Managing MNCs in China JP Morgan China Conference Clinton Dines President BHP Billiton China Beijing - April 25, 2007

Transcription

1 Managing MNCs in China JP Morgan China Conference 2007 Clinton Dines President BHP Billiton China Beijing - April 25, 2007

2 Disclaimer The views expressed here contain information derived from publicly available sources that have not been independently verified. No representation or warranty is made as to the accuracy, completeness or reliability of the information. Any forward looking information in this presentation has been prepared on the basis of a number of assumptions which may prove to be incorrect. This presentation should not be relied upon as a recommendation or forecast by BHP Billiton. Nothing in this release should be construed as either an offer to sell or a solicitation of an offer to buy or sell shares in any jurisdiction. Page 2

3 The largest company in a consolidating sector BHP Billiton Alcoa Norilsk Xstrata Shenhua Anglo Platinum Barrick Gold Freeport-McMoRan SPCC Newmont Alcan Impala Goldcorp Teck Cominco Cameco AngloGold Gold Fields CVRD Anglo American Rio Tinto Market value of minerals industry US$892bn Value of Top Four US$367bn Value of BHP Billiton US$134.8bn BHP Billiton Market Cap 2007 (1) 2001 (2) US$ bn $134.8 $29.5 Market Cap. on 28 March 2007 (US$Bn) Page 3 Source: Bloomberg (data as at 28 March 2007) 1. Market Capitalisation on 28 March Market Capitalisation on 28 June 2001

4 Structure driven by customer needs Petroleum Aluminium Base Metals Energy Coal Diamonds & Spec Prod Stainless Steel Materials Metallurgical Coal Manganese Iron Ore Page 4

5 Early days in China BHP s relationship with China began in 1888 with the visit of a Board Director. Our first business transaction with China was recorded in 1891 when BHP exported 50 tons of lead to Fuzhou. Sales ledger of The Broken Hill Proprietary Company, 1891 Page 5

6 BHP Billiton in China First sale to China in 1891 BHP Billiton China - Headquartered in Shanghai and with an office in Beijing Core functions in China are Sales/Marketing, Distribution, Exploration, Market Research & Analysis, Technical R&D, Business Development and Corporate Affairs. More than 80 staff, 90%+ are Chinese nationals Part of the North West Shelf LNG joint venture with CNOOC Wheelarra Joint Venture our mining joint venture with four of China s leading steel mills for the Wheelarra Iron Ore Project in Western Australia Strategic Technical Cooperation Agreement with Baosteel aims to optimise the iron and steelmaking process Page 6

7 BHP Billiton in China continued.. A comprehensive and active posture of business research in macro-economic and sectoral industry analysis Technology Group engaged in resources-related research and development with Chinese partners, including a Strategic partnership with China Academy of Sciences Exploration Group active in reconnaissance and grassroots exploration A well-developed suite of Community programs supporting a variety of partners in social and sustainability initiatives Supplying iron ore, coking coal, copper concentrates, copper cathode, nickel, alumina, aluminium, energy coal, LNG, manganese ore, zinc concentrates, oil, etc. into China Page 7

8 China Sales into China increasing but overall diversification remains strong Half year ended 31 December 2006, 18.1% of total company revenues US$M 4,000 3,500 3,000 2,500 2,000 1,500 1, Australia China Nth America ROW 431 Other Asia 785 Europe Japan 1,075 1,357 1,588 2,407 2,946 3,611 3,999 FY02 H1 03 H2 03 H1 04 H2 04 H1 05 H2 05 H1 06 H2 06 H1 07 Petroleum Aluminium Base Metals Iron Ore Met Coal Manganese Energy Coal SSM Page 8

9 Global commodity consumption Aluminium Other China Copper Other China India India Europe Japan USA Europe Japan USA Steel* Other China Oil* Other China India USA India Europe Japan USA Europe Japan Page 9 Data for 2005* Source: CRU, Brook Hunt, BP Statistical Review of Energy, IISI, BHP Billiton

10 China s raw material and energy needs are prompting increased levels of overseas investment US$ Billion China s outward investment Outward Investment as a percentage of 2005 GDP C hina US Japan EU India W orld Page 10 Note: Outward investment refers to non-financial institution investment and excludes funds going to Hong Kong and Macau. Source: NBS

11 State-owned enterprises were the major investors* and mining was the major investment destination 2004 China s outward investment by ownership Foreign Company 7% Private Enterprise 28% State-owned Enterprise 65% 2004 China s outward investment by industry Lease and Business Services 14% Others 10% Mining 32% Manufacturing 14% Storage, post and Wholesale transportation and retail 15% 15% More support from government and financial institutes to SOEs *There are many more private firms in terms of numbers of firms Page 11 Source: Ministry of Commerce

12 Deep inventory of growth projects Zamzama Phase 2 Blackwater CPP Koala UG WA Iron Ore RGP 3 Douglas Middelburg BROWNFIELD Yabulu GEMCO Samarco NWS T5 NWS Angel Atlantis North Worsley E&G Alumar As at 31 December 2006 Size of bubble indicates proposed capital expenditure; bold outer border signifies sanctioned project. WA Iron Ore RGP 4+ Newcastle Third Port Mt Arthur Coal UG Navajo South Mine Ext $US 200M Kipper CY Atlantis South Neptune Ravensthorpe Maruwai Stage 1 Shenzi Pyrenees Maruwai Genghis Khan Page 12 Stybarrow Cliffs Nickel Project GREENFIELD Bakhuis CSG Petroleum Aluminium Diamonds SSM Iron Ore Met Coal Manganese Energy Coal

13 BHP Billiton s strategic management challenges in China Understanding supply and demand dynamics Matching supply to demand, now and in the future Managing relationships with customers Managing image and reputation with key stakeholders Understanding China s strategic challenges Understanding long term policy directions and imperatives Page 13

14 BHP Billiton s tactical management challenges in China People and skills Institutional knowledge and information sharing Capturing synergies Maximizing value from our relationship with China Managing relationships Living our Charter Values Safety, Community initiatives, Olympic Sponsorship, Respect, etc. Page 14

15 Diversified Minerals & Medals Sponsor of the 2008 Beijing Olympic Games Page 15

16 Page 16