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BHPBill Investor and Analyst Briefing Presentation
BHPBill increased its target for productivity gains within its core portfolio and provided new guidance that highlighted its ability to reduce investment without compromising growth. It also provided updates on its Copper and Coal businesses. Maximising operating and capital productivity in Copper The outlook for copper remains strong. Industry production will be increasingly challenged by structural factors including grade decline and higher strip ratios, with the availability of power and water a significant constraint in several countries. This is likely to result in a significant supply deficit by 2018.
BHPBill is not immune to these challenges, but the Company is well positioned to respond. Operational performance continues to improve, with unit costs at Escondida expected to fall by 30 per cent in the three years to the end of the 2015 financial year. Meanwhile productivity initiatives, including low cost debottlenecking projects at Escondida, Spence and Olympic Dam, are expected to offset grade decline within the Copper business over the medium term. And longer-term growth projects at Olympic Dam and Spence could support total copper production capacity of well over 2.0 Mtpa with first quartile average C1 costs.
After three years of strong growth at Escondida, production is expected to fall in the 2016 financial year as a result of significant grade decline. This is expected to mark the low point in production for the remainder of the decade. The life extension of the Los Colorados concentrator and the completion of the Water Supply Project in 2017 will allow Escondida to run three concentrators and maintain production for a decade, without the need for any major investment. Annual capacity at Olympic Dam is expected to increase by approximately 50 kt from the 2018 financial year upon completion of a low cost debottlenecking project, which will also significantly reduce unit costs. Over the longer term, BHPBill is evaluating a low-risk underground expansion with significantly lower capital intensity than the previous open cut design. This has the potential to deliver over 450 kt of copper production a year at first quartile C1 costs by the middle of next decade.
Improving productivity and sustainably lowering costs in Coal In metallurgical coal, high-cost, uneconomic supply has remained resilient although we do expect to see an increasing number of production cuts, particularly in the United States. Given robust underlying demand growth for premium hard coking coals, pricing for our products is likely to be well supported in the medium and longer term.
The thermal coal market remains well supplied, prolonging the weaker pricing environment. While demand from key importing regions remains steady, prices are unlikely to respond until uneconomic supply exits the market. BHPBill’s Coal business has re-established its competitive advantage by closing high- cost capacity and sustainably reducing costs. All of our Coal operations remain cash positive despite the low price environment and are well placed for margin expansion when prices are expected to recover in the medium term.
Productivity in the Coal business has improved significantly in the last two years, with unit costs cut by 37 per cent in metallurgical coal and by 21 per cent in energy coal. The Group is targeting a further 10 per cent reduction in unit costs at Queensland Coal in the 2015 financial year and a 15 per cent decline in unit costs at New South Wales Energy Coal by the end of the 2016 financial year.
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BHPBill senior executive changes
BHPBill Chief Executive Officer, Andrew Mackenzie, announced changes to the Group Management Committee (GMC). Athalie Williams will join the GMC on 1 January 2015 to replace Mike Fraser as President, Human Resources. As announced, Mike will become President and Chief Operating Officer Elect Africa of the proposed demerged company.
Daniel Malchuk, currently President, Aluminium Manganese and Nickel (AMN), will become President, Copper effective 1 March 2015. Daniel will replace Peter Beaven who, as previously announced, was appointed Chief Financial Officer in October following Graham Kerr’s appointment as Chief Executive Officer Elect of the proposed new company. Daniel will retain responsibility for Nickel West and will relocate from Perth to Santiago, Chile.
Edgar Basto, who has been Acting President, Copper will move to a new senior leadership role which will be announced in due course. In addition to the changes related to senior executive appointments associated with the proposed demerger, Mr Mackenzie also announced portfolio changes for two GMC members as part of the company’s approach to strategic planning of senior leadership roles.
Effective 1 January 2015 Mike Henry will move to the role of President, Coal. He will relocate to Brisbane. Mike joined the GMC in 2011 and is currently President, Health, Safety, Environment (HSE), Marketing and Technology. Dean Dalla Valle who is currently President, Coal will relocate to Melbourne and will become President, HSE, Marketing and Technology.
In addition Jane McAloon, President, Governance and Group Company Secretary, has advised of her intention to leave BHPBill in July 2015 after a distinguished eight year career including leadership of the Company’s approach to governance strategy and processes. Jane remains critical to the success of the demerger proposal and will remain on the GMC until the completion of the demerger following the Extraordinary General Meetings, expected in May 2015.
Margaret Taylor will join BHPBill in the new year as Company Secretary. Margaret has most recently been Group Company Secretary and Head of Group Governance at the Commonwealth Bank of Australia. She was previously Group General Counsel and Company Secretary at Boral, and has also worked in BHPBill’s Legal group.
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BHPBill investor and analyst briefing presentation
The following presentations have today been submitted to the National Storage Mechanism and will shortly be available for inspection at:
- www.morningstar.co.uk/uk/NSM
- Investor and Analysis Briefing Presentations
The presentations will also shortly be available via BHPBill's website: http://www.bhpbilliton.com/home/investors/reports/Documents/2014/141124_Investor andAnalystPresentation.pdf
The meeting will be webcast at: http://www.media-server.com/m/p/ziwdf8sp Further information can be found at www.bhpbilliton.com.
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BHPBill demerger update
BHPBill announced a number of appointments to the management team of the new company it plans to create from its proposed demerger and provided an update on progress towards completion. Ricus Grimbeek has been appointed President and Chief Operating Officer Elect Australia and will be based in Perth. Mike Fraser has been appointed President and Chief Operating Officer Elect Africa and will be based in the new company’s regional Johannesburg office.
Dividend policy
BHPBill and BHP Billiton Ltd. shareholders will be entitled to 100 per cent of the shares in the new company through a pro-rata in-specie distribution. Shareholders will retain their shares in BHPBill and the Group will not re-base its dividend as a result of the demerger, implying a higher payout ratio. BHPBill remains committed to steadily increasing or at least maintaining its dividend per share in US dollar terms at each half yearly payment following the demerger. In addition, the new company will have the flexibility to consider a dividend policy that reflects its cash generating capacity.
Company brand and further proposed Board appointments
As previously announced David Crawford will chair the new company and will be joined on its Board by current BHPBill director Keith Rumble and executives Graham Kerr and Xolani Mkhwanazi.
Regulatory approvals and timetable
Good progress has been made in securing the government, taxation, regulatory and other third party approvals required to proceed with the demerger, with approval received from the Australian Foreign Investment Review Board and the Australian Taxation Office, amongst other third parties.
A final Board decision on the proposed demerger will be made once all necessary third party approvals are secured on satisfactory terms. On this basis, we expect to release all shareholder documentation with full details of the proposed demerger in March 2015, with a shareholder vote taking place in May. Further information on the proposed demerger can be found at: www.bhpbilliton.com.
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BHPBill -- change to the board
As announced on 19 August 2014 David Crawford retired as an independent non-executive Director of BHP Billiton Limited and BHP Billiton Plc with effect from the end of the Annual General Meeting of BHP Billiton Limited on 20 November 2014.
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BHPBill 2014 AGM results
lease find attached the results of the business conducted at the meetings of shareholders of BHPBilliton Ltd. held in Adelaide, Australia on 20 November 2014 and BHP Billiton Plc ("BHPBill") held in London, United Kingdom on 23 October 2014. As required by the Dual Listed Companies Structure, a poll was conducted on each of the proposed resolutions. Each resolution is a Joint Electorate Action. The poll results for BHP Billiton Ltd. and BHPBill are attached.
The final proxy position for each company (excluding the proxy votes carried from one meeting to the other meeting by the Special Voting Shares) is detailed in Appendix 1. The additional information required in respect of BHP Billiton Plc by the United Kingdom’s Companies Act 2006 (as amended by The Companies (Shareholders’ Rights) Regulations 2009) is provided in Appendix 2.
A copy of the resolutions passed at the closure of the poll today has been submitted to the National Storage Mechanism and will shortly be available for inspection at: www.morningstar.co.uk/uk/NSM.
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BHPBill AGM presentation
The following document has today been submitted to the National Storage Mechanism and will shortly be available for inspection at: www.morningstar.co.uk/uk/NSM
- BHP Billiton Ltd. 2014 AGM Presentation
The document will also shortly be available via BHP Billiton’s website: http://www.bhpbilliton.com/home/investors/shareholderinfo/Documents/2014/141120_ BHPBillitonLtd2014AGMPresentation.pdf. The meeting will be webcast at http://www.media-server.com/m/p/vj2eu3h3. Further information can be found at www.bhpbilliton.com.
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| Closing price data source: JSE Ltd. All other statistics calculated by ProfileData. |
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