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Iron Ore Briefing and WAIO Site Tour
BHP Billiton Plc
Registration number 3196209
Registered in England and Wales
Share code: BIL
ISIN: GB0000566504
Issued by: BHP Billiton Plc
Date: 6 October 2014
To: London Stock Exchange
JSE Limited
For Release: Immediately
Contact: Elizabeth Hobley +44 (0) 20 7802 4054
BHP Billiton Plc – Iron Ore Briefing and Western Australia Iron Ore Site Tour
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:
BHP Billiton Iron Ore Briefing and Western Australia Iron Ore Site Tour
The document may also be accessed via BHP Billiton’s website - www.bhpbilliton.com -
at:
http://www.bhpbilliton.com/home/investors/reports/Documents/2014/141006_IronOreBrie
fingandWesternAustraliaIronOreSiteTour.pdf
Sponsor: Merrill Lynch South Africa Proprietary Limited
BHP Billiton Plc Registration number 3196209
Registered in England and Wales
Registered Office: Neathouse Place London SW1V 1BH United Kingdom
A member of the BHP Billiton Group which is headquartered in Australia
NEWS RELEASE
Release Time IMMEDIATE
Date 6 October 2014
Number 17/14
COST REDUCTIONS AND CAPITAL EFFICIENT GROWTH AT WAIO
BHP Billiton President Iron Ore, Jimmy Wilson, today announced plans to cut unit
costs at Western Australia Iron Ore (WAIO) by at least 25 per cent and the potential
to increase capacity there by 65 million tonnes per year at a very low capital cost.
Mr Wilson outlined BHP Billiton’s view of the long-term supply and demand trends in
the iron ore market.
“We continue to see healthy demand growth for iron ore in the mid-term as Chinese
steel production is expected to increase by approximately 25 per cent to between 1.0
and 1.1 billion tonnes in the early to mid-2020s,” he said.
“Meanwhile, steel production growth in other emerging economies is outpacing China
as those nations urbanise and industrialise. We expect to see a compound annual
growth rate for global steel production of between 2.5 and 3.0 per cent between now
and 2030.
“Unsurprisingly, high prices over the last decade created the incentives needed for
new entrants to join the market and traditional producers to substantially increase
supply. As a result, growth in seaborne supply is expected to exceed growth in
demand over the short to medium term.
“In anticipation of this transition, we turned our focus from major supply chain
investment to productivity, cost reduction and capital efficient growth more than two
years ago.”
Mr Wilson highlighted the quality and footprint of the WAIO operations which consist
of the four main joint ventures Mt Newman, Yandi, Mt Goldsworthy and Jimblebar.
“We have the strongest resource position in Western Australia and the quality of our
ore bodies will help us sustain strong margins over the long term. We have already
significantly cut the cost of production at WAIO and plan to go further,” he said.
“We expect unit cash costs(1) of less than US$20 per tonne(2) in the medium term, a
reduction of more than 25 per cent on the average achieved in the 2014 financial
year.
“Our reserves are concentrated around our four major mining hubs which will support
a lower level of sustaining capital expenditure than required by our peers. With
annual sustaining capex of approximately US$5 per tonne over the next five years,
we aim to be the lowest cost supplier to China on an all-in cash basis.”
Mr Wilson also said BHP Billiton could add 65 million tonnes of capacity at WAIO at a
capital intensity of approximately US$30 per annual tonne, taking total system
capacity from 225 Mtpa to 290 Mtpa by the end of the 2017 financial year.
“The economics of further increasing our production are compelling. We completed
our major supply chain investments some time ago and have since focussed on
using BHP Billiton’s benchmarking systems to improve the performance of our
equipment by systematically tackling the bottlenecks,” he said.
“We now expect to increase WAIO mine capacity to 275 Mtpa without the need for
additional fixed plant investment. Beyond that, the Inner Harbour Debottlenecking
and Jimblebar Phase 2 projects(3) will help us to reach 290 Mtpa of supply chain
capacity at low capital cost.”
This week the Company is hosting investors and analysts on a tour of major hubs
supporting WAIO operations, including Jimblebar, Yandi and Port Hedland.
Further information on BHP Billiton can be found at: www.bhpbilliton.com.
(1) Excludes freight and royalties
(2) Based on real 2014 terms, AUD:USD of 0.91
(3) Not Board approved
Investor Relations
Media Relations
Australia
Australia Tara Dines
Tel: +61 3 9609 2222 Mobile: +61 499 249 005
Emily Perry email: Tara.Dines@bhpbilliton.com
Tel: +61 3 9609 2800 Mobile: +61 477 325 803
email: Emily.Perry@bhpbilliton.com Jodie Phillips
Tel: +61 3 9609 2069 Mobile: +61 418 710 516
Paul Hitchins email: Jodie.Phillips@bhpbilliton.com
Tel: + 61 3 9609 2592 Mobile: + 61 419 315 001
email: Paul.Hitchins@bhpbilliton.com United Kingdom and South Africa
Eleanor Nichols Jonathan Price
Tel: +61 3 9609 2360 Mobile: +61 407 064 748 Tel: +44 20 7802 4131 Mobile: +44 7990 527 726
email: Eleanor.Nichols@bhpbilliton.com email: Jonathan.H.Price@bhpbilliton.com
Dean Simon
Tel: +44 20 7802 7461 Mobile: +44 7717 511 193
email: Dean.Simon@bhpbilliton.com
United Kingdom
Americas
Ruban Yogarajah
Tel: +44 20 7802 4033 Mobile: +44 7827 082 022 James Agar
email: Ruban.Yogarajah@bhpbilliton.com Tel: +1 212 310 1421 Mobile: +1 347 882 3011
email: James.Agar@bhpbilliton.com
Jennifer White
Tel: +44 20 7802 7462 Mobile: +44 7827 253 764 Joseph Suarez
email: Jennifer.White@bhpbilliton.com Tel: +1 212 310 1422 Mobile: +1 646 400 3803
email: Joseph.Suarez@bhpbilliton.com
Americas
Ruban Yogarajah
Tel: +44 20 7802 4033 Mobile: +44 7827 082 022
email: Ruban.Yogarajah@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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