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BIL 201410270006A
Capital Markets Day Presentations
BHP Billiton Plc
Registration number 3196209
Registered in England and Wales
Share code: BIL
ISIN: GB0000566504
Issued by: BHP Billiton Plc
Date: 27 October 201
To: London Stock Exchange
JSE Limited
For Release: Immediately
Contact: Helen Ratsey +44 7802 7540
Capital Markets Day Presentations
UK Listing Authority Submissions
The following document has today been submitted to the National Storage Mechanism and
will shortly be available for inspection at:
www.hemscott.com/nsm.do :
• Capital Markets Day Presentations
The document will also shortly be available via BHP Billiton’s website:
http://www.bhpbilliton.com/home/investors/reports/Documents/2014/141027_MaximisingValu
eAndShareholderReturns.pdf
The meeting will be webcast at: http://edge.media-server.com/m/p/iwk3o2hs
Further information can be found at www.bhpbilliton.com.
Sponsor: Merrill Lynch South Africa Proprietary Limited
BHP Billiton Plc Registration number 3196209
Registered in England and Wales
Registered Office: Neathouse Place London SW1V 1LH United Kingdom
A member of the BHP Billiton Group which is headquartered in Australia
NEWS RELEASE
Release Time IMMEDIATE
Date 27 October 2014
Number 20/14
MAXIMISING VALUE AND SHAREHOLDER RETURNS
BHP Billiton today explained how with a simpler portfolio it will maximise value and
shareholder returns by reducing operating costs and improving capital efficiency.
BHP Billiton Chief Executive Officer, Andrew Mackenzie, said: “We are confident that our
productivity drive will be accelerated by the demerger proposal we announced in August. A
simpler portfolio, focused on our 19 core 1 assets, will retain an optimal level of
diversification while generating even stronger growth and margins.”
Production 2 from the core portfolio is expected to grow by 23 per cent over the two years to
the end of the 2015 financial year as the Company completes high-return, brownfield
projects and embeds productivity-led volume gains. BHP Billiton remains on track to meet
all 2015 financial year production guidance.
The Group has cut unit costs across all its mineral businesses and expects further
reductions across the core portfolio. Unit costs 3 at Western Australia Iron Ore fell 12 per
cent in the second half of the 2014 financial year and a 25 per cent reduction is expected in
the medium term.
Production costs in the Copper business have also fallen despite grade decline. Escondida
unit costs 4 declined by 22 per cent in the last two years and we forecast another five per
cent reduction in the 2015 financial year.
At Queensland Coal, a 24 per cent reduction in operating costs 5 has re-established the
business as a leader in its industry. We expect to reduce unit costs by a further 10 per cent,
to below US$90 per tonne, in the 2015 financial year as we continue to increase throughput
from our installed infrastructure.
In Petroleum, forensic benchmarking of every component of our Onshore US drilling
program has significantly improved capital productivity. Drilling costs in the Black Hawk fell
16 per cent in the 2014 financial year. Onshore US operating costs 6 are also expected to
improve with a 10 per cent reduction forecast in the 2015 financial year.
BHP Billiton expects to embed a minimum of US$3.5 billion in annualised productivity
gains 7 by the end of the 2017 financial year with more than US$2.3 billion to come from
cash cost savings.
Our longstanding capital management framework defines four priorities for cash flow: to
retain a solid A credit rating to maintain a strong balance sheet through the cycle; to at least
maintain or grow our progressive base dividend in every reporting period; to invest
selectively in high-return opportunities through the cycle; and to return excess capital to
shareholders in the most efficient way.
Mr Mackenzie said: “We see our capital management strategy as a precondition to
maximising shareholder value. It has allowed us to invest through the cycle and grow our
dividend at an average annual rate of 17 per cent over the last decade without interruption.
“Our core portfolio includes a suite of development options that are expected to generate an
average rate of return 8 of over 20 per cent. As our capital efficiency improves we will be
able to create more value for less investment. We believe we can significantly reduce
annual capital expenditure relative to our current plans while maintaining our growth
trajectory.”
Our focus in Iron Ore and Coal is to safely stretch the potential of our existing infrastructure
and equipment. In Copper, BHP Billiton holds many of the industry’s best brownfield
development options with projects under evaluation at Escondida, Spence and Olympic
Dam.
In Petroleum, the Group continues to prioritise value over volume which dictates a focus on
Onshore US liquids development and investment in high-return brownfield projects across
the Conventional business.
Mr Mackenzie said: “In the Eagle Ford and Permian we are forecasting liquids production of
approximately 200 thousand barrels per day by the 2017 financial year. This is expected to
generate significant value as investments in our liquids-rich Onshore US wells typically
generate returns 9 of over 50 per cent.
“In time, we expect to fully develop our Haynesville gas field given the quality of our
acreage. As we look to improve the balance of liquids and gas across our Petroleum
portfolio we have initiated the marketing our Fayetteville acreage. However, we will only
divest the field if it maximises value for shareholders.”
In closing, Mr Mackenzie said: “Our strategy, including our commitment to a strong balance
sheet, has worked well for our owners. We have delivered a total shareholder return of 394
per cent over the last decade including US$64 billion in dividends and buy-backs. By safely
improving operating and capital efficiency we will maximise value and increase cash returns
to our shareholders. Improving our competitiveness will benefit shareholders and the local
communities and economies in which we operate.”
1 Core assets include: Western Australia Iron Ore; Samarco; Queensland Coal; NSW Energy Coal; Cerrejón; Escondida;
Olympic Dam; Pampa Norte; Antamina; Onshore US; Shenzi, Mad Dog, Atlantis; Angostura; North West Shelf; Bass Strait;
Pyrenees, Macedon; and the Jansen project.
2 Copper equivalent production based on FY13 average realised product prices.
3 Unit cash costs excluding freight and royalties. Medium term reduction based on real 2014 terms and an exchange rate of
AUD/USD 0.91.
4 Unit cash costs excluding treatment and refining charges. Percentage reduction in the last two years includes an adjustment
to the FY12 reported figures for the effect of IFRIC 20. FY15 forecast based on an exchange rate of USD/CLP 568.
5 Unit cash costs. FY15 forecast based on an exchange rate of AUD/USD 0.91.
6 Unit cash costs.
7 Represents planned annualised volume and cash cost productivity gains to be delivered from our core assets only by the end
of FY17, relative to our FY14 baseline.
8 Ungeared, post tax, nominal rate of return.
9 Weighted average rate of return after tax (based on September 2014 futures prices) for Eagle Ford and Permian wells
expected to be put on line during FY15.
Further information on BHP Billiton can be found at: www.bhpbilliton.com.
Media Relations Investor Relations
Australia Australia
Emily Perry Tara Dines
Tel: +61 3 9609 2800 Mobile: +61 477 325 803 Tel: +61 3 9609 2222 Mobile: +61 499 249 005
email: Emily.Perry@bhpbilliton.com email: Tara.Dines@bhpbilliton.com
Paul Hitchins Andrew Gunn
Tel: + 61 3 9609 2592 Mobile: + 61 419 315 001 Tel: +61 3 9609 3575 Mobile: +61 402 087 354
email: Paul.Hitchins@bhpbilliton.com email: Andrew.Gunn@bhpbilliton.com
Eleanor Nichols United Kingdom and South Africa
Tel: +61 3 9609 2360 Mobile: +61 407 064 748
email: Eleanor.Nichols@bhpbilliton.com Jonathan Price
Tel: +44 20 7802 4131 Mobile: +44 7990 527 726
United Kingdom email: Jonathan.H.Price@bhpbilliton.com
Ruban Yogarajah Dean Simon
Tel: +44 20 7802 4033 Mobile: +44 7827 082 022 Tel: +44 20 7802 7461 Mobile: +44 7717 511 193
email: Ruban.Yogarajah@bhpbilliton.com email: Dean.Simon@bhpbilliton.com
Jennifer White Americas
Tel: +44 20 7802 7462 Mobile: +44 7827 253 764
email: Jennifer.White@bhpbilliton.com James Agar
Tel: +1 212 310 1421 Mobile: +1 347 882 3011
Americas email: James.Agar@bhpbilliton.com
Ruban Yogarajah Joseph Suarez
Tel: +44 20 7802 4033 Mobile: +44 7827 082 022 Tel: +1 212 310 1422 Mobile: +1 646 400 3803
email: Ruban.Yogarajah@bhpbilliton.com email: Joseph.Suarez@bhpbilliton.com
BHP Billiton Limited ABN 49 004 028 077 BHP Billiton Plc Registration number 3196209
Registered in Australia Registered in England and Wales
Registered Office: Level 16, 171 Collins Street Registered Office: Neathouse Place
Melbourne Victoria 3000 Australia London SW1V 1LH United Kingdom
Tel +61 1300 55 4757 Fax +61 3 9609 3015 Tel +44 20 7802 4000 Fax +44 20 7802 4111
Members of the BHP Billiton Group which is headquartered in Australia
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