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BHP Billiton – Latin America
Presentation to Analysts
April, 2004
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Brazil
Aluminium
Carbon Steel Materials
Development
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Brazil – Introduction
• Population: 178 million (5th
in the world)
• Area: 8,515,000 Km2
• GDP per capita: US$2,961
• Life expectancy: 69 years
• The pace of economic
recovery has moderated;
labor market conditions weak
• Interest rate in decline (16%
p.a.); inflation under control
• Exports at record levels,
supporting the currency
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Brazil – Macroeconomic Figures
2002A
2003A
2004F
1.9%
- 0.2%
3.5%
12.5%
9.3%
5.3%
3.53
2.89
3.10
Interest rate (average)
19.1%
23.2%
14.9%
Unemployment (average)
11.7%
12.4%
11.7%
Trade balance (US$ Billion)
13.1
24.8
25.4
Foreign Direct Investment (US$ Billion)
16.6
10.1
15.0
Net Public Sector Debt (% of GDP)
55.5
58.2
57.6
GDP Growth
Inflation rate (IPCA)
Exchange rate (end of period)
Source: Citigroup
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Brazil – Country Risk Premium
Country risk back to 1998 level & Exchange Rate Stable
2400
4.0
Election
concerns
3.5
1800
3.0
1500
2.5
1200
2.0
550 Basis Points
(Apr 13th)
900
1.5
600
1.0
300
0.5
0
Jan-01
Apr-01
Jul-01
Oct-01
Jan-02
Apr-02
Country risk premium
S ource: IPEA – www.ipea.gov.br
Jul-02
Oct-02
Jan-03
Apr-03
Jul-03
Oct-03
Exchange Rate (R$/US$)
Jan-04
0.0
Apr-04
R$/US $
Basi s Point
2100
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Assets:
MRN
Aluminium
Carbon Steel Materials
ALUMAR
PARÁ
MARANHÃO
S AMARCO
(GERMANO)
MINAS
GERAIS
ESPÍRITO SANTO
S AMARCO
(PONTA UBU)
RIO DE JANEIRO
VALES UL
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Structure
BHP Billiton PLC
BHP Billiton Ltd
Billiton Aluminium Holdings BV
BHP International Finance Corp.
Corp.
BHP Billiton Metais SA
BHP Billiton Brasil Ltda
14.8%
45.49%
50%
MRN
Valesul
ALUMAR
Samarco
(Incorporated JV)
(Incorporated JV)
JV)
(Unincorporated
Unincorporated JV)
(Incorporated JV)
JV)
CVRD
ALCOA
CBA
ALCAN
N. HYDRO
40.0%
18.2%
10.0%
12.0%
5.0%
Bauxite
CVRD
54.51%
CVRD
46.34%
36.0%
Aluminium
Refinery
ALCOA
ABALCO
ALCAN
35.1%
18.9%
10.0%
Alumina
Smelter
ALCOA
53.66%
Aluminium
Iron ore
50%
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Revenue and EBIT Contribution (US$ million)
2000 / 2001
2001 / 2002
2002 / 2003
Revenue
548
504
616
EBIT
166
136
193
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BHP Billiton Brazil’s Mission
To Add Value to BHP Billiton Businesses in Brazil
– Be the custodian of the BHP Billiton Charter with
emphasis on HSEC Zero Harm
– Active participation in JV Leadership, Business
Improvement and Growth
– Provide Finance, HR, Legal, IT and Administrative support
– Local knowledge supports individual CSG needs
– Promote standardization and alignment of JVs with BHP
Billiton’s best practices
Aluminium CSG
(Total Production in ‘000t in fiscal years)
S Smelter
z Mine
z Refinery
z Suriname
z Alumar
MRNz S
Mozal
S
Hillside SSBayside
S
Valesul
Worsleyz
Production ('000 tonnes)
1999/00
2000/01
2001/02
883
981
Alumina
1,878
Bauxite
5,744
Aluminium
2002/03
2003/04
2004/05
992
1,074
1,250
1,300
2,939
3,942
4,092
4,200
4,300
9,795
13,097
13,669
14,000
14,000
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BHP Billiton Aluminium and Alumina Production
How our portfolio might look in 2010, after harvesting brownfield potential
Aluminium Production
Alumina Production
1700.0
6200.0
1500.0
5200.0
1300.0
4200.0
1100.0
900.0
3200.0
700.0
2200.0
500.0
1200.0
300.0
99/00
00/01
Hills ide
01/02
Mozal
02/03
03/04
Bay side
04/05
Alumar
05/06
09/10
Valesul
200.0
99/00
00/01
01/02
02/03
Worsley
03/04
Suriname
• M ozal III
• Worsley to 4.1m tpa
• Hillside III – add 54 pots
• Alumar to 3.3mtpa
• Current to at least 350kA
• Suriname to 2.3m tpa
04/05
Alumar
05/06
09/10
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MRN
•
•
•
•
Bauxite mine located in Pará state, set up in 1974
Expansion to 16mtpa capacity in 2003
ISO 14001 and OHSAS 18001 certifications
Reserves of 800 million tonnes
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MRN Production Process
O PERATI O N SEQ U EN CE
ST RIPPIN G
REFO RESTA TIO N
TAI LLIN G
DI SPO SA L
EX CAVA TIO N
AN D H AU LAG E
WA SH IN G
MIN E
CRUSHED BA UX ITE
CRUSHI NG
WA SH ED BAU X ITE
BEN EFI CI AT IO N
CAR L OA DI NG
RA IL WA Y TRA NSPO RTA TIO N
RA I LWA Y
CA R DU MPER
PO RT
WET BA UX I TE
DRYIN G
D RY BA UX ITE
SHI PLO ADER
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Valesul
•
•
•
•
•
Primary aluminium smelter, capacity 93ktpa
Joint Venture with CVRD, commissioned in 1982
Equity in 4 hydro power plants – approx. 40% of needs
ISO 9002, ISO 14000 and BS 8800 certification
Focus on VAP (billet & primary alloys)
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Alumar
• Consortium (UJV) with Alcoa, Alcan and Abalco
• Comprises:
• Alumina refinery – 1.35mtpa (36% BHP Billiton, 54% Alcoa associate
companies, 10% Alcan)
• Aluminium smelter – 375ktpa (46% BHP Billiton, 54% Alcoa)
• ISO 9002, ISO 14001 and OHSAS 18001 certification
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Alumar Refinery Expansion
• Refinery debottlenecking from 1.35mtpa to 1.5mtpa approved
• Alumar Consortium members studying a further expansion to
3.3mtpa
• Decision expected late 2004 with first additional production late
2006
• Estimated unit capital cost of approx. US$400/t capacity and
reduction in cash operating costs make this a very attractive
project
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Brazil
Carbon Steel Materials
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Samarco
Americas
Europe
Sales breakdown 2003
(100% export market)
China
Other Asia
Af rica / Middle
East
• Joint Venture with CVRD – 26 years of operations
• Two industrial facilities linked by the longest iron ore slurry
pipeline in the world
• Extensive iron ore reserves
• 2 Hydroelectric power plants produces 30% of Samarco needs
• ISO 9002, ISO 14001 and OHSAS 18001 certification
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Samarco Expansion
• Brown field expansion project pre-feasibility study being
carried out
• 50% capacity increase: from 14mtpa to 21mtpa
• Capital requirement - US$550 million
• Decision foreseen around first quarter 2005 and first
additional production targeted for third quarter 2007
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Brazil
Other Activities
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Exploration and Development Opportunities
Minerals
Commodity
Region
Copper, Silver, Lead & Zinc
Pará, Bahia & Maranhão
Iron Ore
Minas Gerais
Bauxite
Pará/Amazonas
Copper-Nickel
Mato Grosso/ Rondônia
Petroleum
• Acquired Block BM-C-24 located at Campos Basin (off Rio de Janeiro
State) in June 2002
• Evaluating exploration potential
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Suriname
Growth
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Location
±
Suriname
ATLANTIC OCEAN
Nickerie
!
Paramaribo
!
Moengo
Paranam
!
GUYANA
!
!
Onverd ach t
Alb in a
!
Apoera
!
GUY ANE
Bakhuis Exploration
Concession Area
SURINAME
km
0
20
40
60
80
100
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Bakhuis Exploration
• Commenced a $8.5 million exploration program
• Targeting approx. 300 Mt+ bauxite by end 2005
• Hill type bauxite situated in Western Suriname
• Historic exploration estimated 300 – 400 Mt
• Quality issues with historic data – new exploration under way
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Integration (Aug 2003) of BHP Billiton & Alcoa Interests
• Old BMS − bauxite miner with 45% equity interest in alumina refinery
(Suralco operated)
– Lelydorp III Mine (BMS −76 %, Suralco − 24%)
– Coermotibo Mine (Suralco − 100%)
– Mine closures in 2006/7
• New BMS − alumina producer (45% interest in mines and refinery)
– BMS manages bauxite mining, Suralco manages alumina refining
– Continuity (planning successor mines well advanced)
– Growth:
– Paranam refinery expansion from 1.95mtpa to 2.2mtpa underway (first
production early 2005)
– Bakhuis
– Synergies
– Alignment of shareholder equities
– Alignment of processes
– Focus on output