure has resulted in other changes at the President level. Tom Schutte, currently President, Manganese and Glenn Kellow, currently President, Aluminium and Nickel will work with Daniel Malchuk on the consolidation of these businesses. Hubie van Dalsen currently President, Metallurgical Coal will retire from the company.
Further information on BHPBill can be found at: www.bhpbilliton.com.
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BHPBill -- production report to March 2013
Highlights for the nine months to March 2013:
- Full year production guidance is retained for our major businesses following another quarter of robust operating performance.
- Western Australia Iron Ore achieved record production for the nine month period ended March 2013. Production guidance of 183 million tonnes (100% basis) for the 2013 financial year remains unchanged, despite cyclone related downtime during the period. An annualised production rate approaching 200 million tonnes (100% basis) is anticipated for the June 2013 quarter.
- Onshore US produced more than five million barrels of liquids during the March 2013 quarter and the Eagle Ford is now our single largest liquids producing field. Petroleum production guidance for the 2013 financial year remains unchanged at approximately 240 million barrels of oil equivalent.
- Copper in concentrate production at Escondida increased by 61% during the nine month period ended March 2013. Total Escondida copper production remains on track to increase by at least 20% in the 2013 financial year.
- Queensland Coal production was affected by adverse weather conditions during the March 2013 quarter. However, recently installed flood mitigation infrastructure enabled a rapid recovery in performance and the business was operating at full supply chain capacity at the end of the period.
Petroleum
Total petroleum production - An average production rate of 644 thousand barrels of oil equivalent per day was achieved during the nine month period ended March 2013. Guidance for the 2013 financial year remains unchanged at approximately 240 million barrels of oil equivalent.
Crude oil, condensate and natural gas liquids - A 15 per cent increase in liquids production at our Onshore US business during the March 2013 quarter partially offset cyclone related downtime at our Western Australian operations, extended maintenance and drilling delays at our non-operated facilities in the Gulf of Mexico (US) and natural field decline.
Onshore US produced more than five million barrels of liquids during the March 2013 quarter and the Eagle Ford is now our single largest liquids producing field. These record volumes are expected to grow further in the June 2013 quarter as additional wells come online and infrastructure projects are completed.
Natural gas - A reduction in gas production in the March 2013 quarter reflected lower levels of drilling activity in the dry gas Haynesville and Fayetteville fields (US) and a seasonal reduction in natural gas demand at Bass Strait (Australia).
Aluminium and Nickel
Alumina - The continued ramp up of the Efficiency and Growth project at Worsley (Australia) contributed to record alumina production for the nine month period ended March 2013.
Aluminium - An increase in metal production from the March 2012 quarter reflected a return to full technical capacity at Hillside (South Africa).
Nickel - Nickel production increased by 21 per cent from the December 2012 quarter as the Nickel West smelter and refinery (Australia) returned to full capacity following the successful completion of planned maintenance in the prior period. Total nickel production was further supported by strong performance at Cerro Matoso (Colombia).
Base metals
Copper - Copper in concentrate production at Escondida (Chile) increased by 61 per cent during the nine month period ended March 2013. Production benefited from an increase in the average copper grade mined to 1.4 per cent. Total Escondida copper production remains on track to increase by at least 20 per cent in the 2013 financial year.
Antamina (Peru) achieved record production for the nine month period ended March 2013, despite a temporary reduction in the copper to zinc ore grade ratio during the recent quarter. Olympic Dam (Australia) production increased by 42 per cent in the March 2013 quarter following the completion of major planned maintenance in the prior period.
Lead/silver - Lead and silver production decreased at Cannington (Australia) during the nine month period ended March 2013 due to lower average ore grades.
Zinc - Production increased by 15 per cent from the December 2012 quarter and reflected a temporary increase in the grade profile at Antamina.
Uranium - Uranium production increased by seven per cent during the nine month period ended March 2013 due to higher recoveries and increased plant availability at Olympic Dam.
BHPBill Production Report for the nine months ended 31 March 2013
Diamonds and Specialty Products
Diamonds - On 10 April 2013, BHPBill completed the sale of its diamonds business, comprising its interests in the EKATI Diamond Mine and Diamonds Marketing operations, to Dominion Diamond Corporation for an aggregate cash consideration of USD553 million (after adjustments).
Iron Ore
Iron ore - Western Australia Iron Ore (WAIO) achieved record production for the nine month period ended March 2013. Production guidance of 183 million tonnes (100 per cent basis) for the 2013 financial year remains unchanged, despite cyclone related downtime during the period. An annualised production rate approaching 200 million tonnes (100 per cent basis) is anticipated for the June 2013 quarter.
The Jimblebar Mine Expansion is on schedule for first production in the March 2014 quarter and will broadly match mine and port capacity at 220 million tonnes per annum (100 per cent basis). The progressive debottlenecking of the supply chain is expected to underpin substantial low cost, longer term growth in our WAIO business. Samarco (Brazil) continued to operate at capacity during the March 2013 quarter.
Manganese
Manganese ore - Record ore production for the nine month period ended March 2013 reflected a substantial improvement in plant availability at GEMCO (Australia), the world’s largest and lowest cost manganese operation.
Manganese alloy - The decrease in alloy volumes during the nine month period ended March 2013 was largely attributable to the permanent closure of energy intensive silicomanganese production at Metalloys (South Africa) in January 2012.
Metallurgical Coal
Metallurgical coal - Queensland Coal (Australia) production was affected by adverse weather conditions during the March 2013 quarter. However, recently installed flood mitigation infrastructure enabled a rapid recovery in performance and the business was operating at full supply chain capacity at the end of the period. South Walker Creek achieved record quarterly production following the completion of a wash plant upgrade in the prior period.
The Queensland Coal operations achieved a significant milestone during the quarter with first production achieved at the Daunia mine, ahead of schedule. The ramp up of this mine and future commissioning of Caval Ridge will underpin an increase in the capacity of our Queensland Coal business to 66 million tonnes per annum (100 per cent basis) by the end of the 2014 calendar year.
A planned longwall move at the Dendrobium mine resulted in lower production at Illawarra Coal (Australia) in the March 2013 quarter. A longwall move is scheduled at the West Cliff mine during the June 2013 quarter.
Energy coal
Energy coal - New South Wales Energy Coal (Australia) continued to benefit from the ramp up of the RX1 project with record production achieved for the nine month period ended March 2013. Production in the March 2013 quarter was affected by adverse weather conditions on the east coast of Australia and industrial action at Cerrejon Coal (Colombia) that preceded successful resolution of a new three year Enterprise Agreement.
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BHPBill -- March 2013 development report
BHPBill continues to progress 19 major projects in various stages of development. These projects are largely low risk, brownfield expansions, which are expected to deliver first production before the end of the 2015 financial year. In line with prior guidance, no new major projects were approved during the March 2013 quarter. The Queensland Coal operations achieved a significant milestone during the March 2013 quarter with first production achieved at the Daunia mine, ahead of schedule. The continued ramp up of this mine and future commissioning of Caval Ridge will underpin an expected increase in the capacity of our Queensland Coal business to 66 million tonnes per annum (100 per cent basis) by the end of the 2014 calendar year. The Broadmeadow Life Extension project also achieved first production ahead of schedule and will not be reported in future Exploration and Development Reports.
Following the sale of BHPBill's diamonds business to Dominion Diamond Corporation on 10 April 2013, the EKATI Misery Open Pit project is no longer included in this report. BHPBill's Onshore US drilling and development expenditure totalled USD3.2 billion for the nine month period ended March 2013 and guidance for the 2013 financial year remains unchanged at USD4.0 billion. Over 80 per cent of this expenditure will be focused on the liquids rich areas of the Eagle Ford and Permian.
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