Annual Reports

  • 20-F (Sep 25, 2013)
  • 20-F (Sep 18, 2012)
  • 20-F (Sep 21, 2011)
  • 20-F (Dec 22, 2010)
  • 20-F (Sep 21, 2010)
  • 20-F (Sep 14, 2009)

 
8-K

 
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BHP Billiton 20-F 2010
Form 20-F
Table of Contents

 

 

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

 

 

FORM 20-F

 

 

(Mark One)

¨ REGISTRATION STATEMENT PURSUANT TO SECTION 12(b) OR 12(g) OF THE SECURITIES EXCHANGE ACT OF 1934

OR

 

x ANNUAL REPORT PURSUANT TO SECTION 13 OR 15 (d) OF THE SECURITIES EXCHANGE ACT OF 1934

FOR THE FISCAL YEAR ENDED 30 JUNE 2010

OR

 

¨ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15 (d) OF THE SECURITIES AND EXCHANGE ACT OF 1934

 

¨ SHELL COMPANY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

Date of event requiring this shell company report             

For the transition period from              to             

 

Commission file number: 001-09526   Commission file number: 001-31714

 

 

 

BHP BILLITON LIMITED

(ABN 49 004 028 077)

 

BHP BILLITON PLC

(REG. NO. 3196209)

(Exact name of Registrant as specified in its charter)   (Exact name of Registrant as specified in its charter)

 

 

 

VICTORIA, AUSTRALIA   ENGLAND AND WALES
(Jurisdiction of incorporation or organisation)   (Jurisdiction of incorporation or organisation)

 

180 LONSDALE STREET, MELBOURNE, VICTORIA

3000 AUSTRALIA

 

NEATHOUSE PLACE, VICTORIA, LONDON,

UNITED KINGDOM

(Address of principal executive offices)   (Address of principal executive offices)

 

 

Securities registered or to be registered pursuant to section 12(b) of the Act.

 

Title of each class

 

Name of each exchange on

which registered

 

Title of each class

 

Name of each exchange on

which registered

American Depositary

Shares*

  New York Stock Exchange  

American Depositary

Shares*

  New York Stock Exchange
Ordinary Shares**   New York Stock Exchange  

Ordinary Shares, nominal

value US$0.50 each**

  New York Stock Exchange

 

* Evidenced by American Depositary Receipts. Each American Depositary Receipt represents two ordinary shares of BHP Billiton Limited or BHP Billiton Plc, as the case may be.
** Not for trading, but only in connection with the listing of the applicable American Depositary Shares.

 

 

Securities registered or to be registered pursuant to Section 12(g) of the Act. None

Securities for which there is a reporting obligation pursuant to Section 15(d) of the Act. None

 

 

Indicate the number of outstanding shares of each of the issuer’s classes of capital or common stock as of the close of the period covered by the annual report.

 

     BHP Billiton Limited    BHP Billiton Plc

Fully Paid Ordinary Shares

   3,358,359,496    2,231,121,202

Indicate by check mark if the registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act.    Yes  x    No  ¨

If this report is an annual or transition report, indicate by check mark if the registrant is not required to file reports pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934.    Yes  ¨    No  x

Note – Checking the box above will not relieve any registrant required to file reports pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934 from their obligations under those Sections.

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.    Yes  x    No  ¨

Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (§ 232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files).    Yes  ¨    No  ¨

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, or a non-accelerated filer. See definition of “accelerated filer and large accelerated filer” in Rule 12b-2 of the Exchange Act. (Check one):

Large accelerated filer  x    Accelerated filer  ¨    Non-accelerated filer  ¨

Indicate by check mark which basis of accounting the registrant has used to prepare the financial statements included in this filing:

U.S. GAAP  ¨     International Financial Reporting Standards as issued by the International Accounting Standards Board  x    Other  ¨

If “Other” has been checked in response to the previous question, indicate by check mark which financial statement item the registrant has elected to follow.    Item 17  ¨    Item 18  ¨

If this is an annual report, indicate by checkmark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).     Yes  ¨    No  x

 

 

 


Table of Contents

Table of Contents

 

1    Key information    1
1.1    OUR BUSINESS    1
1.2    CHAIRMANS REVIEW    2
1.3    CHIEF EXECUTIVE OFFICERS REPORT    3
1.4    SELECTED KEY MEASURES    5
1.5    RISK FACTORS    6
1.6    FORWARD LOOKING STATEMENTS    11
2    Information on the Company    13
2.1    BHP BILLITON LOCATIONS    13
2.2    BUSINESS OVERVIEW    16
2.3    PRODUCTION    54
2.4    MARKETING    58
2.5    MINERALS EXPLORATION    59
2.6    RESOURCE AND BUSINESS OPTIMISATION    59
2.7    GOVERNMENT REGULATIONS    59
2.8    SUSTAINABLE DEVELOPMENT – HEALTH, SAFETY, ENVIRONMENT AND COMMUNITY    62
2.9    CLOSURE AND REHABILITATION    64
2.10    EMPLOYEES    64
2.11    ORGANISATIONAL STRUCTURE    66
2.12    MATERIAL CONTRACTS    68
2.13    CONSTITUTION    71
2.14    RESERVES    76
3    Operating and financial review and prospects    95
3.1    INTRODUCTION    95
3.2    OUR STRATEGY    96
3.3    KEY MEASURES    97
3.4    EXTERNAL FACTORS AND TRENDS AFFECTING OUR RESULTS    100
3.5    APPLICATION OF CRITICAL ACCOUNTING POLICIES    105
3.6    OPERATING RESULTS    106
3.7    LIQUIDITY AND CAPITAL RESOURCES    123
3.8    OFF-BALANCE SHEET ARRANGEMENTS AND CONTRACTUAL COMMITMENTS    127
3.9    SUBSIDIARIES AND RELATED PARTY TRANSACTIONS    128
3.10    SIGNIFICANT CHANGES    128
4    Board of Directors and Group Management Committee    129
4.1    BOARD OF DIRECTORS    129
4.2    GROUP MANAGEMENT COMMITTEE    134
5    Corporate Governance Statement    136
5.1    GOVERNANCE AT BHP BILLITON    136
5.2    SHAREHOLDER ENGAGEMENT    137
5.3    BOARD OF DIRECTORS    138
5.4    BOARD OF DIRECTORS – REVIEW, RE-ELECTION AND RENEWAL    148
5.5    BOARD COMMITTEES    151
5.6    RISK MANAGEMENT    158
5.7    MANAGEMENT    160
5.8    DIVERSITY AT BHP BILLITON    161
5.9    BUSINESS CONDUCT    162
5.10    MARKET DISCLOSURE    163
5.11    CONFORMANCE WITH CORPORATE GOVERNANCE STANDARDS    163
5.12    ADDITIONAL UK DISCLOSURE    164

 


Table of Contents
5.13    CONTROLS AND PROCEDURES    165
6    Remuneration Report    167
6.1    REMUNERATION POLICY AND STRUCTURE    168
6.2    SUMMARY OF REMUNERATION FOR MARIUS KLOPPERS    168
6.3    REMUNERATION AND PERFORMANCE    174
6.4    NON-EXECUTIVE DIRECTORS    186
6.5    REMUNERATION COMMITTEE    196
6.6    REMUNERATION IN DETAIL    197
6.7    NON-EXECUTIVE DIRECTOR ARRANGEMENTS    198
6.8    BONUS AMOUNT FOR PETROLEUM EXECUTIVES    202
7    Directors’ Report    203
7.1    PRINCIPAL ACTIVITIES, STATE OF AFFAIRS AND BUSINESS REVIEW    203
7.2    SHARE CAPITAL AND BUY-BACK PROGRAMS    204
7.3    RESULTS, FINANCIAL INSTRUMENTS AND GOING CONCERN    205
7.4    DIRECTORS    205
7.5    REMUNERATION AND SHARE INTERESTS    206
7.6    SECRETARIES    207
7.7    INDEMNITIES AND INSURANCE    207
7.8    EMPLOYEE POLICIES AND INVOLVEMENT    207
7.9    ENVIRONMENTAL PERFORMANCE    208
7.10    CORPORATE GOVERNANCE    208
7.11    DIVIDENDS    208
7.12    AUDITORS    208
7.13    NON-AUDIT SERVICES    209
7.14    VALUE OF LAND    209
7.15    POLITICAL AND CHARITABLE DONATIONS    209
7.16    EXPLORATION, RESEARCH AND DEVELOPMENT    209
7.17    CREDITOR PAYMENT POLICY    209
7.18    CLASS ORDER    209
7.19    PROCEEDINGS ON BEHALF OF BHP BILLITON LIMITED    209
7.20    DIRECTORSSHAREHOLDINGS    209
7.21    GMC MEMBERSSHAREHOLDINGS (OTHER THAN DIRECTORS)    210
7.22    PERFORMANCE IN RELATION TO ENVIRONMENTAL REGULATION    211
7.23    SHARE CAPITAL, RESTRICTIONS ON TRANSFER OF SHARES AND OTHER ADDITIONAL INFORMATION    211
8    Legal proceedings    212
9    Financial Statements   
10    Glossary    215
10.1    NON-MINING TERMS    215
10.2    MINING AND MINING-RELATED TERMS    217
10.3    UNITS OF MEASURE    220
11    Shareholder information    221
11.1    MARKETS    221
11.2    SHARE OWNERSHIP    221
11.3    DIVIDENDS    225
11.4    SHARE PRICE INFORMATION    225
11.5    TAXATION    227
12    Exhibits    233

 


Table of Contents

Form 20-F Cross Reference Table

 

Item Number

  

Description

  

Report section reference

1.

   Identity of directors, senior management and advisors    Not applicable

2.

   Offer statistics and expected timetable    Not applicable

3.

   Key Information   
    A    Selected financial information    1.4.1
    B    Capitalisation and indebtedness    Not applicable
    C    Reasons for the offer and use of proceeds    Not applicable
    D    Risk factors    1.5
4.    Information on the company   

    A

   History and development of the company    2.2.1, 2.2.2 to 2.2.10, 2.3, 2.11 and 3

    B

   Business overview    1, 2.2 to 2.9 and 3.1

    C

   Organisational structure    2.11 and Note 25 to the Financial Statements

    D

   Property, plant and equipment    2.1, 2.2.2 to 2.2.10, 2.3, 2.8, 2.14 and 3.7.2
4A.    Unresolved staff comments    None
5.    Operating and financial review and prospects   

    A

   Operating results    1.5, 2.7, 3.4, 3.6

    B

   Liquidity and capital resources    3.7

    C

   Research and development, patents and licenses etc    2.5, 2.6 and 7.16

    D

   Trend information    3.4.1 to 3.4.8

    E

   Off-balance sheet arrangements    3.8 and Notes 21 and 22 to the Financial Statements

    F

   Tabular disclosure of contractual obligations    3.8 and Notes 21, 22 and 28 to the Financial Statements
6.    Directors, senior management and employees   

    A

   Directors and senior management    4.1 and 4.2

    B

   Compensation    6

    C

   Board practices    4.1, 4.2, 5, 6.3, 6.4, 6.6 and 6.7

    D

   Employees    2.10 and 7.8

    E

   Share ownership    6, 7.8, 7.20 and 7.21
7.    Major shareholders and related party transactions   

    A

   Major shareholders    11.2

    B

   Related party transactions    3.9 and Note 31 to the Financial Statements

    C

   Interests of experts and counsel    Not applicable
8.    Financial Information   

    A

   Consolidated statements and other financial information    9, 11.3 and F–1 to F–96

    B

   Significant changes    3.10
9.    The offer and listing   

    A

   Offer and listing details    11.4

    B

   Plan of distribution    Not applicable

    C

   Markets    11.1

    D

   Selling shareholders    Not applicable

 


Table of Contents

Item Number

  

Description

  

Report section reference

    E

   Dilution    Not applicable

    F

   Expenses of the issue    Not applicable

10.

   Additional Information   

    A

   Share capital    Not applicable

    B

   Memorandum and articles of association    2.7.3 and 2.13

    C

   Material contracts    2.12

    D

   Exchange controls    2.7.3

    E

   Taxation    11.5

    F

   Dividends and paying agents    Not applicable

    G

   Statement by experts    Not applicable

    H

   Documents on display    2.13.14

    I

   Subsidiary information    3.9 and Note 25 to the Financial Statements
11.    Quantitative and qualitative disclosures about market risk    3.7.4 and Note 28 to the Financial Statements
12.    Description of securities other than equity securities    Not applicable
13.    Defaults, dividend arrearages and delinquencies    There have been no defaults, dividend arrearages or delinquencies
14.    Material modifications to the rights of security holders and use of proceeds    There have been no material modifications to the rights of security holders and use of proceeds since our last Annual Report
15.    Controls and procedures    5.5.1 and 5.13
16.      

    A

   Audit committee financial expert    4.1 and 5.5.1

    B

   Code of ethics    5.9

    C

   Principal accountant fees and services    5.13.2 and Note 34 to the Financial Statements

    D

   Exemptions from the listing standards for audit committees    Not applicable

    E

   Purchases of equity securities by the issuer and affiliated purchasers    7.2

    F

   Change in Registrant’s Certifying Accountant    There has been no change of the Registrant’s Certifying Accountant since our last Annual Report

    G

   Corporate Governance    5.11
17.    Financial statements    Not applicable as Item 18 complied with
18.    Financial statements    F–1 to F–96, Exhibit 15.1
19.    Exhibits    12

 


Table of Contents

1 Key information

1.1 Our business

We are the world’s largest diversified natural resources company. Our corporate objective is to create long-term value for shareholders through the discovery, development and conversion of natural resources, and the provision of innovative customer and market-focused solutions. We pursue this objective through our unchanged strategy of investing in ‘tier one’ assets that are large, low-cost and long-life to provide a balanced portfolio of export-oriented commodities:

 

   

steelmaking products - iron ore, metallurgical coal, manganese;

 

   

non-ferrous products - copper, aluminium, nickel, diamonds, potash;

 

   

energy products - petroleum, energy coal, uranium.

We continue to invest in the future and have a deep inventory of growth assets.

Our operations and investments are designed to ensure the Group remains stable in the long term and responsive to market volatility in the short term.

The Group is headquartered in Melbourne, Australia, and consists of the BHP Billiton Limited Group and the BHP Billiton Plc Group as a combined enterprise, following the completion of the Dual Listed Company (DLC) merger in June 2001. BHP Billiton Limited and BHP Billiton Plc have each retained their separate corporate identities and maintained their separate stock exchange listings, but they are operated and managed as if they are a single unified economic entity, with their boards and senior executive management comprising the same people.

BHP Billiton Limited has a primary listing on the Australian Securities Exchange (ASX) in Australia. BHP Billiton Plc has a premium listing on the London Stock Exchange (LSE) in the UK and a secondary listing on the Johannesburg Stock Exchange in South Africa. In addition, BHP Billiton Limited American Depositary Receipts (ADRs) and BHP Billiton Plc ADRs trade on the New York Stock Exchange (NYSE) in the US.

As at 30 June 2010, we had a market capitalisation of approximately US$165.6 billion. For the year ended 30 June 2010, we reported net operating cash flow of US$17.9 billion, profit attributable to shareholders of US$12.7 billion and revenue of US$52.8 billion. We have approximately 100,000 employees and contractors working in more than 100 operations in over 25 countries.

We operate nine businesses, called Customer Sector Groups (CSGs), which are aligned with the commodities we extract and market:

 

   

Petroleum

 

   

Aluminium

 

   

Base Metals (including Uranium)

 

   

Diamonds and Specialty Products

 

   

Stainless Steel Materials

 

   

Iron Ore

 

   

Manganese

 

   

Metallurgical Coal

 

   

Energy Coal.

 

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Table of Contents

1.2 Chairman’s Review

I am pleased to report that in a difficult global economic and financial environment, BHP Billiton continued to perform well and strengthened its strategic and financial position.

While the global economic outlook has improved, the recovery remains fragile. Despite a near-term slowing in China, we continue to believe that the fundamentals driving Asian growth are robust. It is clear to the Board that the long-term outlook for BHP Billiton is strong. We have unique assets that are critical to the growth of the world’s developing economies, and a geographic and commodity spread that reduces risk and optimises opportunity.

During the year, your Chief Executive, Marius Kloppers, and his team focused on delivering strong production and cost performance as well as investing in new growth opportunities.

Our strategy is clear and remains unchanged since 2001. We focus on large, long-life, low-cost, upstream, high-quality assets, diversified by commodity, geography and markets. This strategy means more predictable business performance over time which, in turn, underpins the creation of value for our shareholders, customers, employees and, importantly, the communities in which we operate.

The execution of our strategy resulted in a profit from operations, excluding exceptional items, of US$19.7 billion an increase of 8.3 per cent. Net operating cash flows were US$17.9 billion, US$7.7 billion of which was reinvested in new growth projects. In addition, the Board increased dividends by 6.1 per cent to 87 cents per share, in line with our progressive dividend policy.

While the Board is pleased with these results, our progress in the critical area of safety is still below expectation. We continued to reduce the number of workplace injuries, however five people lost their lives at our operations this year. This is clearly unacceptable and a tragedy for their families, friends and colleagues.

In August 2010, we announced a fully funded takeover of Potash Corporation of Saskatchewan. The proposed acquisition meets our criteria of developing quality long-life assets using our existing mining skills to gain a leading position in the growing world market for fertiliser. We are committed to being a strong corporate citizen in Saskatchewan and New Brunswick, Canada, and our intention is to establish a global potash business based in Canada.

Important governance developments occurred in the UK, US and Australia during the year responding to the challenges of the global recession. We support the changes, particularly the emphasis on ensuring Boards comprise Directors with the collective set of essential skills and experience to govern the Group supported by robust succession planning and performance evaluation.

As part of our Board succession, Carolyn Hewson and Malcolm Broomhead joined the Board in March 2010. Together they bring deep experience in industrial and resource companies, financial markets and investment risk management. During the year, Don Argus, Paul Anderson, Gail de Planque, David Jenkins and David Morgan retired from the Board. We thank each of them for their contribution, particularly former Chairman Don Argus AC.

We have always believed that corporate governance and executive remuneration practices are critical issues for any company and its stakeholders. We support the need for simplified and transparent executive remuneration reporting, and these have been key influences on the structure of our remuneration report this year.

Our Remuneration Committee reviewed the Group’s Long Term Incentive Plan for our most senior executives. The plan was originally introduced in 2004 and, given the changes in the global environment, the Committee believed a review was warranted. We consulted widely with our shareholders as well as governance advisers. As a result, we continue to believe that the duration of our five-year, long-term plan is appropriate. However, we also believe it is important to change some design elements as the plan produced highly leveraged outcomes not reflective of our business strategy. This is a matter on which we will seek shareholder approval.

One thing that has impressed me since the time I started as a Director in 2006 has been the quality of BHP Billiton people throughout the Group. In resources, as in many other industries, results are not only a function of the quality of the assets but the quality of the people operating and managing those assets.

Marius is a talented Chief Executive and he has developed a strong and diverse team with a depth of talent to support him. On your behalf, the Board would like to thank everyone involved with our Company for the contribution they have made in this challenging year.

 

2


Table of Contents

Finally, since becoming Chairman this year after the retirement of Don Argus, I have had the privilege of meeting many of our institutional and individual shareholders. This is a rewarding part of my role and I look forward to meeting many more of you over the coming years.

1.3 Chief Executive Officer’s Report

Financial year 2010 was a year that presented a broad mix of challenges and achievements. Despite continued volatility and ongoing uncertainty across the global economy, BHP Billiton delivered a strong operational and financial performance.

It is our consistent and long-term strategy of focusing on a portfolio of upstream, tier one, low-cost assets diversified by commodity, market and geography that underpinned our ability to overcome the challenges during the year. I am encouraged by the Group’s performance, which is testament to our focus on creating shareholder value in the long term.

We are a leading global resources company and our successes and achievements are significant. However, we cannot say we are truly successful until we eliminate fatalities and serious injuries in our workplace. This year we continued to make progress in reducing the number of injuries, though we did not meet our targets. It is with great sadness that I report to you that five of our colleagues lost their lives at work during the year and I personally extend my condolences to the families and friends of those individuals.

This is a stark reminder that we must lead in a way that ensures a safe workplace, and we can only do this by creating operating discipline and simplifying the way we work. Safety starts with strong leadership and I cannot emphasise enough how important this is to me personally and to our Group.

I am pleased to announce that BHP Billiton operations this year delivered solid results, with annual production records achieved in our Iron Ore and Petroleum businesses. In Iron Ore, this marked the tenth consecutive annual production record, and for Petroleum, it was the third consecutive production record. Our long-life, low-cost expandable assets provide our Company with the capacity to continue to deliver and strengthen our position in a range of markets.

By operating at full capacity whenever possible and staying focused on eliminating low value activities, we maintained our low-cost position and our ability to generate robust cash flows.

Of significant note in FY2010 was the move from annually negotiated benchmark prices in metallurgical coal and iron ore to shorter-term reference pricing. We have long advocated a move to a more transparent pricing regime and will actively support the development of a wider traded market in these commodities.

This move brings metallurgical coal and iron ore into line with how the rest of our portfolio is priced globally and moves us closer to achieving our stated objective of market prices for all of our commodities. More broadly, prices for our products recovered during the year driven by demand in China and restocking in the Organisation for Economic Co-operation and Development (OECD) countries. While government stimulus measures generally supported a gradual return to normalised global trade, the improvement in the developed economies was from a low base.

We believe that the recovery momentum of the major economies will remain uncertain as the impact of fiscal and monetary stimuli fades. Therefore, we are still cautious in our short-term view of the economy.

In the longer term, we are encouraged by the fundamentals underpinning sustained growth in China and India, which will continue to drive a strong demand for our products. This, along with our strong balance sheet, supports our capacity for future growth. We have extensive experience operating in emerging resource regions and we have the capability to capture additional opportunities as they arise.

 

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Table of Contents

Our disciplined approach to capital deployment has enabled BHP Billiton to both invest in the expansion of high-quality assets and further diversify our portfolio by commodity, market and geography, consistent with our unchanged strategy. The acquisition of Athabasca Potash earlier this year ensures our Group has access to more than 14,000 square kilometres of prospective exploration ground in the world-class Saskatchewan potash basin. Our all-cash bid to acquire Potash Corporation of Saskatchewan, the world’s largest integrated fertiliser company and world’s largest producer of potash by capacity, is consistent with our strategy and is a natural fit with BHP Billiton’s greenfield land holdings in Canada. This acquisition represents an acceleration of our entry into the fertiliser industry.

This, plus the delivery of five major capital projects, is evidence of our growth capabilities.

However, we only earn the right to grow this business if we can do it safely, in an environmentally sound manner and in a way that demonstrates our unqualified commitment to working with integrity. I believe it is worth reiterating that safe growth underpinned by demonstrating our Charter values can only be achieved through leadership commitment and operating discipline. I want to take this opportunity to sincerely thank our employees and contractors and other stakeholders for their efforts in responding to the accountabilities articulated in our operating model.

Our Company has a clear strategy for growing our value, within a disciplined framework, and using prudent decision-making. Who and what we are today is the product of the vision and efforts of previous management teams in executing a consistent strategy. It is our responsibility to not only preserve, but enhance and increase the value of that legacy.

 

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Table of Contents

1.4 Selected key measures

1.4.1 Financial information

Our selected financial information reflects the operations of the BHP Billiton Group, and should be read in conjunction with the 2010 financial statements, together with the accompanying notes.

We prepare our consolidated financial statements in accordance with International Financial Reporting Standards (IFRS), as issued by the International Accounting Standards Board, and as outlined in note 1 ‘Accounting policies’ to the financial statements in this Annual Report. We publish our consolidated financial statements in US dollars.

 

     2010     2009     2008     2007 (a)     2006 (a)  

Consolidated Income Statement (US$M except per share data)

          

Revenue

   52,798      50,211      59,473      47,473      39,099   

Profit from operations

   20,031      12,160      24,145      19,724      15,716   

Profit attributable to members of BHP Billiton Group

   12,722      5,877      15,390      13,416      10,450   

Dividends per ordinary share – paid during the period (US cents)

   83.0      82.0      56.0      38.5      32.0   

Dividends per ordinary share – declared in respect of the period (US cents)

   87.0      82.0      70.0      47.0      36.0   

Earnings per ordinary share (basic) (US cents) (b)

   228.6      105.6      275.3      229.5      173.2   

Earnings per ordinary share (diluted) (US cents) (b)

   227.8      105.4      274.8      228.9      172.4   

Number of ordinary shares (millions)

          

- At period end

   5,589      5,589      5,589      5,724      5,964   

- Weighted average

   5,565      5,565      5,590      5,846      6,035   

- Diluted

   5,595      5,598      5,605      5,866      6,066   

Consolidated Balance Sheet (US$M)

          

Total assets

   88,852      78,770      76,008      61,404      51,343   

Share capital (including share premium)

   2,861      2,861      2,861      2,922      3,242   

Total equity attributable to members of BHP Billiton Group

   48,525      39,954      38,335      29,667      24,218   

Other financial information

          

Underlying EBIT (US$M) (c)

   19,719      18,214      24,282      20,067      15,277   

Net operating cash flow (US$M)

   17,920      18,863      17,817      15,957      11,325   

Gearing (d)

   6.3   12.1   17.8   25.0   27.2

 

(a) On 1 July 2007, the Group adopted the policy of recognising its proportionate interest in the assets, liabilities, revenues and expenses of jointly controlled entities within each applicable line item of the financial statements. All such interests were previously recognised using the equity method. Comparative figures for the years 2007 and 2006 that were affected by the policy change have been restated.
(b) The calculation of the number of ordinary shares used in the computation of basic earnings per share is the aggregate of the weighted average number of ordinary shares outstanding during the period of BHP Billiton Limited and BHP Billiton Plc after deduction of the weighted average number of shares held by the Billiton share repurchase scheme and the Billiton Employee Share Ownership Plan Trust and the BHP Bonus Equity Plan Trust and adjusting for the BHP Billiton Limited bonus share issue. Included in the calculation of fully diluted earnings per share are shares contingently issuable under Employee Share Ownership Plans.
(c) Underlying EBIT is profit from operations, excluding the effect of exceptional items. See section 3.6.1 for more information about this measure, including a reconciliation to profit from operations.
(d) See section 10 for glossary definitions.

 

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Table of Contents

1.4.2 Operational information

Our Board and Group Management Committee monitor a range of financial and operational performance indicators, reported on a monthly basis, to measure performance over time. We also monitor a comprehensive set of health, safety, environment and community contribution indicators.

 

     FY2010    FY2009     FY2008

People and Licence to operate – Health, safety, environment and community

       

Total Recordable Injury Frequency (TRIF) (a)

   5.3    5.6      5.9

Community investment (US$M) (a) (b)

   200.5    197.8 (b)    141.0

Production (c)

       

Total Petroleum Production (million barrels of oil equivalent)

   158.56    137.97      130.07

Alumina (‘000 tonnes)

   3,841    4,396      4,554

Aluminium (‘000 tonnes)

   1,241    1,233      1,298

Copper cathode and concentrate (‘000 tonnes)

   1,075.2    1,207.1      1,375.5

Nickel (‘000 tonnes)

   176.2    173.1      167.9

Iron ore (‘000 tonnes)

   124,962    114,415      112,260

Metallurgical coal (‘000 tonnes)

   37,381    36,416      35,193

Manganese alloys (‘000 tonnes)

   583    513      775

Manganese ores (‘000 tonnes)

   6,124    4,475      6,575

Energy coal (‘000 tonnes)

   66,131    66,401      80,868

 

(a) See section 10 for glossary definitions.
(b) In FY2009 we established a UK-based charitable company, BHP Billiton Sustainable Communities, registered with the UK Charities Commission for the purpose of funding community investment globally. In FY2010 our voluntary community contribution included the provision of US$80 million (2009: US$60 million; 2008: $US0 million) to BHP Billiton Sustainable Communities.
(c) Further details appear in section 2.3 of this Report.

1.5 Risk factors

We believe that, because of the international scope of our operations and the industries in which we are engaged, there are numerous factors which may have an effect on our results and operations. The following describes the material risks that could affect the BHP Billiton Group.

Fluctuations in commodity prices and impacts of the global financial crisis may negatively impact our results

The prices we obtain for our oil, gas, minerals and other commodities are determined by, or linked to, prices in world markets, which have historically been subject to substantial variations. The Group’s usual policy is to sell its products at the prevailing market prices. The diversity provided by the Group’s broad portfolio of commodities may not fully insulate the effects of price changes. Fluctuations in commodity prices can occur due to sustained price shifts reflecting underlying global economic and geopolitical factors, industry demand and supply balances, product substitution and national tariffs. The ongoing effects of the global financial crisis has impacted commodity markets in terms of lower prices, reduced demand and increased price volatility. The ongoing uncertainty and impact on global economic growth, particularly in the developed economies, may impact future demand and prices for commodities. The influence of hedge and other financial investment funds participating in commodity markets has increased in recent years, contributing to higher levels of price volatility. The impact of potential longer-term sustained price shifts and shorter-term price volatility creates the risk that our financial and operating results and asset values will be materially and adversely affected by unforeseen declines in the prevailing prices of our products.

We seek to maintain a solid ‘A’ credit rating as part of our strategy. Notwithstanding our financial and capital management programs the ongoing effects of the global financial crisis may impact our future cash flows, ability to adequately access and source capital from financial markets and our credit rating.

 

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Our profits may be negatively affected by currency exchange rate fluctuations

Our assets, earnings and cash flows are influenced by a wide variety of currencies due to the geographic diversity of the countries in which we operate. Fluctuations in the exchange rates of those currencies may have a significant impact on our financial results. The US dollar is the currency in which the majority of our sales are denominated. Operating costs are influenced by the currencies of those countries where our mines and processing plants are located and also by those currencies in which the costs of imported equipment and services are determined. The Australian dollar, South African rand, Chilean peso, Brazilian real and US dollar are the most important currencies influencing our operating costs. Given the dominant role of the US currency in our affairs, the US dollar is the currency in which we present financial performance. It is also the natural currency for borrowing and holding surplus cash. We do not generally believe that active currency hedging provides long-term benefits to our shareholders. We may consider currency protection measures appropriate in specific commercial circumstances, subject to strict limits established by our Board. Therefore, in any particular year, currency fluctuations may have a significant impact on our financial results.

The commercial counterparties we transact with may not meet their obligations and negatively impact our results

We commercially contract with a large number of commercial and financial counterparties including customers, suppliers, and financial institutions. The global financial crisis has placed strains on global financial markets, reduced liquidity and impacted business conditions generally. Our existing counterparty credit controls may not prevent a material loss due to credit exposure to a major customer or financial counterparty. In addition, customers, suppliers, contractors or joint venture partners may fail to perform against existing contracts and obligations. Non-supply of key inputs or equipment may unfavourably impact our operations. Reduced liquidity and available sources of capital in financial markets may impact the cost and ability to fund planned investments. These factors could negatively affect our financial condition and results of operations.

Failure to discover new reserves, maintain or enhance existing reserves or develop new operations could negatively affect our future results and financial condition

The increased demand for our products and increased production rates from our operations in recent years has resulted in existing reserves being depleted at an accelerated rate. As our revenues and profits are related to our oil and gas and minerals operations, our results and financial conditions are directly related to the success of our exploration and acquisition efforts, and our ability to replace existing reserves. Exploration activity occurs adjacent to established operations and in new regions, in developed and less developed countries. These activities may increase land tenure, infrastructure and related political risks. A failure in our ability to discover new reserves, enhance existing reserves or develop new operations in sufficient quantities to maintain or grow the current level of our reserves could negatively affect our results, financial condition and prospects.

There are numerous uncertainties inherent in estimating ore and oil and gas reserves, and geological, technical and economic assumptions that are valid at the time of estimation may change significantly when new information becomes available. The impacts of the global financial crisis may impact economic assumptions related to reserve recovery and require reserve restatements. Reserve restatements could negatively affect our reputation, results, financial condition and prospects.

Reduction in Chinese demand may negatively impact our results

The Chinese market has become a significant source of global demand for commodities. In CY2009, China represented 56 per cent of global seaborne iron ore demand, 36 per cent of copper demand, 35 per cent of nickel demand, 39 per cent of aluminium demand, 42 per cent of energy coal demand and nine per cent of oil demand. China’s demand for these commodities has been driving global materials demand over the past decade.

The strong economic growth and infrastructure development in China of recent years has been tempered by the global financial crisis. Sales into China generated US$13.2 billion (FY2009: US$9.9 billion), or 25.1 per cent (FY2009: 19.7 per cent), of our revenue in the year ended 30 June 2010. A slowing in China’s economic growth could result in lower prices and demand for our products and therefore reduce our revenues.

In response to its increased demand for commodities, China is increasingly seeking strategic self-sufficiency in key commodities, including investments in existing businesses or new developments in other countries. These investments may adversely impact future commodity demand and supply balances and prices.

 

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Actions by governments or political events in the countries in which we operate could have a negative impact on our business

We have operations in many countries around the globe, some of which have varying degrees of political and commercial stability. We operate in emerging markets, which may involve additional risks that could have an adverse impact upon the profitability of an operation. These risks could include terrorism, civil unrest, nationalisation, renegotiation or nullification of existing contracts, leases, permits or other agreements, and changes in laws and policy, as well as other unforeseeable risks. Risks relating to bribery and corruption may be prevalent in some of the countries in which we operate. If one or more of these risks occurs at one of our major projects, it could have a negative effect on the operations in those countries, as well as the Group’s overall operating results and financial condition.

Our operations are based on material long term investments that anticipate long term fiscal stability. Following the global financial crisis some governments face increased debt and funding obligations and may seek additional sources of revenue and economic rent by increasing rates of taxation, royalties or resource rent taxes to levels that are globally uncompetitive to the resource industry. Such taxes may negatively impact the financial results of existing businesses and reduce the anticipated future returns and overall level of prospective investment in those countries.

On 2 May 2010, the Australian Government proposed a Resource Super Profits Tax at a rate of 40 per cent on profits made from the extraction of non-renewable resources. Subsequently, on 2 July 2010, this proposal was amended to a Minerals Resource Rent Tax (MRRT), at a rate of 30 per cent (with a 25 per cent extraction allowance – effectively resulted in a 22.5 per cent additional tax on profits) for iron ore and coal, while the current Petroleum Resource Rent Tax (PRRT) will be extended to all Australian oil and gas projects, including the North West Shelf. Legislation is proposed to be introduced into parliament in late CY2011, and then for the commencement date of the new tax regime to be 1 July 2012. The MRRT would operate in parallel with State and Territory royalty regimes, and those royalties in place or scheduled at 2 May 2010 would be creditable against the MRRT. The proposed MRRT would increase the effective tax rate of Australian coal and iron ore operations and the North West Shelf project. This could have a negative effect on the operating results of the Group’s Australian operations. The MRRT is subject to passing by the Australian Parliament and may differ (wholly or in part) in its final form.

With the objective of raising more funds to face the reconstruction following the recent earthquake in Chile, the Chilean Government announced on 16 April 2010 an intention to increase the Corporate Income Tax rate (First Category Tax –FCT) as well as changing the Mining Tax in exchange for extending the tax invariability period available to investors, from 2017 currently in place for an extra eight years to 2025. The current draft legislation proposes a temporary increase of the FCT rate for two years (2010-2011) with the change in the Mining Tax regime having been removed from the current proposed bill. Any potential tax changes in the future if implemented may impact our financial results from Chilean operations.

Our business could be adversely affected by new government regulation, such as controls on imports, exports and prices. Increasing requirements relating to regulatory, environmental and social approvals can potentially result in significant delays in construction and may adversely impact upon the economics of new mining and oil and gas projects, the expansion of existing operations and results of our operations.

Infrastructure, such as rail, ports, power and water, is critical to our business operations. We have operations or potential development projects in countries where government provided infrastructure or regulatory regimes for access to infrastructure, including our own privately operated infrastructure, may be inadequate or uncertain. These may adversely impact the efficient operations and expansion of our businesses. On 30 June 2010, the Australian Competition Tribunal granted declaration of BHP Billiton’s Goldsworthy rail line, but rejected the application for declaration of its Newman rail line under Part IIIA of the Trade Practices Act. Following the tribunal’s decision, access seekers may now negotiate for access to the Goldsworthy railway. These negotiations, and the availability and terms of access, would be governed by the Part IIIA statutory framework, and either the access seeker or BHP Billiton could refer disputed matters to the ACCC for arbitration. The outcome of this process would govern whether access would be provided and on what terms.

In South Africa, the Mineral and Petroleum Resources Development Act (2002) (MPRDA) came into effect on 1 May 2004. The law provides for the conversion of existing mining rights (so called ‘Old Order Rights’) to rights under the new regime (‘New Order Rights’) subject to certain undertakings to be made by the company applying for such conversion. The Mining Charter requires that mining companies achieve 15 per cent ownership by historically disadvantaged South Africans of South African mining assets by 1 May 2009 and 26 per cent ownership by 1 May 2014. If we are unable to convert our South African mining rights in accordance with the MPRDA and the Mining Charter, we could lose some of those rights. Where New Order Rights are obtained under the MPRDA, these rights may not be equivalent to the Old Order Rights in terms of duration, renewal, rights and obligations.

 

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In May 2010, in response to the oil spill from BP’s Macondo well, the United States Government announced a deepwater drilling moratorium in the Gulf of Mexico. There is uncertainty as to potential new permitting requirements that may be imposed on deepwater drilling. Our business could be adversely affected by the moratorium and any new regulatory requirements.

We operate in several countries where ownership of land is uncertain and where disputes may arise in relation to ownership. In Australia, the Native Title Act (1993) provides for the establishment and recognition of native title under certain circumstances. In South Africa, the Extension of Security of Tenure Act (1997) and the Restitution of Land Rights Act (1994) provide for various landholding rights. Such legislation could negatively affect new or existing projects.

We may not be able to successfully integrate our acquired businesses

We have grown our business in part through acquisitions. We expect that some of our future growth will stem from acquisitions. There are numerous risks encountered in business combinations. These include adverse regulatory conditions and obligations, commercial objectives not achieved due to minority interests, unforeseen liabilities arising from the acquired businesses, retention of key staff, sales revenues and the operational performance not meeting our expectations, anticipated synergies and cost savings being delayed or not being achieved, uncertainty in sales proceeds from planned divestments, and planned expansion projects are delayed or cost more than anticipated. These factors could negatively affect our financial condition and results of operations.

We may not recover our investments in mining and oil and gas projects

Our operations may be impacted by changed market or industry structures, commodity prices, technical operating difficulties, inability to recover our mineral, oil or gas reserves and increased operating cost levels. These may impact the ability for assets to recover their historical investment and may require financial write-downs adversely impacting our financial results.

Our non-controlled assets may not comply with our standards

Some of our assets are controlled and managed by joint venture partners or by other companies. Some joint venture partners may have divergent business objectives which may impact business and financial results. Management of our non-controlled assets may not comply with our management and operating standards, controls and procedures (including health, safety, and environment). Failure to adopt equivalent standards, controls and procedures at these assets could lead to higher costs and reduced production and adversely impact our results and reputation.

Operating cost pressures and shortages could negatively impact our operating margins and expansion plans

Increasing cost pressures and shortages in skilled personnel, contractors, materials and supplies that are required as critical inputs to our existing operations and planned developments may occur across the resources industry. As the prices for our products are determined by the global commodity markets in which we operate we may not have the ability to offset these cost increases resulting in operating margins being reduced. Notwithstanding our efforts to reduce costs and a number of key cost inputs being commodity price-linked, the inability to reduce costs and a timing lag may impact our operating margins for an extended period.

Changing industrial relations legislation such as the Australian Fair Work Act 2009 may impact workforce flexibility, productivity and costs. Labour unions may seek to pursue claims under the new framework. Industrial action may impact our operations resulting in lost production and revenues. Since the introduction of the Australian Fair Work Act in 2009, increasing occurrences of low-level industrial activity have been experienced across many Australian assets. The additional claims relate to increased access and coverage as provided by the legislation. If this activity continues, some negative productivity impacts may result.

A number of our operations are energy or water intensive and, as a result, the Group’s costs and earnings could be adversely affected by rising costs or by supply interruptions. These could include the unavailability of energy, fuel or water due to a variety of reasons, including fluctuations in climate, significant increases in costs, inadequate infrastructure capacity, interruptions in supply due to equipment failure or other causes and the inability to extend supply contracts on economical terms.

These factors could lead to increased operating costs at existing operations.

 

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Increased costs and schedule delays may impact our development projects

Although we devote significant time and resources to our project planning, approval and review process, we may underestimate the cost or time required to complete a project. In addition, we may fail to manage projects as effectively as we anticipate, and unforeseen challenges may emerge. Any of these may result in increased capital costs and schedule delays at our development projects impacting anticipated financial returns.

Health, safety, environmental and community exposures and related regulations may impact our operations and reputation negatively

We are a major producer of carbon-related products such as energy and metallurgical coal, oil, gas, and liquefied natural gas. Our oil and gas operations are both onshore and offshore.

The nature of the industries in which we operate means that our activities are highly regulated by health, safety and environmental laws. As regulatory standards and expectations are constantly developing, we may be exposed to increased litigation, compliance costs and unforeseen environmental rehabilitation expenses.

Potential health, safety, environmental and community events that may materially impact our operations include rockfall incidents in underground mining operations, aircraft incidents, light vehicle incidents, explosions or gas leaks, incidents involving mobile equipment, uncontrolled tailings breaches, escape of polluting substances, community protests or civil unrest.

Longer-term health impacts may arise due to unanticipated workplace exposures by employees or site contractors. These effects may create future financial compensation obligations.

We provide for operational closure and site rehabilitation. Our operating and closed facilities are required to have closure plans. Changes in regulatory or community expectations may result in the relevant plans not being adequate. This may impact financial provisioning and costs at the affected operations.

We contribute to the communities in which we operate by providing skilled employment opportunities, salaries and wages, taxes and royalties and community development programs. Notwithstanding these actions, local communities may become dissatisfied with the impact of our operations, potentially affecting costs and production, and in extreme cases viability.

Legislation requiring manufacturers, importers and downstream users of chemical substances, including metals and minerals, to establish that the substances can be used without negatively affecting health or the environment may impact our operations and markets. These potential compliance costs, litigation expenses, regulatory delays, rehabilitation expenses and operational costs could negatively affect our financial results.

We may continue to be exposed to increased operational costs due to the costs and lost time associated with the HIV/AIDS and malaria infection rate mainly within our African workforce. Because we operate globally, we may be affected by potential pandemic influenza outbreaks, such as A(H1N1) and avian flu, in any of the regions in which we operate.

Despite our best efforts and best intentions, there remains a risk that health, safety, environmental and/or community incidents or accidents may occur that may negatively impact our reputation or licence to operate.

Unexpected natural and operational catastrophes may adversely impact our operations

We operate extractive, processing and logistical operations in many geographic locations both onshore and offshore. Our operational processes may be subject to operational accidents such as port and shipping incidents, fire and explosion, pitwall failures, loss of power supply, railroad incidents, loss of well control, environmental pollution and mechanical failures. Our operations and geographic locations may also be subject to unexpected natural catastrophes such as earthquakes, flood, hurricanes and tsunamis. Based on our claims, insurance premiums and loss experience, our risk management approach is to maintain self-insurance for property damage and business interruption related risk exposures. Existing business continuity plans may not provide protection for all of the costs that arise from such events. The impact of these events could lead to disruptions in production and loss of facilities more than offsetting premiums saved and adversely affect our financial results and prospects. Third party claims arising from these events may also exceed the limit of liability insurance policies we have in place.

 

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Climate change and greenhouse effects may adversely impact our operations and markets

Carbon based energy is a significant input in a number of the Group’s mining and processing operations and we have significant sales of carbon based energy products.

A number of governments or governmental bodies have introduced or are contemplating regulatory change in response to the impacts of climate change. The December 1997 Kyoto Protocol established a set of greenhouse gas emission targets for developed countries that have ratified the Protocol. The European Union Emissions Trading System (EU ETS), which came into effect on 1 January 2005, has had an impact on greenhouse gas and energy-intensive businesses based in the EU. Our Petroleum assets in the UK are currently subject to the EU ETS, as are our EU based customers. Elsewhere, there is current and emerging climate change regulation that will affect energy prices, demand and margins for carbon intensive products. The Australian Government’s plan of action on climate change includes the introduction of a national emissions trading scheme by 2013 and a mandatory renewable energy target of 20 per cent by the year 2020. From a medium to long-term perspective, we are likely to see some changes in the cost position of our greenhouse-gas-intensive assets and energy-intensive assets as a result of regulatory impacts in the countries in which we operate. These regulatory mechanisms may impact our operations directly or indirectly via our suppliers and customers. Inconsistency of regulations particularly between developed and developing countries may also change the competitive position of some of our assets. Assessments of the potential impact of future climate change regulation are uncertain given the wide scope of potential regulatory change in the many countries in which we operate.

The physical impacts of climate change on our operations are highly uncertain and will be particular to the geographic circumstances. These may include changes in rainfall patterns, water shortages, rising sea levels, increased storm intensities and higher average temperature levels. These effects may adversely impact the productivity and financial performance of our operations.

Our human resource talent pool may not be adequate to support our growth

Our existing operations and especially our pipeline of development projects in regions of numerous large projects, such as Western Australia, when activated, require many highly skilled staff with relevant industry and technical experience. In such a competitive environment, the inability of the Group and industry to attract and retain such people may adversely impact our ability to adequately meet demand in projects. Skills shortages in engineering, technical service, construction and maintenance may impact activities. These shortages may adversely impact the cost and schedule of development projects and the cost and efficiency of existing operations.

Breaches in our information technology (IT) security processes may adversely impact the conduct of our business activities

We maintain global IT and communication networks and applications to support our business activities. IT security processes protecting these systems are in place and subject to assessment as part of the review of internal control over financial reporting. These processes may not prevent future malicious action or fraud by individuals or groups, resulting in the corruption of operating systems, theft of commercially sensitive data, misappropriation of funds and disruptions to our business operations.

A breach in our governance processes may lead to regulatory penalties and loss of reputation

We operate in a global environment straddling multiple jurisdictions and complex regulatory frameworks. Our governance and compliance processes, which include the review of internal control over financial reporting, may not prevent future potential breaches of law, accounting or governance practice. Our BHP Billiton Code of Business Conduct, anti-bribery and corruption, and anti-trust standards may not prevent instances of fraudulent behaviour and dishonesty nor guarantee compliance with legal or regulatory requirements. This may lead to regulatory fines, litigation, loss of operating licences or loss of reputation.

1.6 Forward looking statements

This Annual Report contains forward looking statements, including statements regarding:

 

   

estimated reserves

 

   

trends in commodity prices

 

   

demand for commodities

 

   

plans, strategies and objectives of management

 

   

closure or divestment of certain operations or facilities (including associated costs)

 

   

anticipated production or construction commencement dates

 

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expected costs or production output

 

   

anticipated productive lives of projects, mines and facilities

 

   

provisions and contingent liabilities.

Forward looking statements can be identified by the use of terminology such as ‘intend’, ‘aim’, ‘project’, ‘anticipate’, ‘estimate’, ‘plan’, ‘believe’, ‘expect’, ‘may’, ‘should’, ‘will’, ‘continue’ or similar words. These statements discuss future expectations concerning the results of operations or financial condition, or provide other forward looking statements.

These forward looking statements are not guarantees or predictions of future performance, and involve known and unknown risks, uncertainties and other factors, many of which are beyond our control, and which may cause actual results to differ materially from those expressed in the statements contained in this Annual Report. Readers are cautioned not to put undue reliance on forward looking statements.

For example, our future revenues from our operations, projects or mines described in this Annual Report will be based, in part, upon the market price of the minerals, metals or petroleum produced, which may vary significantly from current levels. These variations, if materially adverse, may affect the timing or the feasibility of the development of a particular project, the expansion of certain facilities or mines, or the continuation of existing operations.

Other factors that may affect the actual construction or production commencement dates, costs or production output and anticipated lives of operations, mines or facilities include our ability to profitably produce and transport the minerals, petroleum and/or metals extracted to applicable markets; the impact of foreign currency exchange rates on the market prices of the minerals, petroleum or metals we produce; activities of government authorities in some of the countries where we are exploring or developing these projects, facilities or mines, including increases in taxes, changes in environmental and other regulations and political uncertainty; and other factors identified in the description of the risk factors above.

We cannot assure you that our estimated economically recoverable reserve figures, closure or divestment of such operations or facilities, including associated costs, actual production or commencement dates, cost or production output or anticipated lives of the projects, mines and facilities discussed in this Annual Report, will not differ materially from the statements contained in this Annual Report.

Except as required by applicable regulations or by law, the Group does not undertake any obligation to publicly update or review any forward looking statements, whether as a result of new information or future events.

 

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2 Information on the Company

2.1 BHP Billiton locations

LOGO

Petroleum

 

Ref

  

Country

  

Asset

  

Description

   Ownership  

1

   Algeria    Ohanet    Joint operator with Sonatrach of wet gas development    45

2

   Algeria    ROD Integrated Development    Onshore oil development (non-operated)    38

3

   Australia    BassStrait    Producer of oil, condensate, LPG, natural gas and ethane (non-operated)    50

4

   Australia    Minerva    Operator of Minerva gas field development in the Otway Basin of Victoria    90

5

   Australia    North West Shelf    One of Australia’s largest resource projects, producing liquids, LNG and domestic gas (non-operated)    8.33 – 16.67

6

   Australia    Pyrenees    Operator of Pyrenees floating, production, storage and offloading vessel, which produces oil in Western Australia    71.43

7

   Australia    Stybarrow    Operator of Stybarrow floating, production, storage and offloading vessel, which produces oil in Western Australia    50

8

   Pakistan    Zamzama    Operator of onshore gas development in Sindh province    38.5

9

   Trinidad and Tobago    Angostura    Operator of oil field located offshore east Trinidad    45

10

   UK    Bruce/Keith    Oil and gas production in the UK North Sea    Bruce – 16

Keith – 31.83


11

   UK    Liverpool Bay    Operator of oil and gas developments in the Irish Sea    46.1

12

   US    Gulf of Mexico   

Interests in several producing assets, including deepwater oil and gas production at:

- Atlantis (44%)

- Shenzi (44%)

- Mad Dog (23.9%)

- Neptune (35%)

 

Additional other interests in producing assets and a significant exploration acreage position (4.95–100%)

   4.95 – 100

 

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Aluminium

 

Ref

  

Country

  

Asset

  

Description

   Ownership  

13

   Australia    Worsley    Integrated alumina refinery and bauxite mine in Western Australia    86

14

   Brazil    Alumar    Integrated alumina refinery and aluminium smelter    36–40

15

   Brazil    MRN    Bauxite mine    14.8

16

   Mozambique    Mozal    Aluminium smelter near Maputo    47.1

17

   SouthAfrica    Aluminium South Africa    Two aluminium smelters at Richards Bay    100

Base Metals

 

Ref

  

Country

  

Asset

  

Description

   Ownership  

18

   Australia    Cannington    Silver, lead and zinc mine in northwest Queensland    100

19

   Chile    Pampa Norte    Integration of Cerro Colorado and Spence open-cut mines producing copper cathode in Atacama Desert, northern Chile    100

20

   Chile    Escondida    The world’s largest copper mine, located in northern Chile    57.5

21

   Peru    Antamina    Copper and zinc mine located in the Andes, north-central Peru    33.75

22

   US    Pinto Valley    Copper mine located in State of Arizona    100

Uranium (a)

 

Ref

  

Country

  

Asset

  

Description

   Ownership  

23

   Australia    Olympic Dam    The largest poly-metallic ore body in the world and Australia’s biggest underground mine, producing uranium, copper and gold    100

 

(a) Uranium forms part of the Base Metals Customer Sector Group.

Diamonds and Specialty Products

 

Ref

  

Country

  

Asset

  

Description

   Ownership  

24

   Canada    EKATI    Diamond mines in the Northwest Territories of Canada    80

25

   South Africa    Richards Bay Minerals    Integrated titanium smelter and mineral sands mine    37

Stainless Steel Materials

 

Ref

  

Country

  

Asset

  

Description

   Ownership  

26

   Australia    Nickel West    Sulphide nickel assets including Mt Keith and Leinster nickel operations, Kalgoorlie nickel smelter and Kambalda nickel concentrator and the Kwinana nickel refinery    100

27

   Colombia    Cerro Matoso    Integrated laterite ferronickel mining and smelting complex in northern Colombia    99.94

Iron Ore

 

Ref

  

Country

  

Asset

  

Description

   Ownership  

28

   Australia    Western Australia Iron Ore    Integrated iron ore mines, rail and port operations in the Pilbara    85–100

29

   Brazil    Samarco    An efficient low-cost producer of iron ore pellets in southeast Brazil    50

 

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Manganese

 

Ref

  

Country

  

Asset

  

Description

   Ownership  

30

   Australia    GEMCO    Producer of manganese ore in the Northern Territory    60

31

   Australia    TEMCO    Producer of manganese alloys in Tasmania    60

32

   South Africa    Samancor Manganese    Integrated producer of manganese ore (Hotazel Manganese Mines) and alloy (Metalloys)    60

Metallurgical Coal

 

Ref

  

Country

  

Asset

  

Description

   Ownership  

33

   Australia    Illawarra Coal    Underground coal mines (West Cliff, Dendrobium, Appin) in southern NSW, with access to rail and port facilities    100

34

   Australia    BHP Billiton Mitsubishi Alliance    Integrated mine, rail and port operations, including a loading terminal at Hay Point, in the Bowen Basin, Central Queensland    50

35

   Australia    BHP Mitsui Coal    Two open-cut coal mines in the Bowen Basin, Central Queensland    80

Energy Coal

 

Ref

  

Country

  

Asset

  

Description

   Ownership  

36

   Australia    NSW Energy Coal    Open-cut coal mine that supplies thermal coal to export markets and for domestic electricity generation    100

37

   Colombia    Cerrejón    Largest thermal coal exporter in Colombia, with integrated rail and port facilities    33.3

38

   South Africa    BHP Billiton Energy Coal South Africa    One of the largest producers and exporters of thermal coal in South Africa    50–100

39

   US    New Mexico Coal    Two mines in New Mexico supplying energy coal to adjacent power stations    100

BHP Billiton office locations

 

Ref

  

Country

  

Office location

  

Business area

40

   Australia    Adelaide   

Shared Services Centre

Uranium Head Office

Marketing

41

   Australia    Brisbane   

Metallurgical Coal Head Office

Project Hub

Marketing

42

   Australia    Melbourne    Global Headquarters

43

   Australia    Newcastle    Marketing

44

   Australia    Perth   

Iron Ore Head Office

Project Hub

Stainless Steel Materials Head Office

Marketing

45

   Australia    Sydney    Energy Coal Head Office

46

   Belgium    Antwerp    Marketing

47

   Brazil    Rio de Janeiro    Marketing

48

   Canada    Vancouver   

Diamonds and Specialty Products Head Office

Project Hub

 

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Ref

  

Country

  

Office location

  

Business area

49

   Chile    Santiago   

Base Metals Head Office

Marketing

Project Hub

Shared Services Centre

50

   China    Shanghai    Marketing

51

   India    New Delhi    Marketing

52

   Japan    Tokyo    Marketing

53

   Malaysia    Kuala Lumpur    Global Shared Services Centre

54

   Netherlands    The Hague    Marketing

55

   Pakistan    Islamabad    Marketing

56

   Singapore    Singapore   

Corporate Centre

Marketing

Minerals Exploration

57

   South Africa    Johannesburg   

Manganese Head Office

Marketing

58

   South Africa    Richards Bay    Marketing

59

   South Korea    Seoul    Marketing

60

   Switzerland    Baar    Marketing

61

   UK    London   

Aluminium Head Office

Corporate Centre

62

   US    Houston   

Petroleum Head Office

Project Hub

Shared Services Centre

Marketing

63

   US    Pittsburgh    Marketing

Projects and exploration activities are not shown on this map

 

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Offices

 

  l Operations

2.2 Business Overview

2.2.1 History and development

Since 29 June 2001, we have operated under a Dual Listed Company (DLC) structure. Under the DLC structure, the two parent companies, BHP Billiton Limited (formerly BHP Limited and before that The Broken Hill Proprietary Company Limited) and BHP Billiton Plc (formerly Billiton Plc) operate as a single economic entity, run by a unified Board and management team. More details of the DLC structure are located under section 2.11 of this Report.

BHP Billiton Limited was incorporated in 1885 and is registered in Australia with ABN 49 004 028 077. BHP Billiton Plc was incorporated in 1996 and is registered in England and Wales with registration number 3196209. Successive predecessor entities to BHP Billiton Plc have operated since 1860.

The registered office of BHP Billiton Limited is 180 Lonsdale Street, Melbourne, Victoria 3000, Australia, and its telephone number is 1300 55 47 57 (within Australia) or +61 3 9609 3333 (outside Australia). The registered office of BHP Billiton Plc is Neathouse Place, London SW1V 1BH, UK, and its telephone number is +44 20 7802 4000. Our agent for service in the United States is Earl K. Moore at 1360 Post Oak Boulevard, Suite 150, Houston, TX 77056.

 

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2.2.2 Petroleum Customer Sector Group

Our Petroleum CSG comprises a base of large, long-life, low unit cost production operations that are located in six countries throughout the world. We pursue significant upstream opportunities with multiple options for growth to ensure continued success.

During FY2010, Petroleum delivered its third consecutive annual production record by realising 158.56 million barrels of oil equivalent following the successful delivery of a series of growth projects in the Gulf of Mexico and Australia. The Pyrenees facility (Australia) was brought on stream on schedule during the third quarter FY2010 and our deepwater Shenzi field (US) performed at or above design capacity during the year. We also realised strong reservoir performance from Atlantis North (US). All three factors plus strong base operating uptime worldwide contributed to a 27 per cent increase in high margin crude oil and condensate production over the previous year. This was accomplished while keeping our unit operating cost below US$6 per barrel.

Production in FY2010 from our Gulf of Mexico projects has not been materially impacted by events following the oil spill from BP’s Macondo well. However, our current understanding of the Gulf of Mexico drilling moratorium, updated by the US Department of the Interior on 12 July 2010, indicates that it will be extremely unlikely for any new producing wells to commence drilling until at least very late in CY2010 which is expected to have a significant impact on FY2011 production.

We continue to invest in our business through economic cycles and maintain a long-term view. Our consistently strong project execution over the past four years has led us to successfully deliver four major operated projects, the latest one being the Pyrenees floating production storage and offtake facility offshore Western Australia. Combined with Shenzi and Neptune in the deepwater Gulf of Mexico and Stybarrow in Western Australia, we have proven our ability to safely deliver large, technically-challenging projects in diverse and challenging environments.

Our financial strength allows us to continue to aggressively pursue exploration opportunities around the globe. Our focus is on capturing and operating large acreage positions in areas that are material to BHP Billiton. Over the past four years, we have substantially grown our captured acreage position and commenced one of the most aggressive drilling campaigns in the Group’s history that will continue into the coming years.

Information on Petroleum operations

The following table contains additional details of our production operations. This table should be read in conjunction with the production (see section 2.3.1) and reserve tables (see section 2.14.1).

 

Name, location and type of asset

  

Ownership and operation

  

Title/lease

  

Facilities

AUSTRALIA         

Bass Strait

 

Offshore Victoria, Australia

Oil and gas production

  

We hold a 50% interest in the Bass Strait fields. Esso Australia, a subsidiary of Exxon Mobil, owns the other 50% interest and is the operator.

 

Oil Basins Ltd holds a 2.5% royalty interest in 18 of the production licences.

  

The venture holds 20 production licences and two retention leases issued by the Commonwealth of Australia with expiry dates ranging between 2016 to end of life of field.

 

One of the 20 production licences is held with additional partner Santos Ltd.

  

There are 20 producing fields with 21 offshore developments (14 steel jacket platforms, three subsea developments, two steel gravity based mono towers and two concrete gravity based platforms).

 

Onshore infrastructure includes the Longford Facility, which includes three gas plants and liquid processing facilities, interconnecting pipelines, the Long Island Point LPG and crude oil storage facilities and an ethane pipeline.

 

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Name, location and type of asset

  

Ownership and operation

  

Title/lease

  

Facilities

              

The Bass Strait production capacity
is as follows:

- Crude – 200 Mbbl/d

- Gas – 1,075 MMcf/d

- LPG – 5,150 tpd

- Ethane – 850 tpd

North West Shelf (NWS) – gas, LNG, LPG and condensate

 

North Rankin, Goodwyn, Perseus, Echo-Yodel and Angel, and Searipple fields offshore Dampier in Western Australia, Australia

 

Domestic gas, LPG and condensate production and LNG liquefactions

  

We are a participant in the NWS Project, an unincorporated joint venture. We hold 8.33% of the original domestic gas joint venture. Our share of domestic gas production will progressively increase from 8.33% to 16.67%. We also hold 16.67% of the Incremental Pipeline Gas (IPG) domestic gas joint venture, 16.67% of the original LNG joint venture, 12.5% of the China LNG joint venture, 16.67% of the LPG joint venture and approximately 15% of current condensate production.

 

Other participants in the respective NWS joint ventures are subsidiaries of Woodside Energy, Chevron, BP, Shell, Mitsubishi/Mitsui and the China National Offshore Oil Corporation.

 

Woodside Petroleum Ltd is the operator.

   The venture holds nine production licences issued by the Commonwealth of Australia, of which six expire in 2022 and three expire five years after the end of production.   

Production from the North Rankin and Perseus fields is currently processed through the North Rankin A platform, which has the capacity to produce 2,300 MMcf/d of gas and 60 Mbbl/d of condensate.

 

Production from the Goodwyn, Searipple and Echo-Yodel fields is processed through the Goodwyn A platform, which has the capacity to produce 1,450 MMcf/d of gas and 110 Mbbl/d of condensate. Four subsea wells in the Perseus field are tied into the Goodwyn A platform.

 

Production from Angel field is currently processed through the Angel platform, which has the capacity to produce 960 MMcf/d of gas and 50 Mbbl/day of condensate.

 

An onshore gas treatment plant at Withnell Bay has a current capacity to process approximately 600 MMcf/d of gas for the domestic market.

 

An existing five train LNG plant has the capacity to produce an average rate of 45,000 tpd of LNG.

North West Shelf – crude oil

 

Approximately 30 km northeast of the North Rankin gas and condensate field, offshore Western Australia, Australia

 

Crude oil production is from the Wanaea, Cossack, Lambert and Hermes oil fields.

  

We hold a 16.67% working interest in oil production from these fields. The other 83.33% is held by Woodside Energy (33.34%), with BP Developments Australia, Chevron Australia, and Japan Australia LNG (MIMI) each holding 16.67%.

 

Woodside Petroleum Ltd is the operator.

   The venture holds three production licences issued by the Commonwealth of Australia, with expiry dates ranging between 2012 and 2018.    The oil is produced to a floating production storage and offtake unit, the Cossack Pioneer, which has a production capacity of 140 Mbbl/d and a storage capacity of 1.15 MMbbl of crude oil.

Griffin

 

Situated in the Carnarvon Basin, 62 km offshore Western Australia, Australia

Comprises the Griffin, Chinook and Scindian offshore oil and gas fields

  

We hold a 45% interest in the Griffin venture. The other 55% is held by Mobil Exploration and Producing Australia (35%) and Inpex Alpha (20%).

 

We are the operator.

  

The venture holds a production licence issued by the Commonwealth of Australia that expires in 2014.

 

The venture ceased production in October 2009.

   Oil and gas were produced using a floating production storage and offtake facility. Natural gas was piped to shore, where it was delivered directly into a pipeline.

Minerva

 

Approximately 10 km offshore in the Otway Basin of Victoria, Australia

 

Single offshore gas reservoir with two compartments. Gas plant is situated approximately 4 km inland from Port Campbell.

  

We hold a 90% share of the Minerva venture. The other 10% is held by Santos (BOL) Pty Ltd.

 

We are the operator.

   The venture holds a production licence issued by the Commonwealth of Australia that expires five years after production ceases.    The Minerva development consists of two well completions in 60 m of water. A single flow line transports gas to an onshore gas processing facility with an original production design capacity of 150 TJ/d and 600 bbl/d of condensate.

 

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Name, location and type of asset

  

Ownership and operation

  

Title/lease

  

Facilities

Stybarrow

 

Situated in the Exmouth Sub-basin, 65 km offshore Western Australia, Australia

 

Comprises the Stybarrow and Eskdale oil and gas fields.

  

We own a 50% share of the Stybarrow venture. The other 50% interest is held by Woodside Energy.

 

We are the operator.

   The venture holds a production licence issued by the Commonwealth of Australia that expires five years after production ceases.   

Oil is produced by the Stybarrow development which comprises of a floating production storage and offtake facility, nine subsea well completions (including five producers, three water injectors and one gas injector) in 825 m of water.

 

The Stybarrow facility has a crude oil production and storage capacity of 80 Mbbl/d and 900 Mbbl respectively. Gas production is reinjected into the reservoirs.

Pyrenees

 

Situated in the Exmouth Sub-basin, 23 km offshore Western Australia, Australia

 

Comprises the Crosby, Stickle and Ravensworth oil fields. The Ravensworth field straddles both the WA-42-L and WA-43-L production permits.

  

We hold a 71.43% share in the WA-42-L permit. The remaining 28.57% is held by Apache PVG. We hold a 40% share in the WA-43-L permit. The remaining 60.01% is held by Apache Permits (31.5%) and Inpex Alpha (28.5%).

 

We are the operator.

   The venture holds a production licence issued by the Commonwealth of Australia that expires five years after production ceases.   

Oil is produced by the Pyrenees development which comprises of a floating production storage and offtake facility, 17 subsea well completions (including thirteen producers, three water injectors and one gas injector) in an average water depth of 200 m.

 

The Pyrenees facility has crude oil production and storage capacity of 96 Mbbl/de and 920 Mbbl respectively.

Production commenced in third quarter FY2010.

UNITED STATES         

Neptune (Green Canyon 613)

 

Gulf of Mexico, approximately 195 km offshore of Fourchon, Louisiana, US

 

Deepwater oil and gas field

  

We hold a 35% interest in the joint venture.

 

The other owners are Marathon Oil (30%), Woodside Energy (20%) and Maxus US Exploration (15%).

 

We are the operator.

   The venture holds a lease from the US as long as oil and gas are produced in paying quantities.   

The production facility consists of a tension-leg platform permanently moored in 1,300 m of water.

 

The facility has nameplate processing capacity of 50 Mbbl/d of oil and 50 MMcf/d of gas.

Shenzi (Green Canyon 653 )

 

Gulf of Mexico, approximately 200 km offshore of Fourchon, Louisiana, US

 

Deepwater oil and gas field

  

We hold a 44% interest in the joint venture.

 

The other owners are Hess Corporation (28%) and Repsol (28%).

 

We are the operator.

   The venture holds a lease from the US as long as oil and gas are produced in paying quantities.   

The Shenzi production facility consists of a stand-alone tension-leg platform (TLP) permanently moored in 1,310 m of water.

 

The facility has nameplate processing capacity of 100 Mbbl/d of oil and 50 MMcf/d of gas.

 

The Genghis Khan field is part of the same geological structure as the Shenzi project and consists of a tieback to the existing Marco Polo TLP.

West Cameron 76

 

Gulf of Mexico, approximately 20 km offshore, Central Louisiana, US

 

Offshore gas and condensate field

  

We hold a 33.76% interest in the joint venture.

 

The other owners are ENI Petroleum (40%), Merit Management Partners (15%) and Ridgewood Energy Company (11.24%).

 

We are the operator.

   The venture holds a lease from the US as long as oil and gas are produced in paying quantities.    The production facility consists of two conventional gas platforms with a capacity of 120 MMcf/d of gas and 800 bbl/d of condensate.

 

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Name, location and type of asset

  

Ownership and operation

  

Title/lease

  

Facilities

Starlifter (West Cameron 77)

 

Gulf of Mexico, approximately 25 km offshore, Central Louisiana, US

 

Offshore gas and condensate field

  

We hold a 30.95% interest in the joint venture.

 

The other owners are McMoRan (33.75%), Seneca Resources (11.25%) Merit Management Partners (13.75%) and Ridgewood Energy Company (10.3%).

 

We are the operator.

   The venture holds a lease from the US as long as oil and gas are produced in paying quantities.    The production facility consists of a single conventional gas platform with a capacity of 40 MMcf/d of gas and 450 bbl/d of condensate.

Mustang (West Cameron 77)

 

Gulf of Mexico, approximately 25 km offshore, Central Louisiana, US

 

Offshore gas and condensate field

  

We hold a 43.66% interest in the joint venture.

 

The other owners are ENI Petroleum (22.4%), Merit Management Partners (19.4%) and Ridgewood Energy Company (14.54%).

 

We are the operator.

   The venture holds a lease from the US as long as oil and gas are produced in paying quantities.    The production facility consists of a single conventional gas platform with a capacity of 40 MMcf/d of gas and 450 bbl/d of condensate.

Atlantis (Green Canyon 743)

 

Gulf of Mexico, approximately 200 km offshore of Fourchon, Louisiana, US

 

Deepwater oil and gas field

  

We hold a 44% working interest in the joint venture.

 

The other owner is BP (56%).

 

BP is the operator.

   The venture holds a lease from the US as long as oil and gas are produced in paying quantities.   

The production facility consists of a semi-submersible platform permanently moored in 2,155 m of water.

 

The facility has nameplate processing capacity of 200 Mbbl/d of oil and 180 MMcf/d of gas.

Mad Dog (Green Canyon 782)

 

Gulf of Mexico, approximately 210 km offshore of Fourchon, Louisiana, US

 

Deepwater oil and gas field

  

We hold a 23.9% interest in the joint venture.

 

The other owners are BP (60.5%) and Chevron (15.6%).

 

BP is the operator.

   The venture holds a lease from the US as long as oil and gas are produced in paying quantities.   

The production facility consists of an integrated truss spar equipped with facilities for simultaneous production and drilling operations, permanently moored in 1,310 m of water.

 

The facility has the capacity to process 100 Mbbl/d of oil and 60 MMcf/d of gas.

Genesis (Green Canyon 205)

 

Gulf of Mexico, approximately 155 km offshore of Fourchon, Louisiana, US

 

Deepwater oil and gas field

  

We hold a 4.95% interest in the joint venture.

 

The other owners are Chevron (56.67%) and ExxonMobil (38.38%).

 

Chevron is the operator.

   The venture holds a lease from the US as long as oil and gas are produced in paying quantities.    The production facility consists of a floating cylindrical hull (spar) moored to the seabed with integrated drilling facilities and a capacity of 55 Mbbl/d of oil and 72 MMcf/d of gas.

 

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Name, location and type of asset

  

Ownership and operation

  

Title/lease

  

Facilities

OTHER         

Liverpool Bay

 

Douglas and Douglas West oil fields, Hamilton, Hamilton North and Hamilton East gas fields, and Lennox oil and gas field in the Irish Sea, approximately 10 km off the northwest coast of England

 

Offshore oil and gas fields

  

We hold a 46.1% interest in the joint venture. The other 53.9% is held by ENI.

 

We are the operator.

   The joint venture holds three production licences issued by the Crown of the United Kingdom, which expire in 2016, 2025 and 2027.   

The Liverpool Bay asset is an integrated development of six fields.

 

Oil from the Lennox and Douglas fields is treated at the Douglas complex and piped 17 km to an oil storage barge for export by tankers.

 

Gas from the Hamilton, Hamilton North, Hamilton East and Lennox fields is initially processed at the Douglas complex then piped by subsea pipeline to the Point of Ayr gas terminal for further processing. The facility has the capacity to produce 308 MMcf/d of gas and 70 Mbbl/d of oil and condensate.

Bruce/Keith

 

North Sea, approximately 380 km northeast offshore of Aberdeen, Scotland

 

The Keith field is located adjacent to the Bruce field.

 

Offshore oil and gas fields

  

We hold a 16% interest in the Bruce field. The other 84% is owned by BP (37%), Total (43.25%) and Marubeni (3.75%).

 

BP is the operator of Bruce.

 

We hold a 31.83% interest in the Keith field. The other 68.17% is owned by BP (34.84%), Total (25%) and Marubeni (8.33%).

 

We are the operator of Keith.

   The joint venture holds three production licences issued by the Crown of the United Kingdom, which expire in 2011, 2015 and 2018.   

Production is via an integrated oil and gas platform. The capacity of the Bruce facility has, since 2002, been increased to 920 MMcf/d.

The Keith field was developed as a tie-back to the Bruce platform facilities.

Ohanet

 

Approximately 1,300 km southeast of Algiers, Algeria

 

Four onshore gas and condensate fields

  

We have an effective 45% interest in the Ohanet joint venture. The other 55% is held by Japan Ohanet Oil and Gas Co. Ltd. (30%), Woodside Energy (Algeria) Pty. Ltd. (15%) and Petrofac Energy Developments (Ohanet) LLC (10%).

 

The project is operated by a Sonatrach/BHP Billiton staffed organisation.

  

The joint venture is party to a risk service contract with the title holder, Sonatrach, which expires in 2011, with an option to extend under certain conditions.

 

Under this contract, the joint venture is reimbursed and remunerated for its investments in liquids.

   Ohanet is a wet gas (LPG and condensate) development consisting of four gas and condensate fields and a gas processing plant with the capacity to treat 20 MMcm/d of wet gas and 61 Mbbl/d of associated liquids (LPG and condensate).

ROD Integrated Development

 

Berkine Basin, 900 km southeast of Algiers, Algeria

 

Six onshore oil fields

  

We hold a 45% interest in the 401a/402a production sharing contract, with ENI holding the remaining 55%.

 

We have an effective 38% interest in ROD unitised integrated development. ENI owns the remaining 62%. Our interest is subject to a contractual determination to ensure that interest from participating association leases is accurately reflected. Future redetermination of our interest may be possible under certain conditions.

 

A joint Sonatrach/ENI entity is the operator.

   The venture is party to a production sharing contract with the title holder, Sonatrach, which expires in 2016, with an option for two five-year extensions under certain conditions.   

Comprises the development and production of six oil fields, the largest two of which, ROD and SFNE, extend into the neighbouring blocks 403a and 403d.

 

The ROD Integrated Development is being produced through a dedicated processing train located adjacent to BRN processing facilities on block 403, with the capacity to process approximately 80 Mbbl/d of oil.

 

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Name, location and type of asset

  

Ownership and operation

  

Title/lease

  

Facilities

Greater Angostura

 

Approximately 40 km off the east coast of Trinidad

 

Shallow water oil and gas field

  

We hold a 45% interest in the joint venture.

 

The other 55% is held by Total (30%) and Chaoyang (25%).

 

We are the operator.

   The venture has entered into a production sharing contract with the Republic of Trinidad and Tobago that entitles the contractor to operate Greater Angostura until 2021.   

Greater Angostura is an integrated oil and gas development. The infrastructure consists of a steel jacketed central processing platform with three satellite wellhead protector platforms and flow lines. A pipeline connects the processing platform to storage facilities at Guayaguayare, where an export pipeline has been installed to allow for offloading to tankers in Guayaguayare Bay.

 

The facility has the capacity to process 100 Mbbl/d of oil.

Zamzama

 

Dadu Block, Sindh Province, Pakistan

 

Onshore gas wells

  

We hold a 38.5% working interest in the joint venture. The other 61.5% is owned by ENI Pakistan (M) Ltd (17.75%), PKP Exploration Ltd (9.375%), PKP Exploration Ltd 2 (9.375%), and Government Holdings (Private) Limited (25%).

 

We are the operator.

   20-year development and production lease starting April 2002 from the Government of Pakistan (with an option to extend five years beyond the 20-year term).    Zamzama currently consists of eight production wells and four process trains, with an existing capacity of 500 MMcf/d of gas and 3,350 bbl/d of condensate.

Our production assets are as follows:

Bass Strait

Together with our 50–50 joint venture partner, Esso Australia, a subsidiary of ExxonMobil, we have been producing oil and gas from Bass Strait, off the south-eastern coast of the Australian mainland, for 40 years, having participated in the original discovery of hydrocarbons there in 1965. We dispatch the majority of our Bass Strait crude oil and condensate production to refineries along the east coast of Australia. Gas is piped ashore to our Longford processing facility, from where we sell our production to domestic distributors under contracts with periodic price reviews.

North West Shelf

We are a domestic gas joint venture participant in the North West Shelf Project in Western Australia. The North West Shelf Project was developed in phases: the domestic gas phase, which supplies gas to the Western Australian domestic market mainly under long-term contracts, and a series of LNG expansion phases, which supply LNG to buyers in Japan, Korea and China under a series of long-term contracts. The North West Shelf Project also produces LPG and condensate.

We are also a joint venture participant in four nearby oil fields. Both the North West Shelf gas and oil ventures are operated by Woodside Petroleum Ltd.

Australia Operated

We are the operator of two oil fields offshore Western Australia and one gas field in Victoria.

The Pyrenees asset came on line in the third quarter FY2010 and is an oil development which consists of three fields (Crosby, Stickle and Ravensworth) located offshore Western Australia. The project uses a floating production storage and offtake facility.

The Stybarrow asset (50 per cent BHP Billiton share) is an oil development located offshore Western Australia. The project uses a floating production storage and offtake facility.

The Minerva asset (90 per cent BHP Billiton share) is a gas field located offshore Victoria. The asset consists of two subsea producing wells which pipe gas onshore to a processing plant. The gas is delivered into a pipeline and sold domestically.

Gulf of Mexico

We operate three fields in the Gulf of Mexico (Neptune, Shenzi and consolidated operations in the West Cameron area), and hold non-operating interests in a further three fields (Atlantis, Mad Dog and Genesis). We also own 25 per cent and 22 per cent, respectively, of the companies that own and operate the Caesar oil pipeline and the Cleopatra gas pipeline which transport oil and gas from the Green Canyon area, where a number of our fields are located, to connecting pipelines that transport product to the mainland. We deliver our oil production to refineries along the Gulf Coast of the United States.

 

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Liverpool Bay and Bruce/Keith

The Liverpool Bay integrated development consists of six offshore gas and oil fields in the Irish Sea, the Point of Ayr onshore processing plant in North Wales, and associated infrastructure. We deliver all of the Liverpool Bay gas by pipeline to E.ON’s Connah’s Quay power station. We own 46.1 per cent of and operate Liverpool Bay. We also hold a 16 per cent non-operating interest in the Bruce oil and gas field in the North Sea and operate the Keith field, a subsea tie-back, which is processed via the Bruce platform facilities.

Algeria

Our Algerian assets comprise our effective 45 per cent interest in the Ohanet wet gas development and our effective 38 per cent interest in the ROD Integrated Development, which consists of six satellite oil fields that pump oil back to a dedicated processing train.

Trinidad and Tobago

The Greater Angostura project is an integrated oil and gas development located offshore east Trinidad. We are the operator of the field and have a 45 per cent interest in the production sharing contract for the project.

Zamzama

We hold a 38.5 per cent working interest in and operate the Zamzama gas project in Sindh province of Pakistan. Both gas and condensate are sold domestically.

Development projects

Australia

North West Shelf North Rankin gas compression project

In March 2008, the Board approved the North West Shelf gas compression project to recover remaining lower pressure gas from the North Rankin and Perseus gas fields. A new gas compression platform, North Rankin B, capable of processing 2,500 million cubic feet of gas per day will be constructed adjacent to the existing North Rankin A platform, 135 kilometres offshore from Karratha on the northwest coast of Western Australia. The two platforms will be connected by a 100 metre long bridge and operate as a single facility. Our 16.67 per cent share of development costs is approximately US$850 million, of which US$257 million was incurred as of 30 June 2010. First gas is expected in 2012.

North West Shelf Cossack, Wanaea, Lambert, Hermes (CWLH) life extension

In December 2008, approval was announced to undertake a redevelopment project to replace and refurbish CWLH facilities because the existing operation had performed above expectation and had an expected field life much longer than originally planned. The project consists of the replacement of the existing Cossack Pioneer floating production storage and offtake vessel and selected refurbishment of existing subsea infrastructure and the existing riser turret mooring. Our 16.67 per cent share of the cost is approximately US$245 million, of which US$111 million was incurred as of 30 June 2010. First production through the redeveloped facilities is expected in CY2011.

Bass Strait Kipper gas field development

Initial development of the Kipper gas field in the Gippsland Basin located offshore Victoria was approved by the Board in December 2007. The first phase of the project includes two new subsea wells, three new pipelines and platform modifications to supply 10 thousand barrels of condensate per day and 80 million cubic feet of gas per day. Gas and liquids will be processed via the existing Gippsland Basin joint venture facilities. Our share of development costs is approximately US$500 million, of which US$216 million was incurred as of 30 June 2010. The initial production target date is CY2011. The schedule and budget are currently under review following advice from the operator.

We own a 32.5 per cent interest in the Kipper Unit Joint Venture, with Esso Australia and Santos owning the remaining 67.5 per cent. We own a 50 per cent interest in the Gippsland Basin joint venture.

 

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Bass Strait Turrum field development

Further expansion of the Gippsland Basin facilities is underway with the Board approving the full field development of the Turrum oil and gas field in July 2008. The project consists of a new platform, Marlin B, linked by a bridge to the existing Marlin A platform. The Turrum field, which has a capacity of 11 thousand barrels of oil per day and 200 million cubic feet of gas per day, is located 42 kilometres from shore in approximately 60 metres of water. Our share of development costs is approximately US$625 million, of which US$270 million was incurred as of 30 June 2010. The initial production target date is CY2011. The schedule and budget are currently under review following advice from the operator.

Other

Greater Angostura Phase 2

In September 2008, we announced the signing of a gas sales contract with the National Gas Company of Trinidad and Tobago Limited (NGC) for the purchase of gas from the second phase of the Greater Angostura field. In August 2008, we sanctioned an investment of approximately US$400 million (US$180 million our share, of which US$117 million was incurred as of 30 June 2010) to construct and install a new gas export platform alongside the Company’s existing facilities within the Greater Angostura Field. Fabrication of the 280 million cubic feet per day facility started in February 2009 and is expected to be online during CY2011.

The development also includes modifications to the existing Greater Angostura facilities and the installation of a new flowline. NGC will take delivery of the gas at the new gas export platform and will transport it in their proposed 36 inch diameter Northeastern Offshore Pipeline to Trinidad and a 12 inch diameter Tobago pipeline.

The Greater Angostura field includes oil and gas discoveries at Aripo, Kairi and Canteen. We hold a 45 per cent interest in the joint venture. Other partners are Total (30 per cent interest) and Chaoyang Petroleum (BVI) Limited (25 per cent interest), a consortium between CNOOC and Sinopec.

Exploration and appraisal

We focus on capturing and operating large acreage positions in areas that are material to the Group. We have exploration interests throughout the world, particularly in the Gulf of Mexico, Australia, South East Asia, and Latin America. During the year, our gross expenditure on exploration was US$817 million, of which US$563 million was expensed. Our major exploration interests are as follows:

Australia

We have a 50 per cent interest in the Gippsland Basin joint venture with Esso Australia Ltd. Operations for the South East Remora-1 wildcat well commenced in December 2009 and the well encountered a hydrocarbon-bearing interval. The well has been plugged and abandoned and continues to be evaluated for development potential.

In October 2009, exploration block WA-346-P was renewed for an additional five years following the expiry of the initial six-year term. WA-346-P contains the existing Thebe and Jupiter gas fields and the northern portion of the Scarborough gas field. The work program in the five year term includes one exploration well as well as continued evaluation of the development potential of the existing discoveries. We operate WA-346-P and hold a 100 per cent interest.

Exploration block WA-351-P, located on the Exmouth Plateau south of Scarborough, was also renewed in June 2010 for an additional five years following the initial six-year term. The work program includes one exploration well and geological and geophysical studies within the five-year term. We operate WA-351-P and hold a 55 per cent interest with Tap Oil (25 per cent) and Roc Oil (20 per cent) holding the remainder.

In June 2009, we farmed into block WA-335-P to the south of WA-351-P, acquiring 30 per cent equity from the joint venture partners Apache (45.5 per cent) and Kufpec (24.5 per cent). A 3D seismic survey covering all of block WA-335-P has commenced.

In August 2009, Woodside Browse Pty Ltd farmed into the AC/RL8 retention lease over the Argus gas field, acquiring a 43.33 per cent working interest from us. Woodside subsequently acquired Petronas’ equity in the block, taking their interest to 60 per cent with BHP Billiton retaining a 40 per cent interest.

 

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United States

Knotty Head - Green Canyon 512

We currently own a 25 per cent interest in the Knotty Head prospect, located in Green Canyon Block 512. Partners in the field are Nexen (25 per cent), Unocal (25 per cent) and Statoil (25 per cent). Knotty Head appraisal well-2 was drilled in October 2009 and concluded in March 2010. The appraisal well was drilled to a total of 33,227 feet measured depth or 32,446 feet true vertical depth and evaluated the western portion of the block. Development options for the field are currently being evaluated.

Deep Blue - Green Canyon 723

We currently own a 31.875 per cent interest in the Deep Blue prospect located in the Green Canyon area. Partners in the well are Noble (33.75 per cent), Statoil (15.625 per cent), Samson (9.375 per cent) and Murphy (9.375 per cent). Deep Blue exploration well-1 was drilled in November 2009 and concluded in May 2010. The sidetrack drilling started in May and was suspended in June 2010 due to the Gulf of Mexico drilling moratorium issued by the US Federal Government. The Green Canyon 723 #1 original hole drilled to a total depth of 32,684 feet measured depth and encountered hydrocarbons. The forward plan is to complete the sidetrack operations once the moratorium is lifted. There is insufficient information to confirm the extent of hydrocarbons until drilling operations have been completed.

Gulf of Mexico - Other

We drilled the Double Mountain (70 per cent interest) and Firefox (50 per cent interest) exploration wells which were completed in April 2010. Both wells were plugged and abandoned and expensed as dry holes.

Other

Canada

In January 2010, we were awarded two offshore non-operated licenses in the Laurentian Basin, Newfoundland, Canada - E.L. 1118 (45 per cent interest) and E.L. 1119 (36 per cent interest). ConocoPhillips Canada Resources Corp. is the operator and holds the balance of the interests.

In April 2010, the East Wolverine well was plugged and abandoned and expensed as a dry hole. We had 45 per cent interest with ConocoPhillips holding the remaining 55 per cent. In June 2010, we and ConocoPhillips relinquished our interest in Laurentian Basin Newfoundland Licenses E.L. 1081R, 1082R, 1086R and 1087R and also relinquished interest in Laurentian Basin St. Pierre-et-Miquelon (SPM) exploration permit and pending SPM Langlade permit application.

Colombia

In April 2006, we entered into two Exploration and Production Contracts for the Fuerte Norte and Fuerte Sur blocks located offshore Colombia. We held a 75 per cent operating interest in each block with Ecopetrol holding the remaining 25 per cent. The joint venture has completed acquisition and processing of 3D seismic over the area as part of the Phase 2 work program commitment. In October 2009, we elected not to enter into Phase 3 of Fuerte Norte and Fuerte Sur projects and transferred all of our interest to Ecopetrol in December 2009.

In September 2008, we entered into a technical evaluation assignment for the evaluation of hydrocarbons in Block 5 in the Llanos basin onshore Colombia. We are the operator of the project and hold a 71.4 per cent working interest in the joint venture, with SK Energy Co holding the remaining 28.6 per cent interest. The minimum work program includes the acquisition of 1,000 kilometres of 2D seismic plus the drilling of five stratigraphic wells. The airborne survey was completed in January 2010, and plans to complete the 2D seismic drilling program are currently underway.

Falkland Islands

In December 2007, we farmed into Northern and Southern area licences offshore the Falkland Islands. We acquired a 51 per cent interest from our joint venture partner Falkland Oil and Gas Limited and assumed operatorship in January 2008. The minimum exploration work program includes drilling two wells in the first phase by the end of 2010. Site surveys on both blocks were completed in 2009. The first exploration well began drilling in June 2010 and was plugged and abandoned and expensed as a dry hole in July 2010.

 

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India

In December 2008, we were awarded seven offshore blocks in India. We are the operator of all seven blocks, each with its own production sharing contract. The minimum exploration program includes the acquisition and processing of 2D seismic data across the seven blocks. We currently own a 26 per cent interest in all seven blocks, with our partner GVK holding the remaining 74 per cent. In June 2010, we were awarded three additional offshore blocks. The minimum work program associated with the three blocks includes the acquisition and processing of 2D and 3D seismic data. We hold a 100 per cent interest in each of these three blocks.

Malaysia

In March 2007, we were awarded offshore Blocks N and Q in Malaysia with a 60 per cent interest and operatorship, with Petronas Carigali holding the residual 40 per cent. The minimum exploration program includes the acquisition and processing of seismic data across the two blocks and the drilling of four exploration wells within the first seven years. The initial seismic acquisition program commenced in June 2008 and was completed in September 2008. The first exploration well was drilled in February 2010 and was plugged, abandoned and expensed as a dry hole.

Philippines

In November 2009, we acquired a 75 per cent interest in Service Contract 59, located offshore Philippines and assumed operatorship in April 2010. PNOC Exploration Corp owns the remaining 25 per cent interest. As part of the minimum work program, the joint venture completed the acquisition and processing of a 2D seismic survey in April 2010. Plans to complete a 3D seismic survey are currently underway.

In August 2009, we exercised our option with partner Mitra Energy (25 per cent) to acquire a 25 per cent non-operating interest in Service Contract 56 located offshore Philippines. The joint venture completed drilling of the first exploration well in December 2009, and the second consecutive well was completed in February 2010. Both wells were expensed as dry holes. The block is operated by ExxonMobil (50 per cent).

Vietnam

In October 2009, we became operator of Vietnam Blocks 28 and 29/03 that are located approximately 200 kilometres offshore southern Vietnam. We have a 50 per cent interest in each of the blocks, with Mitra Energy holding the remaining 50 per cent. The minimum work program for the first sub-phase includes 2D seismic data and two wells. In addition to the 2D seismic data requirement, we acquired and processed 3D data.

Present Activities

Drilling

The number of wells in the process of being drilled as of 30 June 2010 was as follows:

 

     Exploratory Wells    Development Wells    Total
     Gross    Net (a)    Gross    Net (a)    Gross    Net (a)

Australia

         3    2    3    2

United States

   1       6    2    7    2

Other

   1    1          1    1
                             

Total (b)

   2    1    9    4    11    5
                             

 

(a) Represents our share of the gross well count.
(b) 1 (Net: 0.3) exploratory well and 3 (Net: 1.3) development wells were suspended as a result of the Gulf of Mexico drilling moratorium.

 

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Other significant activities

Australia

Browse

The Browse LNG Development comprises the development of the Torosa, Brecknock and Calliance gas fields, which were discovered in 1971, 1979, and 2000, respectively. The fields are approximately 270 kilometres from the Kimberley coast and 440 kilometres north-northwest of Broome, Australia in water depths ranging from 30 to 800 metres. Retention Leases were renewed during FY2010. Evaluation of an LNG plant located at James Price Point in the Kimberley area of Western Australia is underway in addition to the upstream development. Woodside is the operator and we currently own 8.33 per cent in East Browse and 20 per cent in West Browse; however, the partnership is currently working to align the equity interests for the overall development.

Macedon

The Macedon project is in the final stages of evaluation and is a lean dry gas field that is ideally placed to meet growing Western Australian domestic gas demand. The project is scheduled to meet a market window governed by the end of existing gas supply contracts and the start of supply from green field LNG projects.

The Macedon field was discovered in 1992. The field lies in Production Licence WA-42L. We are operator with a 71.43 per cent share and Apache Northwest Pty Ltd holds a 28.57 per cent share.

Scarborough

The development planning for the large Scarborough gasfield offshore Western Australia is in progress. Development options are being evaluated for an LNG plant and offshore production facilities. Esso is the operator of the WA-1-R lease and we hold a 50 per cent working interest. We also have a 100 per cent working interest in the WA-346-P block.

United States

Shenzi Water Injection

The Shenzi Water Injection program includes drilling and completion of five water injection wells and provides facilities to inject up to 125 thousand barrels of water per day at 7,000 psi. The Shenzi Water Injection program was approved as part of the original sanctioned Shenzi project which began producing in 2009 and is intended to supplement aquifer pressure for additional recovery.

Atlantis South Water Injection

The Atlantis South Water Injection project, which is in the execution phase, involves drilling four subsea water injectors, tying them into the existing infrastructure and commissioning the 75 thousand barrels of water per day injection facilities. This water injection project mitigates low aquifer pressure which could result in a swift production decline. BP is the operator and we hold a 44 per cent working interest.

Atlantis North Phase 2B

The Atlantis North Flank began production in July 2009; and the North Phase 2B is a brownfield capital investment program being developed to improve production rates. Phase 2B includes a three well program and associated subsea infrastructure. As with the original Atlantis North project, BP is the operator, and we hold a 44 per cent working interest.

Mad Dog Phase 2

The Mad Dog Phase 2 project is in response to the successful Mad Dog South appraisal well, which confirmed significant resource in the southern portion of the Mad Dog field. We are working with our partners in the project to select the optimum concept for development.

Other

Zamzama Front End Compression

Zamzama Front End Compression is a brownfield project which allows for the additional drawdown of the reservoir, adding reserves and extending the plateau. Development is currently underway.

 

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Delivery Commitments

We have delivery commitments of natural gas and LNG of approximately 2,594 billion cubic feet through 2031 (67 per cent Australia and 33 per cent Other) and crude, condensate and NGL commitments of 33.3 million barrels through 2011 (72 per cent Australia, 27 per cent United States and 1 per cent Other). We have sufficient proved reserves and production capacity to fulfil these delivery commitments. Further information can be found in Section 2.14.1.

2.2.3 Aluminium Customer Sector Group

Our Aluminium business is a portfolio of assets at three stages of the aluminium value chain: we mine bauxite, we refine bauxite into alumina, and we smelt alumina into aluminium metal. We are the world’s seventh-largest producer of aluminium, with total production in FY2010 of 1.2 million tonnes of aluminium. We also produced 13.9 million tonnes of bauxite and 3.8 million tonnes of alumina.

During FY2010, 52 per cent of our alumina production was used in our aluminium smelters and we sold the balance to other smelters. Our alumina sales are a mixture of long-term contract sales at London Metal Exchange (LME)-linked prices and spot sales at negotiated prices. Prices for our aluminium sales are generally linked to prevailing LME prices.

As with our other businesses, our strategy with bauxite and alumina is to own large, low-cost assets that provide good returns through the investment cycle and provide us with options for brownfield development. With aluminium smelters, where the availability and cost of power are critical, our investment decisions have been driven in part by the availability of stranded power generation capacity.

We have interests in one integrated bauxite mining/alumina refining asset:

 

   

Boddington/Worsley

The Boddington bauxite mine in Western Australia supplies bauxite ore via a 51 kilometre long conveyor to the Worsley alumina refinery. Worsley is one of the largest and lowest-cost refineries in the world, and is currently undergoing a major expansion (see Development projects below). Our share of Worsley’s FY2010 production was 3.054 million tonnes of alumina. Worsley’s export customers include our own Hillside, Bayside and Mozal smelters in southern Africa. Boddington has a reserve life of 23.9 years at current production rates. We own 86 per cent of the mine and the refinery.

 

   

Kaaimangrasie/ Klaverblad/Caramacca/Coermotibo/Paranam

On 31 July 2009, we executed transaction agreements to pass all of our 45 per cent interest in the Suriname bauxite and alumina joint venture that comprised bauxite mines in the Kaaimangrasie, Klaverblad, Caramacca and Coermotibo areas of Suriname and the nearby Paranam alumina refinery to Suralco effective on that date. Our share of Paranam’s FY2010 production to the date of sale was 78,000 tonnes of alumina.

We also own 14.8 per cent of Mineração Rio do Norte (MRN) which owns and operates a large bauxite mine in Brazil.

We have interests in the Alumar integrated alumina refinery/aluminium smelter and three stand-alone aluminium smelters:

 

   

Alumar

We own 36 per cent of the Alumar refinery and 40 per cent of the smelter. Alcoa operates both facilities. The operations, and their integrated port facility, are located at São Luís in the Maranhão province of Brazil. Alumar sources bauxite from MRN. During FY2010, approximately 46 per cent of Alumar’s alumina production was used to feed the smelter, while the remainder was exported. Our share of Alumar’s FY2010 saleable production was 709,000 tonnes of alumina and 174,000 tonnes of aluminium. The Alumar refinery completed a significant expansion in October 2009.

 

   

Hillside and Bayside

Our Hillside and Bayside smelters are located at Richards Bay, South Africa. Hillside’s capacity of approximately 715,000 tonnes per annum makes it the largest aluminium smelter in the southern hemisphere and it is one of the most efficient. Bayside has a smelting capacity of approximately 96,000 tonnes per annum, but it also uses its own aluminium and liquid aluminium from Hillside to produce various slab products. Both operations import alumina predominantly from our Worsley refinery and source power from Eskom, the South African state utility, under long-term contracts with prices linked to the LME price of aluminium except for Hillside Potline 3, the price of which is linked to the South African and US producer price indices.

 

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In January 2008, Eskom determined that it had insufficient power to meet the national demand in South Africa, and mandated an emergency 10 per cent reduction in power consumption by many large industrial users, including BHP Billiton. Although our contracts with Eskom specify that power supply to our aluminium smelters can only be interrupted approximately one per cent of the time per calendar year, we have respected the emergency situation faced by the country and reduced our demand by the requested 10 per cent. To achieve this in the most economically efficient way, we have mothballed the B and C potlines at Bayside, reducing production there by approximately 90,400 tonnes per annum. Across both South African smelters, associated production losses were approximately 86,000 tonnes per annum.

 

   

Mozal

We own 47.1 per cent of and operate the Mozal aluminium smelter in Mozambique, which has a total capacity of approximately 563,000 tonnes per annum. Mozal sources power generated by Hydro Cahora Basa via Motraco, a transmission joint venture between Eskom and the national electricity utilities of Mozambique and Swaziland. Our share of Mozal’s FY2010 production was 259,000 tonnes.

Information on the Aluminium CSG’s bauxite mining operations

The following table contains additional details of our mining operations. This table should be read in conjunction with the production (see section 2.3.2) and reserve tables (see section 2.14.2).

 

Name, location, mineralisation style,
type of mine and access

  

Ownership, operation and title/lease

  

History

  

Facilities and power source

Boddington bauxite mine

 

123 km southeast of Perth at Boddington, Western Australia, Australia

 

Surficial gibbsite-rich lateritic bauxite, residual weathering of Darling Range metamorphic and volcanic rocks

 

Open-cut mine

 

The mine is accessible by sealed public roads. The ore is transported to Worsley alumina refinery via a 51 km overland conveyor.

  

We own 86% of the Worsley joint venture. The other 14% interest is owned by Sojitz Alumina Pty Ltd (4%), and Japan Alumina Associates (Australia) Pty Ltd (10%).

 

BHP Billiton Worsley Alumina Pty Ltd is the manager of the joint venture on behalf of the participants. BHP Billiton Worsley Alumina Pty Ltd has the same ownership structure as the Worsley joint venture.

 

We hold a 2,631 km2 mining lease from the Western Australian government and two sub leases totalling 855 km2 from Alcoa of Australia Limited. The lease expires in 2025 with a 21-year renewal available.

   The Boddington bauxite mine opened in 1983 and was significantly extended in 2000.   

The mine has a crushing plant with the capacity of approximately 13 mtpa of bauxite. Power is supplied from the Worsley alumina refinery site via a joint venture-owned powerline.

 

A description of the Worsley alumina refinery can be found in the table below.

 

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Name, location, mineralisation style,
type of mine and access

  

Ownership, operation and title/lease

  

History

  

Facilities and power source

Suriname Kaaimangrasie mine

 

38 km southeast of Paramaribo and 30 km east of the Paranam refinery, Suriname

 

Lateritic gibbsite-rich bauxite, residual weathering of Precambrian meta-sediments overlain by thick sediments

 

Open-cut mine

 

The mine is accessible by a joint venture-owned haul road. The ore is hauled by truck over a distance of 30 km to the Paranam refinery.

  

During the first month of FY2010, we owned 45% of the refining and mining joint venture. The other 55% interest was held by Suralco (a subsidiary of Alcoa World Alumina and Chemicals (AWAC), a venture of Alcoa and Alumina Limited).

 

We managed all mining operations.

 

We transferred our ownership to Suralco on 31 July 2009.

  

The development of the Kaaimangrasie mine started in November 2005.

 

Operations/delivery of bauxite to the refinery commenced in July 2006.

  

Kaaimangrasie mine has a nominal production capacity of approximately 1.2 mtpa of bauxite; there are no processing facilities at the mine.

 

Electricity is partly sourced from JV partner Suralco and from power generators that run on diesel fuel.

Suriname Klaverblad mine

 

23 km southeast of Paramaribo and 19 km east of the Paranam refinery, Suriname

 

Lateritic gibbsite-rich bauxite, residual weathering of Precambrian meta-sediments overlain by thick sediments

 

Open-cut mine

 

The mine is accessible by a joint venture-owned haul road. The ore is hauled by truck over a distance of 19 km to the Paranam refinery.

  

During the first month of FY2010, we owned 45% of the refining and mining joint venture. The other 55% interest was held by Suralco.

 

We managed all mining operations.

 

We transferred our ownership to Suralco on 31 July 2009.

  

The development of the Klaverblad mine started in July 2005.

 

Delivery of bauxite to the refinery commenced in April 2007.

  

Klaverblad mine has a nominal production capacity of approximately 1.7 mtpa of bauxite; there are no processing facilities at the mine.

 

Electricity is partly sourced from JV partner Suralco and from power generators that run on diesel fuel.

Suriname Caramacca mine

 

45 km southeast of Paramaribo and 37 km east of the Paranam refinery, Suriname

 

Lateritic gibbsite-rich bauxite, residual weathering of Precambrian meta-sediments overlain by thick sediments

 

Open-cut mine

 

The mine is accessible by a joint venture-owned haul road. The ore is hauled by truck over a distance of 37 km to the Paranam refinery.

  

During the first month of FY2010, we owned 45% of the refining and mining joint venture. The other 55% interest was held by Suralco.

 

We managed all mining operations.

 

We transferred our ownership to Suralco on 31 July 2009.

  

The development of the Caramacca mine started in July 2007.

 

Operations/delivery of bauxite to the refinery commenced in August 2008.

  

Caramacca mine has a nominal production capacity of approximately 0.9 mtpa of bauxite; there are no processing facilities at the mine.

 

Electricity is partly sourced from JV partner Suralco and from power generators that run on diesel fuel.

Suriname Coermotibo mine

 

150 km east of Paranam, Suriname

 

Lateritic gibbsite-rich bauxite, residual weathering of Precambrian meta-sediments occurring on hills

 

Open-cut mine

 

The mine is accessible by joint venture-owned haul roads.

 

The ore is hauled to the Coermotibo crushing and loading facility and subsequently barged along the Commewijne River to the Paranam refinery.

  

During the first month of FY2010, we owned 45% of the Coermotibo joint venture. The other 55% interest was held by Suralco.

 

We managed all mining operations.

 

We transferred our ownership to Suralco on 31 July 2009.

   The Coermotibo mine started operations in 1991.   

Coermotibo mine has a nominal production capacity of 1.7 mtpa. There are primary crushing, beneficiation plant and barge loading facilities.

 

Coermotibo generates its own electricity from power generators that run on diesel fuel.

 

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Name, location, mineralisation style,
type of mine and access

  

Ownership, operation and title/lease

  

History

  

Facilities and power source

MRN

 

Porto Trombetas, Pará, Brazil

 

Lateritic bauxite, residual weathering of nepheline syenite occuring primarily as gibbsite in a clay matrix overlain by thick clay sediments

 

Open-cut mine

 

The mine is situated approximately 40 km from Porto Trombetas. Porto Trombetas can only be reached by air or by river. An asphalt road connects the mine area with the village at Porto Trombetas.

  

MRN is operated as an incorporated joint venture between BHP Billiton (14.8%), Alcoa and affiliates (18.2%), Vale (40%), Rio-Tinto Alcan (12%), Votorantim (10%) and Hydro (5%).

 

MRN holds valid mining rights granted by the Brazilian Federal Government to all its reserves until exhaustion of the reserves.

 

Run of mine bauxite is mined from various plateaus, and after crushing is conveyed to the washing facilities, where the quality of bauxite is improved. The washed bauxite is then transported by rail, approximately 28 km to the loading facilities at Porto Trombetas.

   Production started in 1979 and after the last expansion in 2003, MRN reached its current nominal production capacity of 18 mtpa of washed bauxite.   

The mine is supported by a village of approximately 6,000 people which is owned and maintained by MRN with all required facilities to maintain the residents in the village.

 

Crushing facilities, long distance conveyors and the wash plant are situated near the mine area. Drying and ship loading facilities are situated close to the main mine village at Porto Trombetas.

 

A small airport is also maintained by MRN at Porto Trombetas.

 

Power is generated on-site by fuel oil generators.

 

All infrastructure in the area is owned by MRN.

Information on the Aluminium CSG’s aluminium smelters and alumina refineries

 

Operation and location

  

Ownership, operation and title

  

Plant type/product

  

Capacity and power source

Hillside aluminium smelter

 

Richards Bay, 200 km north of Durban, KwaZulu-Natal province, South Africa

  

We own and operate the smelter.

 

We hold freehold title over the property, plant and equipment.

We have long-term leases over the harbour facilities.

   The Hillside smelter uses the Aluminium Pechiney AP35 technology to produce standard aluminium ingots and aluminium T-Bars.   

The nominal production capacity of the smelter is 0.715 mtpa of primary aluminium.

 

The plant’s power requirements are sourced from the national power supplier Eskom under long-term contracts. The prices in the contract for Hillside 1 and 2 are currently linked to the LME price for aluminium, while the prices for Hillside 3 are linked to the SA and US producer price index.

Bayside aluminium smelter

 

Richards Bay, 200 km north of Durban, KwaZulu-Natal province, South Africa

  

We own and operate the smelter.

 

We hold freehold title over the property, plant and equipment.

We have long-term leases over the harbour facilities.

   The Bayside smelter currently uses Alusuisse pre-bake technology to produce primary aluminium. Bayside uses its own aluminium and liquid aluminium acquired from Hillside to produce the various slab products.   

The nominal potline production capacity is 0.095 mtpa of primary aluminium on the remaining Potline A.

 

The plant’s power requirements are sourced from the national power supplier Eskom, under a long-term contract with prices currently linked to the LME price for aluminium.

Mozal aluminium smelter

 

17 km from Maputo, Mozambique

  

We hold a 47.1% interest in the Mozal joint venture and operate the smelter. The other 52.9% is owned by Mitsubishi (25%), Industrial Development Corporation of South Africa Limited (24%), and the Government of Mozambique (3.9%).

 

The joint venture has a 50-year right to use the land, renewable for another 50 years under a government concession.

   The Mozal aluminium smelter uses the Aluminium Pechiney AP35 technology to produce standard aluminium ingots.   

The nominal production capacity of the smelter is 0.563 mtpa.

 

The plant’s power requirements are purchased from Motraco.

 

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Operation and location

  

Ownership, operation and title

  

Plant type/product

  

Capacity and power source

Worsley alumina refinery

 

Approximately 55 km northeast of Bunbury, Western Australia, Australia

  

We own 86% of this asset through the Worsley joint venture. The other 14% is owned by Sojitz Alumina Pty Ltd (4%), and Japan Alumina Associates (Australia) Pty Ltd (10%).

 

BHP Billiton Worsley Alumina Pty Ltd is the manager of the joint venture on behalf of the participants. BHP Billiton Worsley Alumina Pty Ltd has the same ownership structure as the Worsley joint venture.

 

We hold a 2,480 ha refinery lease from the Western Australian Government. The lease expires in 2025 with a 21-year renewal available.

   The Worsley alumina refinery uses the Bayer process to produce metallurgical grade alumina, which is used as feedstock for aluminium smelting.   

The nominal production capacity is 3.5 mtpa.

Power and steam needed for the refinery are provided by a joint venture-owned on-site coal power station and a non-joint venture-owned on-site gas fired steam power generation plant.

Paranam refinery

 

Paranam, Suriname

  

During the first month of FY2010, we owned 45% of the Paranam joint venture. The other 55% of the joint venture was owned by Suralco.

 

Suralco managed the alumina refinery.

 

We transferred our ownership to Suralco on 31 July 2009.

   The Paranam alumina refinery utilises the Bayer process to produce metallurgical grade alumina, which is used as feedstock for aluminium smelting.    Capacity is 2.2 mtpa. The Paranam refinery generates its own power.

Alumar

 

São Luís, Maranhão, Brazil

  

The Alumar Consortium is an unincorporated joint venture that holds the smelter, refinery, ingot plant and support facilities.

 

We own 40% of the aluminium smelter. The other 60% is owned by Alcoa Aluminio SA (Alcoa).

 

We own 36% of the alumina refinery. The other 64% is owned by Alcoa and its affiliate Abalco SA (35.1% and 18.9% respectively) and Rio Tinto (10%).

 

Alcoa operates both facilities.

The consortium comprises an integrated port, an alumina refinery and an aluminium smelter together with areas for the production of anodes and aluminium ingots.

 

All the above are freehold interests of the joint venture participants.

   The alumina refinery and aluminium smelter use Alcoa technology to produce alumina and aluminium ingots.   

The refinery complex was last expanded in October 2009, increasing nominal capacity to 3.5 mtpa.

 

The smelter has a nominal capacity of approximately 0.45 mtpa of primary aluminium.

 

The electricity requirements are supplied by Brazilian public power generation concessionaire Electronorte, pursuant to a 20-year contract.

Development projects

Worsley Efficiency and Growth Project

In May 2008, we announced approval for an expansion project to lift capacity of the Worsley refinery from 3.5 million tonnes per annum of alumina to 4.6 million tonnes per annum (100 per cent capacity) of alumina through expanded mining operations at Boddington, additional refinery capacity and upgraded port facilities. The project is budgeted to cost US$1.9 billion (our share), with first production anticipated in first half of CY2011 and with mechanical completion in the second half of CY2011. To date we have spent US$1.2 billion.

Guinea Alumina

We have a one-third interest in a joint venture that is undergoing a feasibility study into the construction of a 10 million tonnes per annum bauxite mine, an alumina refinery with processing capacity exceeding 3.3 million tonnes per annum and associated infrastructure approximately 110 kilometres from the port of Kamsar in Guinea.

2.2.4 Base Metals Customer Sector Group

Our Base Metals CSG is one of the world’s top producers of copper, silver, lead and uranium, and a leading producer of zinc. Our portfolio of large, low-cost mining operations includes the Escondida mine in Chile, which is the world’s largest single producer of copper, and Olympic Dam in South Australia, which is already a major producer of copper and uranium and has the potential to be significantly expanded.

 

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In recent years, we have commissioned the Spence copper mine and the Escondida Sulphide Leach projects. Our total copper production in FY2010 was 1.0 million tonnes. In addition to conventional mine development, we continue to pursue advanced treatment technologies, such as the leaching of low-grade chalcopyrite ores, which we believe has the potential to recover copper from ores which were previously uneconomic to treat.

We market five primary products:

 

   

copper concentrates

 

   

copper cathodes

 

   

uranium oxide

 

   

lead concentrates

 

   

zinc concentrates.

We sell most of our copper, lead and zinc concentrates to smelters under long-term volume contracts with prices based on the LME price for the contained metal three or four months after shipment, less treatment charges and refining charges (collectively referred to as ‘TCRCs’) that we negotiate with the smelters on an annual or bi-annual basis. Some of the ores we mine contain quantities of silver and gold, which remain in the base metal concentrates we sell. We receive payment credits for the silver and gold recovered by our customers in the smelting and refining process.

We sell most of our copper cathode production to rod and brass mills and casting plants around the world under annual contracts with premiums to LME prices. We sell uranium oxide to electricity generating utilities, principally in western Europe, north America and north Asia. Uranium is typically sold under long-term contracts. A significant portion of production is sold into fixed price contracts although increasingly sales are based on flexible pricing terms.

We have seven production assets:

Escondida

Our 57.5 per cent owned and operated Escondida mine is the largest and one of the lowest-cost copper producers in the world. In FY2010, our share of Escondida production was 448,111, tonnes of payable copper in concentrate and 174,199 tonnes of copper cathode. Current reserves will support mining for a further 30 years at current production rates. Availability of key inputs like power and water supply at competitive prices is an important focus at Escondida. To ensure security of supply and competitive power costs in the long term, we supported the construction of an LNG facility to supply gas to the Northern grid system, which has been operating since June 2010 and have signed-off-take agreements underwriting the construction of a 460 megawatt coal-fired power plant, which is scheduled for completion in CY2011. To address limitations on the availability of water, we carefully manage our use and re-use of available water, and explore for alternative sources including desalination of seawater.

During FY2009, Escondida experienced an electrical motor failure at the SAG Mill in the Laguna Seca concentrator plant. This impacted the throughput at the plant given the increased maintenance requirements. A permanent repair was successfully completed in the first quarter of FY2010.

Olympic Dam

While it is already a significant producer of copper cathode and uranium oxide, and a refiner of smaller amounts of gold and silver bullion, we are continuing to explore a series of staged development options that would make our wholly owned Olympic Dam operation one of the world’s largest producers of copper, the largest producer of uranium and a significant producer of gold (see Development projects below).

During the second quarter of FY2010, the haulage system in the Clark Shaft at Olympic Dam was damaged. Ore hoisting operated at approximately 25 per cent of capacity until the fourth quarter of FY2010, when hoisting from the Clark Shaft resumed achieving a return to full production following the completion of repair works. Production in FY2010 was impacted due to this incident with Olympic Dam producing 103,253 tonnes of copper cathode, 2,279 tonnes of uranium oxide, 65,494 ounces of refined gold and 500,346 ounces of refined silver.

 

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Antamina

We own 33.75 per cent of Antamina, a large, low-cost, long-life copper/zinc mine in Peru. Opened in 2001, its reserves will support mining at current rates for a further 20 years. Our share of Antamina’s FY2010 production was 98,600 tonnes of copper in concentrate, and 135,573 tonnes of zinc in concentrate. In addition to its primary copper and zinc concentrate products, Antamina also produces smaller amounts of molybdenum and lead/bismuth concentrate.

Spence

We completed our wholly owned greenfield Spence copper mine development in Chile and began ramping up cathode production in December 2006. During FY2010, we produced 159,604 tonnes of copper cathode which was impacted by industrial action during the second quarter. Spence´s current reserves will support mining at current rates for a further 16 years.

Cerro Colorado

Our wholly owned Cerro Colorado mine in Chile remains a significant producer of copper cathode, although production levels have declined in recent years as grades have declined. Production in FY2010 was 85,200 tonnes of copper cathode. Our current mine plan sees production continuing until FY2021, although we are currently evaluating the extent of hypogene mineralisation that may support further extension options.

Cannington

Our wholly owned Cannington mine in northwest Queensland has grown to become the world’s largest and, we believe, one of the lowest-cost producers of silver and lead. In FY2010, Cannington produced concentrates containing 245,445 tonnes of lead, 62,706 tonnes of zinc and approximately 37 million ounces of silver. The current mine plan sees production continuing until 2019.

Pinto Valley

As a result of the global economic slowdown in FY2009, we made the decision to stop sulphide mining and milling operations at our Pinto Valley Mine located in Arizona, US, placing the operations in care and maintenance.

We continue to produce copper cathode at the Pinto Valley site and the neighbouring Miami Unit from our residual solvent extraction electrowinning (SXEW) operations. Current reserves would support mining operations for approximately four years.

 

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Information on the Base Metals CSG’s mining operations

The following table contains additional details of our mining operations. This table should be read in conjunction with the production (see section 2.3.2) and reserve tables (see section 2.14.2).

 

Name, location, mineralisation style,
type of mine and access

  

Ownership, operation and title/
lease

  

History

  

Facilities and power source

COPPER

        

Escondida

 

Atacama Desert, at an altitude of approximately 3,100 m and 170 km southeast of Antofagasta, Chile

 

The Escondida mining complex includes the Escondida and Escondida Norte mineral deposits that are adjacent, but distinct, supergene-enriched porphyry copper deposits

 

Two open-cut pits

 

The mine is accessible by public road.

 

Copper cathode is transported by privately-owned rail line to the Antofagasta port (government-operated) or Mejillones port (privately operated).

 

Copper concentrate is transported by Company-owned pipeline to its Coloso port facilities.

  

The mine is owned by Minera Escondida Limitada and operated by BHP Billiton.

 

We own 57.5% of Minera Escondida. The other 42.5% is owned by affiliates of Rio Tinto (30%), the JECO Corporation (10%), a consortium represented by Mitsubishi Corporation (7%), Mitsubishi Materials Corporation (1%), Nippon Mining and Metals (2%) and Jeco 2 Ltd (2.5%).

 

Minera Escondida Limitada holds a mining concession from the Chilean state that remains valid indefinitely (subject to payment of annual fees).

  

Original construction of the operation was completed in 1990. The project has since undergone various expansion projects at an additional cost of US$3.0 billion (100% terms).

 

In June 2006, the Escondida Sulphide Leach copper project achieved first production. The cost of the project was US$1.0 billion (100% terms).

  

Escondida has two processing streams: two concentrator plants in which high-quality copper concentrate is extracted from sulphide ore through a flotation extraction process; and two solvent extraction plants in which leaching, solvent extraction and electrowinning are used to produce copper cathode.

 

Nominal production capacity is 3.2 mtpa of copper concentrate and 330,000 tpa of copper cathode.

 

Separate transmission circuits provide power for the Escondida mine facilities. These transmission lines, which are connected to Chile’s northern power grid, are Group-owned. Electricity is purchased under contracts with local generating companies.

Spence

 

Atacama Desert,

150 km northeast of Antofagasta, Chile

 

A porphyry copper deposit that contains significant copper oxide (atacamite and chrysocolla) overlying the supergene sulphide enrichment zone

 

Open-cut mine

 

The mine is accessible by public road and company-owned rail access.

 

Copper cathode produced is transported by rail line to Mejillones port (privately operated) and to Antofagasta port on an exceptional basis.

  

We own and operate the mine (100%).

 

We hold a mining concession from the Chilean state that remains valid indefinitely (subject to payment of annual fees).

  

Spence received Board approval for execution in October 2004. The cost was US$1.1 billion.

 

First ore was crushed in September 2006 with first copper produced in December 2006.

  

Spence has facilities to support the open-cut mining operations and ore processing/crushing operations.

 

The crushed oxide and sulphide ores are leached on separate dynamic (on-off) leach pads. Acid leaching is applied to oxide ores and bio-leaching is applied to supergene sulphide ores. Solvent extraction consists of four trains in a series-parallel configuration, with extraction stages for both oxide and sulphide Pregnant Leach Solution. A single electrowinning plant produces the copper cathode.

 

Nominal capacity is 200,000 tpa of copper cathode.

 

Electrical power is supplied via a Company-owned voltage transmission line connected to Chile’s northern power grid. Electricity is purchased under contracts from a local generating company.

Cerro Colorado

 

Atacama Desert at an altitude of 2,600 m, 120 km east of Iquique, Chile

 

A supergene porphyry copper deposit that consists of a sulphide enrichment zone overlayed by oxide ore (chrysocolla + brochantite)

 

Open-cut mine

 

The mine is accessible by public road.

 

Copper cathode production is trucked to the port at Iquique, which is privately operated.

  

We own and operate the mine.

We hold a mining concession from the Chilean state that remains valid indefinitely (subject to payment of annual fees).

  

Commercial production at Cerro Colorado commenced in June 1994.

 

Expansions took place in 1995 and 1998 to increase the mine’s crushing capacity, leach pad area and mine fleet. With these expansions, production was increased to 100,000 tpa. Production was then increased to the nameplate capacity of 120,000 tpa with optimisation and efficiency improvements. Due to lower copper grades of the ore the production is now approximately 100,000 tpa.

  

Cerro Colorado’s facilities for this process include two primary, secondary and tertiary crushers, leaching pads and solvent extraction and electrowinning plants.

 

Electricity is supplied under long-term contracts to the facilities through the northern Chile power grid.

 

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Table of Contents

Name, location, mineralisation style,
type of mine and access

  

Ownership, operation and title/
lease

  

History

  

Facilities and power source

Pinto Valley

 

Located in the US approximately 125 km east of Phoenix, Arizona.

 

A porphyry copper deposit of low-grade primary mineralisation

 

Open-pit mine (Pinto Valley)

 

In-situ leach (Miami Unit)

The mine is accessible by public road. Current copper cathode production is trucked to domestic customers in the US.

   We own and operate 100% of Pinto Valley and we hold title to the land.    Pinto Valley was acquired through the acquisition of Magma Copper Company in 1996. The sulphide mining operations were discontinued in 1998. In October 2007, the mining and milling operations were restarted. As a result of the global economic slowdown, Pinto Valley mining and milling operations were stopped in January 2009. During cessation of the mining and milling operations, residual SXEW production from both the Pinto Valley site and neighbouring Miami Unit continues to produce small amounts of copper cathode.   

Pinto Valley facilities include two SXEW operations at the Pinto Valley and Miami sites.

Concentrate production facilities in care and maintenance include a primary crusher, secondary and tertiary crushers, six ball mills and copper concentrate and molybdenum flotation circuits.

 

Power is supplied to the site by the Salt River Project.

COPPER URANIUM         

Olympic Dam

 

560 km northwest of Adelaide, South Australia, Australia

 

A large poly-metallic deposit of the iron oxide-copper-gold style of mineralisation

 

Underground mine

 

The mine is accessible by public road. Copper cathode is transported by public road to public ports. Uranium oxide is transported by public road and rail to public ports.

  

We own and operate Olympic Dam.

 

The mining lease was granted by the Government of South Australia by an Act of Parliament for the period of 50 years from 1986, with a right of extension for a further period of 50 years in accordance with the Roxby Downs (Indenture Ratification) Act 1982.

  

Production of copper began in 1988. Between 1989 and 1995, the production rate was increased, ultimately raising the ore mining capacity to approximately 3 mtpa.

During 1997 through 1999 a major expansion was conducted to raise throughput from 3 mtpa to 9 mtpa.

 

In 2002, Olympic Dam completed an optimisation project. A new copper solvent extraction plant was commissioned in the first quarter of 2004.

 

We acquired Olympic Dam as part of our acquisition of WMC in 2005.

  

The underground mine extracts copper uranium ore and hauls the ore by an automated train and trucking network feeding underground crushing, storage and ore hoisting facilities.

 

The processing plant consists of two grinding circuits in which high-quality copper concentrate is extracted from sulphide ore through a flotation extraction process. The concentrate is fed into an Outokumpu flash furnace having a nominal concentrate smelting capacity of 450 ktpa to produce copper anodes, then into an ISA electro-refinery to produce copper cathodes and slimes treated to recover gold and silver. The flotation tailings are further processed through leaching and solvent extraction to produce electrowon copper cathode and high-grade uranium oxide concentrate.

 

Power for the Olympic Dam operations is supplied via a 275 kV powerline from Port Augusta, transmitted by ElectraNet.

COPPER ZINC

        

Antamina

 

Located in the Andes mountain range, North Central Peru at an altitude of 4,300 meters, 270 km north of Lima

 

A zoned porphry skarn deposit with central Cu-only ores and an outer band of Cu-Zn ore zone.

 

Open-cut mine

 

The mine is accessible by a Company-maintained 115 km access road.

 

A 300 km pipeline transports the copper and zinc concentrates to the port of Huarmey.

 

The molybdenum and lead/bismuth concentrates are transported by truck to different locations for shipment.

  

Antamina is owned and operated by a joint venture company called Compañía Minera Antamina S.A., in which we hold a 33.75% interest. The other joint venture partners are Xstrata (33.75%), Teck Cominco Limited (22.5%) and Mitsubishi Corp (10%).

 

Antamina holds mining rights from the Peruvian state over its mine and operations. These rights can be held indefinitely, contingent upon the annual payment of licence fees and the supply of information on investment and production.

   The Antamina project achieved mechanical completion in May 2001 - more than four months ahead of the original schedule. The project began commercial production on 1 October 2001 ahead of schedule and under budget, following two years of exploration and three years of construction at a capital cost of US$2.3 billion.   

The principal project facilities include a primary crusher, a nominal 94,000 tpd concentrator, copper and zinc flotation circuits and a bismuth/ moly cleaning circuit, a 300 km concentrate pipeline with single-stage pumping, and port facilities at Huarmey. The pipeline design throughput is 2.3 dry mtpa.

 

Power to the mine site is being supplied under long-term contracts with individual power producers through a 58 km 220 kV transmission line, which is connected to Peru’s national energy grid.

 

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Table of Contents

Name, location, mineralisation style,
type of mine and access

  

Ownership, operation and title/
lease

  

History

  

Facilities and power source

SILVER, LEAD AND ZINC         

Cannington

 

300 km southeast of Mt Isa, Queensland, Australia

 

A Broken Hill-type silver-lead-zinc sulphide deposit

 

Underground mine

 

The mine is accessible by public road and a Company-owned airstrip.

 

Product is transported 187 km by road to Yurbi, a Company-owned loading facility, where it is loaded on public rail and transported to a public port at which we lease a berth.

  

We own and operate Cannington.

 

The Cannington deposit is contained within mining leases granted by the State of Queensland in 1994 and which expire in 2029.

  

The deposit was discovered in 1990. Concentrate production commenced in 1997.

 

In February 2003, the Cannington Growth Project commenced to improve mill throughput and metal recovery. The project was completed during FY2005.

  

The beneficiation plant consists of a primary grinding circuit (AG mill), secondary grinding circuit (tower mill), pre-flotation circuit, fine lead flotation circuit, coarse lead flotation circuit, zinc flotation circuit, concentrate and tailings thickening, lead and zinc concentrate leaching circuits, lead and zinc concentrate filtration circuit and a paste plant.

 

Nominal capacity is 3.2 mtpa.

A power station, consisting of a combination of gas-fired and diesel-fired engines, located at Cannington, is operated under contract to supply power solely to Cannington.

Development projects

Olympic Dam

Pre-feasibility study work on the proposed expansion of Olympic Dam has addressed production capacities, mining methods, processing (including smelting) options and supporting infrastructure requirements. The proposed expansion would be a progressive development requiring construction activity to increase production to up to 750,000 tonnes per annum of copper, 19,000 tonnes per annum of uranium oxide and 800,000 ounces of gold. The Group released a draft Environmental Impact Statement (EIS) in May 2009 and received more than 4,000 public submissions on the project. The issues raised in the public submissions are addressed in a Supplementary EIS which the Group expects to complete by the end of CY2010. Government decisions on the project are expected in the second half of CY2011. After that, the expansion project will depend on successfully completing all required feasibility studies and on Board approval of the final investment case.

Yeelirrie

Pre-feasibility study work relating to the proposed Yeelirrie uranium oxide mine is in progress and will be reviewed by the Group to determine whether feasibility study work should commence in early 2011. The work currently underway includes resource definition drilling, test work, process plant concept design, environment impact assessment, capital and operating costing and economic evaluation.

Escondida

Exploration of the Escondida lease and early drilling results suggest that there is extensive additional mineralisation in close proximity to existing infrastructure and processing facilities, including a prospect known as Pampa Escondida. In FY2010 Escondida has expensed US$125 million (US$72 million our share) in exploration. Escondida is planning to invest a further estimated US$541 million (US$311 million our share) in drilling, assaying and metallurgical test work in exploration over the next five years.

The Laguna Seca Debottlenecking project which will provide additional processing capacity has moved into feasibility. It is expected that this project will move into execution during FY2011. Development of Organic Growth Project 1 continues which is the replacement of the Los Colorados concentrator allowing access to higher grade ore and additional processing capacity.

Antamina

In FY2010 Antamina announced the approval of the Expansion project. With a total investment of US$1.3 billion (US$434.7 million our share), the project will expand milling capacity by 38 per cent to 130,000 tpd. The Expansion project includes a new SAG mill, a new 55 kilometre power transmission line, an expanded truck shop facility and upgrades to the crushing and tailing systems, flotation circuit and port capacity. Commissioning of the project is scheduled to start at the end of CY2011. Our share of the capital expenditures in the Antamina expansion project totalled US$47 million in FY2010.

 

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Resolution Copper

We hold a 45 per cent interest in the Resolution Copper project in Arizona, which is operated by our partner, Rio Tinto, which owns the other 55 per cent. Resolution Copper is currently undertaking a pre-feasibility study into a substantial underground copper mine and processing facility.

Resolution Copper continued to advance the sinking of the No. 10 Shaft in order to gain access to the ore deposit for characterisation work of mineralisation and geotechnical conditions. In addition to work completed at the project site, efforts continued towards gaining approval within the US Congress for a Federal Land Exchange to access the ore deposit.

2.2.5 Diamonds and Specialty Products Customer Sector Group

Our Diamonds and Specialty Products CSG operates our diamonds and titanium minerals businesses and the exploration and development of a potash business.

Diamonds

The cornerstone of our diamonds business is the EKATI diamond mine in the Northwest Territories of Canada, of which we own 80 per cent. EKATI has produced on average over three million carats per year of rough diamonds over the last three years. However, the grade of ore we process fluctuates from year to year, resulting in variations in carats produced. In addition, the proportion of our production consisting of high-value carats (larger and/or higher-quality stones) and low-value carats (smaller and/or lower-quality stones) will fluctuate from year to year. During the year mining of the higher grade Panda underground was completed. The mine life based on the mine plan is eight years.

Annual sales from EKATI (100 per cent terms) represent approximately three per cent of current world rough diamond supply by weight and approximately nine per cent by value. We sell most of our rough diamonds to international diamond buyers through our Antwerp sales office. We also sell a smaller amount of our diamond production to two Canadian manufacturers based in the Northwest Territories.

Titanium minerals

Our principal interest in titanium minerals consists of our 37.76 per cent interest in Richards Bay Minerals (RBM). RBM is one of the largest and lowest-cost producers of titania slag, high-purity pig iron, rutile and zircon from mineral sands. Approximately 90 per cent of the titanium dioxide slag produced by RBM is suitable for the chloride process of titanium dioxide pigment manufacture and is sold internationally under a variety of short, medium and long-term contracts.

In December 2009, RBM completed its Broad-Based Black Economic Empowerment (‘BBBEE’) transaction by transferring 26 per cent to the BBBEE Consortium. The BBBEE Consortium includes investors, local communities and RBM employees.

Potash

We believe potash has significant growth potential underpinned by increasing demand for food and decreasing arable land, which is largely driven by growing economies in developing countries.

On 18 August 2010, BHP Billiton announced its intention to make an all-cash offer, and on 20 August 2010 formally commenced the offer, to acquire all of the issued and outstanding common shares of Potash Corporation of Saskatchewan Inc. (PotashCorp) at a price of US$130 in cash per PotashCorp common share (the ‘Offer’). The Offer values the total equity of PotashCorp at approximately US$40 billion on a fully diluted basis.

On 23 March 2010, we completed the acquisition of all the issued and outstanding common shares of Athabasca Potash Inc (API) for C$8.35 cash per common share. This acquisition provided us with 100 per cent control of the Burr project and various additional potash exploration properties in Saskatchewan, Canada. Our permit positions for potash extend over 14,000 square kilometres in the Saskatchewan basin and have expiry dates between 2013 and 2016. We are currently studying development opportunities (see Development projects below).

 

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Table of Contents

Information on Diamonds and Specialty Products mining operations

The following table contains additional details of our mining operations. This table should be read in conjunction with the production (see section 2.3.2) and reserve tables (see section 2.14.2).

 

Name, location, mineralisation style,
type of mine and access

  

Ownership, operation and title/lease

  

History

  

Facilities and power source

DIAMONDS         

EKATI Diamond Mine

 

310 km northeast of Yellowknife, Northwest Territories, Canada

 

Eocene age kimberlite pipes-dominantly volcaniclastic infill

 

Fox is an open-cut mine and Koala is an underground mine

 

The mines are accessible year round by contracted aircraft.

 

Road access is available for approximately 10 weeks per year via an ice road.

  

We own an 80% interest in the Core Zone joint venture, which includes the existing operations. The remaining 20% interest is held by two individuals.

 

We also own a 58.8% interest in the Buffer Zone joint venture, made up predominantly of exploration targets.

 

We are the operator of the mines.

 

Tenure is secured through ownership of mining leases granted by the Government of Canada. Mining leases have been granted for reserves until 2017.

  

Construction began in 1997 and production from the first open-cut was initiated in 1997. The mine and processing plant began operation in mid 1998.

 

In October 2001, we acquired Dia Met Minerals Ltd, bringing our interest in the Core Zone and Buffer Zone joint ventures up to 80% and 58.8% respectively.

 

Current active mines include one open-cut (Fox) and one underground mine (Koala). Mining at Panda underground mine was completed during FY2010.

  

The processing plant consists of crushers, washers/scrubber and grinder and heavy media separator. The diamond recovery process makes use of magnetics and X-ray sorters.

 

All the electric power is generated by our Company-owned and operated diesel power station. In addition, there is storage for approximately 90 million litres of diesel fuel on-site.

TITANIUM MINERALS         

Richards Bay Minerals

 

RBM has four beach sand dredge mines located 10 to 50 km north of Richards Bay, KwaZulu-Natal, South Africa

 

Quaternary age coastal dune deposits - heavy mineral sands concentrated by wave action and aeolian processes

 

The mines are accessible via public rail, road and port.

 

The rail between the mine site, harbour and shipping facilities are owned by Spoornet and Portnet (both government business enterprises supplying services on behalf of the state). The roads accessing the smelter are government-owned.

  

RBM comprises two legal entities, Richards Bay Mining (Proprietary) Limited and Richards Bay Titanium (Proprietary) Limited, in each of which the Group has a 50% interest and functions as a single economic entity. After deducting non-controlling interests in subsidiaries of RBM, the Group’s economic interest in the operations of RBM is 37.76%.

 

Rio Tinto operates the joint venture on behalf of the shareholders.

 

RBM holds long-term renewable leases from the state of South Africa.

 

These leases are subject to the South African Mining Charter and an application has been lodged for a conversion to a New Order Rights (see section 2.7, ‘Government regulations’).

  

Richards Bay Minerals was formed in 1976 to mine and beneficiate the sands in the coastal dunes.

 

The mining operations were expanded to five, with the last mine added in 2000. In 2006, this was reduced to four, with the closure of one mining pond.

  

Mining is conducted largely by sand dredge mining, with minor supplementary dry mining. Gravity separation is then utilised to produce a heavy mineral concentrate. This concentrate is then trucked to a central processing plant to produce the finished products, being rutile and zircon and the ilmenite for smelter feed.

 

The smelter processes the ilmenite to produce titanium dioxide slag, with a titanium dioxide content of approximately 85% and high-purity iron.

 

The nominal titanium slag capacity is 1.06 mtpa.

 

Power for the operation is purchased from the South African grid.

Development projects

Potash

We continued advancing the Jansen Project, a greenfield potash project near Saskatoon, Saskatchewan, Canada which is being designed to produce approximately eight million tonnes per annum of saleable potash. The Project is nearing the end of its pre-feasibility study and is anticipated to progress to feasibility in the first half of FY2011. Based on the current schedule and subject to investment approval, the project is expected to produce saleable potash from CY2015. We have also allotted pre-commitment funding of US$240 million to support the development of the first stages of the Jansen Potash Project. This pre-approval expenditure will facilitate the early stage work for the establishment of the production and service shafts.

Jansen is the most advanced of our multiple development options in potash, with nearby Young and Boulder projects both in the concept study phase. We continued exploration activities in Saskatchewan, Canada. The Burr project, acquired with Athabasca Potash on 23 March 2010, is currently under review in the context of our full potash development portfolio. Exploration in the Melville area, also acquired with Athabasca Potash, began in July 2010.

Diamonds

We are working on pre-feasibility and concept studies for developments at EKATI. Because of the nature of the kimberlite pipes in which diamonds are found, individual pipes are relatively short-lived, so we are continually working on options to bring new pipes on-stream.

 

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2.2.6 Stainless Steel Materials Customer Sector Group

Our Stainless Steel Materials business is primarily a supplier of nickel to the stainless steel industry. Nickel is an important component of the most commonly used types of stainless steel. In addition, we supply nickel to other markets, including the specialty alloy, foundry, chemicals, and refractory material industries. We are the world’s fourth-largest producer of nickel and we sell our nickel products under a mix of long-term, medium-term and spot volume contracts, with prices linked to the London Metal Exchange (LME) nickel price.

For the duration of FY2010, our nickel business comprised two sets of production assets:

Nickel West

Nickel West is the name for our wholly owned Western Australian nickel assets, which consist of an integrated system of mines, concentrators, a smelter and a refinery. We mine nickel-bearing sulphide ore at our Mt Keith, Leinster and Cliffs operations north of Kalgoorlie, Western Australia. We operate concentrator plants at Mt Keith and at Leinster, which also concentrates ore from Cliffs. Leinster and Mt Keith have reserve lives of eight and 14 years respectively at current rates of production, and both have options for further expansion. Cliffs is a high-grade underground mine with an expected reserve life of three years. The extraction of ore at Cliffs commenced in FY2008.

We also operate the Kambalda concentrator south of Kalgoorlie, where ore is sourced through tolling and concentrate purchase arrangements with third parties in the Kambalda region. In addition, we have a regular purchase agreement in place for the direct purchase of concentrate, which we dry and blend with other concentrate processed at Kambalda.

We transport concentrate from Leinster, Mt Keith and Kambalda to our Kalgoorlie smelter, which processes it into nickel matte, containing approximately 66 per cent nickel. In FY2010, we exported approximately 43 per cent of our nickel matte production. We processed the remaining nickel matte at our Kwinana nickel refinery, which produces nickel metal in the form of LME grade briquettes and nickel powder, together with a range of saleable by-products.

During FY2010, production of nickel metal from the Kwinana nickel refinery was impacted by a restriction in hydrogen supply, resulting in the redirection of matte feed stocks for external sale. A new hydrogen plant is under construction at the Kwinana nickel refinery and construction is expected to be completed in the second quarter of FY2012.

Cerro Matoso

Cerro Matoso, our 99.94 per cent owned nickel operation in Colombia, combines a lateritic nickel ore deposit with a low-cost ferronickel smelter. Cerro Matoso is the world’s second-largest producer of ferronickel and one of the lowest-cost producers of ferronickel. The smelter produces high-purity, low-carbon ferronickel granules. Cerro Matoso has an estimated current reserve life of 39 years, based on current production levels.

Significant changes to the Stainless Steel Materials business

During FY2010 Stainless Steel Materials made two significant business divestments. In July 2009 we completed the sale of the Yabulu nickel refinery. In February 2010 we completed the sale of the Ravensthorpe nickel operation following the suspension of production activities in January 2009.

 

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Information on Stainless Steel Materials mining operations

The following table contains additional details of our mining operations. This table should be read in conjunction with the production (see section 2.3.2) and reserve tables (see section 2.14.2).

 

Name, location, mineralisation style,
type of mine and access

  

Ownership, operation and title/lease

  

History

  

Facilities and power source

NICKEL         

Mt Keith

 

460 km north of Kalgoorlie, Western Australia, Australia

 

Disseminated textured magmatic nickel-sulphide mineralisation, associated with metamorphosed ultramafic lava flows and intrusions

 

Open-cut mine

 

The mine is accessible by private road.

 

Nickel concentrate is transported by road to Leinster nickel operations from where it is dried and transported by public road and rail to the Kalgoorlie nickel smelter.

  

We own and operate the mine at Mt Keith.

 

We hold leases over the land from the Western Australian Government. The key leases have expiry dates between 2011 and 2029.

 

Further renewals are at the government’s discretion.

  

The Mt Keith mine was officially commissioned in January 1995 by WMC.

 

In June 2005, we gained control of Nickel West (Leinster, Mt Keith and Cliffs) as part of the acquisition of WMC.

  

Concentration plant with a capacity of 11.5 mtpa of ore.

 

Power at Mt Keith nickel operations is primarily derived from on-site third party gas-fired turbines. Gas for these turbines is sourced by us from the North West Shelf gas fields. The existing gas supply contract expires in 2013.

 

The gas is transported through the Goldfields Gas Pipeline, pursuant to an agreement with Southern Cross Pipeline Australia that expires in 2037.

Leinster

 

375 km north of Kalgoorlie in Western Australia, Australia

 

Steeply dipping disseminated and massive textured nickel-sulphide mineralisation, associated with metamorphosed ultramafic lava flows and intrusions

 

Underground and open-cut mines.

 

The mine is accessible by government-owned road and rail.

 

Nickel concentrate is shipped by road and rail to the Kalgoorlie nickel smelter.

  

We own and operate the mines at Leinster.

 

We hold leases over the land from the Western Australian Government. The key leases have expiry dates between 2019 and 2030.

 

Further renewals are at the government’s discretion.

  

Production commenced in 1967.

 

In June 2005, we gained control of Nickel West (Leinster, Mt Keith and Cliffs) as part of the acquisition of WMC.

  

Concentration plant with a capacity of 3 mtpa of ore.

 

Power at Leinster nickel operations is primarily derived from on-site third party gas-fired turbines. Gas for these turbines is sourced by us from the North West Shelf gas fields. The existing gas supply contract expires in 2013.

 

The gas is transported through the Goldfields Gas Pipeline, pursuant to an agreement with Southern Cross Pipeline Australia that expires in 2037.

Cliffs

 

430 km north of Kalgoorlie in Western Australia, Australia

 

Steeply dipping massive textured nickel-sulphide mineralisation, associated with metamorphosed ultramafic lava flows

 

Underground mine

 

The mine is accessible by private road.

 

Nickel ore is transported by road to the Leinster nickel operations for further processing.

  

We own and operate the mine at Cliffs.

 

We hold leases over the land from the Western Australian Government. The key leases have expiry dates between 2025 and 2026. Further renewals are at the government’s discretion.

 

  

Production commenced in 2008.

 

In June 2005, we gained control of Nickel West (Leinster, Mt Keith and Cliffs) as part of the acquisition of WMC.

  

Power at our Cliffs mining operations is primarily derived from Mt Keith’s on-site third party gas-fired turbines. Gas for these turbines is sourced by us from the North West Shelf gas fields. The existing gas supply contract expires in 2013.

 

The gas is transported through the Goldfields Gas Pipeline, pursuant to an agreement with Southern Cross Pipeline Australia that expires in 2037.

Cerro Matoso

 

Montelibano, Córdoba, Colombia

 

Nickel-laterite mineralisation formed from residual weathering of ophiolitic peridotite

 

Open-cut mine

 

The mine is accessible by public highway.

  

We own 99.94% of CMSA, and 0.06% is held by employees.

 

Existing mining concessions are renewable in 2012 with a 30-year extension period until 2042. Further extension is possible at that time.

 

Land on which reserves are located is owned.

  

Mining commenced in 1980 and nickel production started in 1982 under Colombian Government, BHP Billiton and Hanna Mining ownership.

 

In 1989, we increased our ownership to 53%, in 1997 to 99.8% and in 2007 to 99.94%.

 

In 2001, we completed an expansion project to double installed capacity.

  

The ferronickel smelter and refinery are integrated with the mine.

 

Beneficiation plant for the mine consists of a primary and secondary crusher. Ore is sent to a stacker for stockpiling and blending.

 

Process design capacity is 50,000 tpa of nickel in ferronickel form. Actual capacity depends on nickel grade from the mine.

 

Electricity is supplied from the national grid based on supply contracts negotiated periodically. Existing contracts are in place until December 2011.

 

A pipeline supplies domestic natural gas for drier and kiln operation. The existing gas supply contract terminates in 2011.

 

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Information on Stainless Steel Materials smelters, refineries and processing plants

 

Operation and location

  

Ownership, operation and title

  

Plant type/product

  

Capacity and power source

Kambalda nickel concentrator

 

56 km south of Kalgoorlie, Western Australia, Australia

  

We own and operate the Kambalda nickel concentrator and hold mineral leases over the land from the Western Australian Government that expire in 2028.

 

Further renewals are at the government’s discretion.

 

Ore is sourced through tolling and concentrate purchase arrangements with third parties in the Kambalda region.

   Mill and concentrator plant producing concentrate containing approximately 13% nickel.   

The Kambalda concentrator has a capacity of approximately 1.6 mtpa of ore.

 

Power at the Kambalda concentrator is primarily derived from on-site third party gas-fired turbines. Gas for these turbines is sourced by us from the North West Shelf gas fields. The existing gas supply contract expires in 2013.

 

The gas is transported through the Goldfields Gas Pipeline, pursuant to an agreement with Southern Cross Pipeline Australia that expires in 2037.

Kalgoorlie nickel smelter

 

Kalgoorlie, Western Australia, Australia

   We own and operate the Kalgoorlie nickel smelter operation and hold freehold title over the property.    The flash smelting process produces matte containing approximately 66% nickel.   

The Kalgoorlie smelter has a capacity of approximately 110,000 tpa of nickel matte.

 

Power at the Kalgoorlie smelter is primarily derived from on-site third party gas-fired turbines. Gas for these turbines is sourced by us from the North West Shelf gas fields. The existing gas supply contract expires in 2013.

 

The gas is transported through the Goldfields Gas Pipeline, pursuant to an agreement with Southern Cross Pipeline Australia that expires in 2037.

Kwinana nickel refinery

 

30 km south of Perth, Western Australia, Australia

  

We own and operate the Kwinana nickel refinery operation and hold freehold title over the property.

  

The refinery uses the Sherritt-Gordon ammonia leach process to convert nickel matte from the Kalgoorlie nickel smelter into LME-grade nickel briquettes and nickel powder.

 

The refinery also produces a number of intermediate products, including copper sulphide, cobalt-nickel sulphide and ammonium sulphate.

  

The Kwinana nickel refinery has a capacity of approximately 65,000 tpa of nickel metal.

 

Power generated by Southern Cross Energy in the goldfields is distributed across Western Power’s network for use at the Kwinana nickel refinery.

 

The existing gas supply contract terminates in 2013.

Development projects

Cerro Matoso Nickel Ore Smelting System

During FY2010, the Nickel Ore Smelting System project was approved to progress into execution phase. The project will deliver a replacement of the 27-year-old Line 1 furnace to improve operational reliability and accommodate changes in the mineralogy of the ore feed. The construction phase will take approximately six months, followed by heating and ramp-up of the new furnace over a further three months. The shutdown is planned to commence during the second half of FY2011.

Cerro Matoso expansion options

Cerro Matoso has undertaken conceptual studies on options for expanding production, including a heap leaching operation. A completed feasibility study and Board approval would be required before any project based on these studies proceeds.

Mt Keith Talc co-processing

In September 2009 the Mt Keith Talc re-design project was approved to move into execution phase. This will enable Mt Keith to process talcose ore to supplement the current ore supply. The general scope of this project is the installation of additional grinding and flotation equipment within the existing circuits at Mt Keith and the addition of a high magnesium oxide concentrate flotation circuit. This project allows us to treat talcose ores which make up approximately 15 per cent of the Mt Keith orebody and which were not previously able to be processed economically with existing technology. The project is expected to be commissioned in the second quarter of FY2012.

 

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2.2.7 Iron Ore Customer Sector Group

Our Iron Ore CSG consists of our Western Australia Iron Ore (WAIO) business and a 50 per cent interest in the Samarco joint venture in Brazil.

Western Australia Iron Ore

WAIO’s operations involve a complex integrated system of seven mines and more than 1,000 kilometres of rail infrastructure and port facilities, all located in the Pilbara region of northern Western Australia. Our strategy is to maximise output utilising available infrastructure at our disposal.

In response to increasing demand for iron ore, we have been expanding our WAIO operations. Since 2001, we have completed six expansion projects to increase our system production capacity from 69 million tonnes per annum to 155 million tonnes per annum (100 per cent basis). We now have a project under construction to further increase system capacity to 205 million tonnes per annum (100 per cent basis). Additional projects now undergoing pre-feasibility or feasibility studies would further increase system capacity. Our share of FY2010 production was 113.9 million tonnes of ore.

Our Pilbara reserve base is relatively concentrated, allowing us to plan our development around a series of integrated ‘mining hubs’ joined to the orebodies by conveyors or spur lines. The mining hub approach enables us to maximise the value of installed infrastructure by using the same processing plant and rail infrastructure for a number of orebodies. Blending ore at the hub gives us greater flexibility to respond to changing customer requirements and changing properties in the ore being mined, as well as reducing the risk of port bottlenecks.

In conjunction with our capacity expansion, we have continued to explore and refine our understanding of existing tenements. Our proven ore reserves are high-grade, with average iron content ranging from 57.1 per cent at Yandi to 63.0 per cent at Mt Newman. The reserve lives of our mines at current production levels range from 11 years at Mt Goldsworthy (JV Northern) to 72 years at Jimblebar.

Samarco

We are a 50–50 joint venture partner with Vale at the Samarco operations in Brazil. During the FY2008, Samarco completed an expansion project consisting of a third pellet plant, a mine expansion, a new concentrator, port enhancements and a second slurry pipeline.

In FY2010, our share of production was 10.35 million tonnes of pellets. Samarco’s total ore reserve is about 2.11 billion tonnes. In addition, Samarco completed the selection (pre-feasibility) study for its fourth pellet plant which is expected to increase the iron ore pellet capacity by 8.2 million tonnes per annum to 30.7 million tonnes per annum (100 per cent share). This project is still subject to shareholder and Samarco Board approval.

Information on Iron Ore mining operations

The following table contains additional details of our mining operations. This table should be read in conjunction with the production (see section 2.3.2) and reserve tables (see section 2.14.2).

 

Name, location, mineralisation style,
type of mine and access

  

Ownership, operation and title/lease

  

History

  

Facilities and power source

Mt Newman joint venture

 

Pilbara region, Western Australia, Australia

 

Mt Newman joint venture iron ore products are derived from bedded ore types. These are classified as per the host Archaean or Proterozoic iron formation, which are Brockman, Marra Mamba and Nimingarra.

 

Open-cut mine

 

The mines are accessible by public road and Company-owned rail to the joint venture’s Nelson Point shipping facility at Port Hedland.

  

We hold an 85% interest in the Mt Newman joint venture. The other 15% is held by Mitsui ITOCHU Iron (10%), ITOCHU Minerals and Energy of Australia (5%).

 

We are the operators of the Mt Whaleback orebody. Independent contractors operate the mining of orebodies 18, 23, 25, 29 and 30.

 

Mining lease under the Iron Ore (Mt Newman) Agreement Act 1964, expires in 2030 with the right to successive renewals of 21 years.

  

Production began at the Mt Whaleback orebody in 1969.

 

Production continues to be sourced from the major Mt Whaleback orebody, complemented by production from orebodies 18, 23, 25, 29 and 30.

 

First ore from the Newman Hub as part of our RGP4 construction was delivered in 2009.

  

The Newman Hub consists of primary and secondary crushing and screening plants (capacity of 58 mtpa); a heavy media beneficiation plant, stockyard blending facility, a single cell rotary car-dumper, and train-loading facility.

 

At orebody 23/25, primary and secondary crushing and screening plant.

 

Power comes from Alinta Dewap’s Newman gas-fired power station via Company-owned powerlines under long-term contracts.

 

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Name, location, mineralisation style,
type of mine and access

  

Ownership, operation and title/lease

  

History

  

Facilities and power source

Yandi joint venture

 

Pilbara region, Western Australia, Australia

 

Yandi joint venture iron ore products are derived from bedded and channel ore types. Bedded ores are classified as per the host Proterozoic banded iron formation names, which for Yandi is Brockman and Channel Iron Deposits are Cainozoic fluvial sediments.

 

Open-cut mine

 

The mines are accessible by public road and Company-owned rail to the Finucane Island shipping facility and Nelson Point shipping facility at Port Hedland.

 

Our railway spur links Yandi mine to the Newman main line.

  

We hold an 85% interest in the Yandi joint venture. The other 15% is held by Mitsui Iron Ore Corporation (7%), ITOCHU Minerals and Energy of Australia (8%).

 

An independent contract mining company is the operator of the mine.

 

Mining lease under the Iron Ore (Marillana Creek) Agreement Act 1991 expires in 2012 with renewal right to a further 42 years.

  

We began development of the orebody in 1991. The first shipment occurred in 1992.

 

Capacity was progressively expanded between 1994 and 2003 and production is currently 41 mtpa.

  

Two processing plants and a primary crusher and overland conveyor are used to crush and screen ore and deliver it to one of two train-loading facilities.

 

Power comes from Alinta Dewap’s Newman gas-fired power station via Company owned powerlines under long-term contracts.

Jimblebar

 

Pilbara region, Western Australia, Australia

 

Jimblebar iron ore products are derived from bedded ore types. These are classified based on the host Archaean or Proterozoic banded iron formation names, which are Brockman and Marra Mamba.

 

Open-cut mine

 

The mine is accessible by public road and Company-owned rail to Port Hedland via a 32 km spur line linking with the main Newman to Port Hedland railway.

  

We own 100% of the Jimblebar lease. We have a sublease agreement over the Wheelara deposit with ITOCHU Minerals and Energy of Australia, Mitsui Iron Ore and four separate subsidiaries of Chinese steelmakers. As a consequence of this arrangement, we are entitled to 85% of production from the Wheelara sublease.

 

An independent contract mining company is the operator of the mine.

 

Mining lease under the Iron Ore (McCamey’s Monster) Agreement Authorisation Act 1972 expires in 2030 with the rights to successive renewals of 21 years.

  

Production at Jimblebar began in March 1989.

 

The ore currently being produced is blended with ore produced from Mt Whaleback and satellite orebodies 18, 23, 25, 29 and 30 to create the Mt Newman blend.

  

Primary and secondary crushing plant (capacity of 14 mtpa).

 

Power comes from Alinta Dewap’s Newman gas-fired power station via Company-owned powerlines under long-term contracts.

Mt Goldsworthy joint venture

 

Pilbara region, Western Australia, Australia

 

Mt Goldsworthy joint venture iron ore products are derived from bedded ore types. These are classified as per the host Archaean or Proterozoic iron formation names, which are Brockman, Marra Mamba and Nimingarra.

 

Open-cut mine includes Area C, Yarrie and Nimingarra.

 

The mines are accessible by public road and Company-owned rail to the joint venture’s Finucane Island shipping facilities and the Nelson Point shipping facilities, both located at Port Hedland.

 

Our railway spur links Area C mine to the Newman main line.

  

We hold an 85% interest in the Mt Goldsworthy joint venture. The other 15% is held by Mitsui Iron Ore Corporation (7%) and ITOCHU Minerals and Energy of Australia (8%).

 

An independent contract mining company is the operator of the mine.

 

Four mineral leases under the Iron Ore (Mt Goldsworthy) Agreement Act 1964 and the Iron Ore (Goldsworthy – Nimingarra) Agreement Act 1972, which have expiry dates between 2014 and 2028 with rights to successive renewals of 21 years.

 

A number of smaller mining leases granted under the Mining Act 1978 in 2005 expiring in 2026.

  

Operations originally commenced at the Mt Goldsworthy project in 1966 and the Shay Gap mine in 1973. The original Goldsworthy mine closed in 1982 and the associated Shay Gap mine closed in 1993. Mining at the Nimingarra mine ceased in 2007 and has since continued from the adjacent Yarrie area.

 

We opened Area C mine in 2003.

  

The primary crushers at Yarrie and Nimingarra, with a combined capacity of 8 mtpa, have been placed into care and maintenance. Yarrie is currently using mobile in-pit crushing plant at a rate of 2 mtpa.

 

An ore processing plant, primary crusher and overland conveyor are located at Area C with capacity of 42 mtpa.

 

Power for Yarrie and Nimingarra is sourced via overhead powerlines from the Port Hedland gas-fired powered station operated by Alinta Dewap under long-term contracts.

 

Area C sources its power from the Newman gas-fired power station also operated by Alinta Dewap under long-term contracts.

 

Samarco

 

Southeast Brazil

 

Samarco iron ore products are derived from Itabirites (metamorphic quartz-hematite rock) and friable hematite ores.

 

Open-cut mine

 

The mine is accessible by public road. Conveyor belts transport iron ore to the beneficiation plant and a 396 km slurry pipeline transports pellet feed to the pellet plants on the coast.

 

Iron pellets are exported via private port facilities.

  

We own 50% of Samarco. The other 50% is owned by Vale. Samarco is operated as an independent business with its own management team.

 

The Brazilian Government has granted mining concessions to Samarco as long as it mines the Alegria complex according to an agreed plan.

  

Production began at the Germano mine in 1977 and at the Alegria complex in 1992. The Alegria complex has now replaced the depleted Germano mine.

 

An expansion occurred in 1997 when a second pellet plant was built. In 2005, an optimisation project increased pellet feed and pellet production.

 

The most recent expansion occurred in 2008 when a third pellet plant was built as well as a second pipeline.

  

There are two 396 km iron ore slurry pipelines integrating the mining complex to pellet plants.

 

With the addition of the third pellet plant expansion, Samarco has the capacity to process and pump a total of 24 mtpa of ore concentrate and produce and ship approximately 22.5 mtpa of pellets (100% basis).

 

Samarco holds interests in two hydro-electric power plants. These plants furnish approximately 19.2% of Samarco’s electricity requirements.

 

Samarco has signed two agreements expiring in 2014 to purchase remaining power needs from two local concessionaires that operate other hydro-electric power plants.

 

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Development projects

Western Australia Iron Ore

Construction of Rapid Growth Project (RGP) 5 is ongoing. Project expenditure of US$4.8 billion was approved in November 2008 for RGP 5, our share of spend to date amounts to US$3.1 billion. The focus of this expansion project is to substantially double track the Newman mainline rail, construction of two new shipping berths on the Finucane Island side of the Port Hedland harbour and additional crushing, screening and stockpiling facilities at Yandi. RGP 5 is expected to increase the installed capacity of our WAIO operations by a further 50 million tonnes per annum to 205 million tonnes per annum (100 per cent share).

In January 2010, we announced approval of US$1.93 billion (100 per cent share) of capital expenditure to underpin further growth activities in the business. This expenditure represents early spend for the Group’s RGP 6. The capital will allow for early procurement of long lead items and detailed engineering to continue the expansion of the inner harbour at Port Hedland, progress rail track duplication works and expand the mining operations. As at 30 June 2010, our capital spend on this project amounted to US$687 million.

Western Australia Iron Ore – Rio Tinto Joint Venture

On 5 June 2009, BHP Billiton signed a Framework Agreement, including non-binding core principles, with Rio Tinto to form a 50–50 production joint venture combining the economic interests of both companies’ current and future iron ore assets in Western Australia. On 5 December 2009, BHP Billiton and Rio Tinto signed binding agreements that set out the terms that will regulate the establishment of the joint venture and its ongoing operation. Those terms are consistent with the core principles set out in the Framework Agreement, except that the joint marketing of 15 per cent of output contemplated by the core principles will not take place: all output will be sold by BHP Billiton and Rio Tinto separately.

The joint venture offers an excellent opportunity to capture substantial production and development synergies from the companies’ overlapping world-class resources. These synergies are anticipated to come from:

 

   

combining adjacent mines into single operations;

 

   

reducing costs through shorter rail hauls and more efficient allocations of port capacity;

 

   

blending opportunities which will maximise product recovery and provide further operating efficiencies;

 

   

optimising future growth opportunities through the development of consolidated, larger and more capital efficient expansion projects;

 

   

combining the management, procurement and general overhead activities into a single entity.

It is intended that BHP Billiton’s Iron Ore President, Ian Ashby, will be appointed as the initial Chief Executive Officer of the joint venture, while Sam Walsh, currently Rio Tinto’s Chief Executive Iron Ore and Australia will be appointed as initial Chairman of the non-executive owners’ council.

Pre-conditions for formation of the joint venture include receipt of regulatory and relevant governmental clearances and approval from the shareholders of both Rio Tinto and BHP Billiton. The Framework Agreement and the binding agreements will terminate if the pre-conditions are not satisfied by 31 December 2010 unless extended by agreement of Rio Tinto and BHP Billiton.

Heads of Agreement with Western Australian Government

On 21 June 2010, BHP Billiton and Rio Tinto announced that they had signed a non-binding Heads of Agreement with the Government of Western Australia (HoA).

Based on the HoA, the State will proceed with amendments to the State Agreement Acts covering operations managed by BHP Billiton and operations managed by Rio Tinto, to require payment of royalties on iron ore shipments at the rates specified in the WA Mining Regulations with effect from 1 July 2010. Royalty rates will increase from 3.75 per cent of sales revenue to 5.625 per cent for fine ore and from 3.25 per cent to five per cent for beneficiated ore. The lump ore royalty will be 7.5 per cent, which is already the prevailing rate in most cases. The rates as amended will apply to all existing operations and future projects covered by the State Agreements.

Additionally, the HoA permits sharing of infrastructure and blending of products across the network operated by BHP Billiton and the network operated by Rio Tinto, and (subject to agreement between the parties) across both networks.

 

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The State Agreement amendments are subject to the approval of relevant co-venturers under existing joint venture arrangements and the passage of ratifying legislation by the Western Australian Parliament. The amendments are not conditional on finalisation of the joint venture.

In recognition of the value that the amendments to the State Agreements are expected to generate and the need to support local communities, the parties to the relevant State Agreements will make a contribution totalling A$350 million to the consolidated revenue of the State.

West Africa

We are currently carrying out exploration activities in the West African countries of Guinea and Liberia. At Nimba in Guinea, we are conducting concept studies to determine economic viability, sustainability impacts and management implications of operations in this area. During the year, we signed a Mineral Development Agreement with the Government of Liberia to enable the further exploration and development of our mineral leases in that country, this is currently before the Legislature for ratification.

2.2.8 Manganese Customer Sector Group

Our Manganese operations produce a combination of ores and alloys from sites in South Africa and Australia. The Manganese CSG is the world’s largest producer of manganese ore and among the top three global producers of manganese alloy.

Manganese alloy is a key input into the steelmaking process. Manganese high-grade ore is particularly valuable to alloy producers because of the ‘value in use differential’ over low-grade ore, which is the degree to which high-grade ore is proportionately more efficient in the alloying process than low-grade ore.

Our strategy is to focus on upstream resource businesses which have been significant contributors to our profit in FY2010. However, our alloy smelters add value to the overall manganese business because they enable us to access markets with an optimal mix of ore and alloy, optimise production to best suit market conditions and give us insight into the performance of our ores in smelters.

Approximately 80 per cent of ore production is sold directly to external customers and the remainder is used as feedstock in our alloy smelters.

The Group owns and manages all manganese mining assets and alloy plants through a joint venture with Anglo-American in which the Group owns 60 per cent. The joint venture assets are Samancor Manganese, which owns 74 per cent of Hotazel Manganese Mines (Pty) Ltd (HMM) and Metalloys, both situated in South Africa and the Groote Eylandt Mining Company Pty Ltd (GEMCO) and Tasmanian Electro Metallurgical Company Pty Ltd (TEMCO) located in Australia. In July 2009, Samancor Manganese (Pty) Ltd sold 26 per cent of HMM in a series of transactions designed to comply with South Africa’s Black Economic Empowerment requirements. In May 2010, Samancor Manganese sold its 51 per cent equity stake in Manganese Metal Company (Pty) Ltd to Agattu Trading 195 (Pty) Ltd.

Mines:

 

   

Hotazel

HMM owns the Mamatwan open-cut mine and the Wessels underground mine. The ore contained in these mines require only crushing and screening to create saleable product with no further upgrade steps required. During FY2010, production was increased in response to higher demand.

 

   

GEMCO

As a result of its location near our own port facilities and its simple, open-cut mining operation, GEMCO is one of the lowest-cost manganese ore producers in the world. Simple operations combined with its high-grade of ore and relative proximity to Asian export markets, make GEMCO unique among the world’s manganese mines. During FY2010, production was increased in response to higher demand.

Alloy Plants:

 

   

Metalloys

The Samancor Manganese Metalloys alloy plant is one of the largest manganese alloy producers in the world. Due to its size and access to high-quality feedstock from the Hotazel operations, it is also one of the lowest-cost alloy producers. Metalloys produces high and medium-carbon ferromanganese and silicomanganese.

 

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TEMCO

TEMCO is a meduim-sized producer of high-carbon ferromanganese, silicomanganese and sinter using ore shipped from GEMCO, primarily using hydro-electric power.

Information on Manganese mining operations

The following table contains additional details of our mining operations. These tables should be read in conjunction with the production (see section 2.3.2) and reserve tables (see section 2.14.2).

 

Name, location, mineralisation style,
type of mine and access

  

Ownership, operation and title/lease

  

History

  

Facilities and power source

Hotazel Manganese Mines (Pty) Ltd

 

Kalahari Basin, South Africa

Mamatwan is an open-cut mine.

 

Wessels is an underground mine.

 

The ore occurs in Proterozoic volcanogenetic sediments associated with banded iron formation hosted by the Hotazel Formation.

 

The mines are accessible by rail and public road. Most ore and sinter products are transported by government-owned rail. Approximately one third of the ore produced is beneficiated locally with the balance exported via Port Elizabeth, Richards Bay and Durban.

  

Hotazel Manganese Mines (Pty) Ltd, a 74% owned subsidiary of Samancor Manganese. HMM is the owner of Mamatwan and Wessels mines. The other 26% is held by: Ntsimbintle 9%; NCAB, 7%; Iziko, 5% and HMM Education Trust, 5%. BHP Billiton is the operator of the mines.

 

The existing New Order Rights are valid until 2036.

 

In implementing the transformation strategy, Samancor Manganese undertook four empowerment transactions to increase the HDSA shareholding in HMM to 26%. This is aligned to the Mining Charter intents.

  

Mamatwan was commissioned in 1964.

 

Wessels was commissioned in 1973.

  

Mamatwan’s capacity is currently 3.5 mtpa of ore and sinter based on the current product mix at the mine. The beneficiation plant consists of primary, secondary and tertiary crushing with associated screening plants. There is a dense medium separator and a sinter plant with a capacity of 1 mtpa of sinter.

 

Wessels has eight loaders and seven haulers with an annual capacity of approximately 1 mtpa of ore. The processing is a simple crushing and screening circuit consisting of primary and secondary crushing circuits with associated screening capacity.

 

The power source is the national utility company Eskom.

Groote Eylandt Mining Company Pty Ltd (GEMCO)

 

Groote Eylandt, Northern Territory, Australia

 

The ore occurs in partially supergene enriched stratiform Cretaceous sandstone – claystone associated type sedimentary orebodies

 

Open-cut mine

 

Ore is transported from the concentrator by road train directly to our shipping facilities at the port at Milner Bay.

  

BHP Billiton own 60% of GEMCO and operates the mine. The remaining 40% is owned by Anglo American.

 

All leases situated on Aboriginal land held under the Aboriginal Land Rights (Northern Territory) Act 1976. The existing leases are valid until 2031.

   The mine was first commissioned in 1965.   

The beneficiation process consists of crushing, screening, washing and dense media separation with lump and fines products being produced. The existing capacity is 4.2 wet mtpa.

 

GEMCO owns and operates its own on-site diesel power generation facility.

Information on Manganese smelters, refineries and processing plants

 

Operation and location

  

Ownership, operation and title

  

Plant type/product

  

Capacity and power source

Metalloys

 

Meyerton, South Africa

   Metalloys is a division of Samancor Manganese (Pty) Ltd. Samancor Manganese (Pty) Ltd holds freehold title over the property, plant and equipment.    The manganese alloy plant uses eight submerged arc furnaces to produce manganese alloys such as high-carbon ferromanganese and silicomanganese and an oxygen blown converter process producing refined (medium-carbon ferromanganese) alloy.   

400,000 tpa of high-carbon ferromanganese (including hot metal), 135,000 tpa of silicomanganese and 90,000 tpa of medium-carbon ferromanganese in various size fractions.

 

The power source is the national utility company Eskom plus 30 MW of internal power generated from waste heat.

Tasmanian Electro Metallurgical Company Pty Ltd (TEMCO)

 

Bell Bay, Tasmania, Australia

  

BHP Billiton own 60% of TEMCO. Anglo American owns the remaining 40%.

 

TEMCO holds freehold title over the property, plant and equipment.

   Four electric arc furnaces and a sinter plant produce ferroalloys, including high-carbon ferromanganese, silicomanganese and sinter.   

Nominal capacity based on the 2011 budget product mix is 130,000 tpa of high-carbon ferromanganese, 125,000 tpa of silicomanganese and 350,000 tpa of sinter.

 

TEMCO sources its electrical power from Aurora Energy, the state-owned power distribution and retailing company. Power in Tasmania is principally generated from hydro stations, but supplemented with a 240 MW gas generation station. TEMCO also self-generates 11 MW for internal use from an on-site energy recovery unit.

 

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Development projects

GEMCO expansion

The selection study (pre-feasibility study) into a further expansion of the GEMCO mine (GEMCO 2nd expansion) from 4.2 to 4.8 wet million tonnes per annum (100 per cent, or about 2.9 wet million tonnes per annum BHP Billiton share) is reaching its conclusion. The project is subject to approval and is expected to advance into execution at the end of second quarter in FY2011. The total investment amount is approximately US$130 million (BHP Billiton share).

Hotazel Manganese Mines

The central block development project at Wessels mine is expected to be completed in FY2013. The project will enable Wessels mine to increase production from 1 million tonnes per annum to 1.5 million tonnes per annum of capacity (100 per cent, or about 0.7 million tonnes per annum BHP Billiton share). The forecast capital expenditure to completion of the project is an estimated US$26 million (BHP Billiton share).

Metalloys

The definition study (feasibility study) for the High Carbon Ferro Manganese furnace M14 at the Metalloys smelter in Meyerton, South Africa is reaching its conclusion. This furnace would add an additional 130,000 tonnes per annum capacity (100 per cent, or about 78,000 tonnes per annum BHP Billiton share) to the smelter for capital at a cost of US$54 million (BHP Billiton share).

Samancor Gabon Manganese project

The selection study (pre-feasibility study) for the establishment of a manganese mine in Gabon was completed in July 2010. A small entry mine of approximately 300,000 tonnes per annum (100 per cent, or about 180,000 tonnes per annum BHP Billiton share) was selected as the preferred option. The small entry mine requires growth capital investment of US$43 million (BHP Billiton share) to establish the asset producing approximately 300,000 tonnes per annum of manganese ore by FY2012.

2.2.9 Metallurgical Coal Customer Sector Group

Our Metallurgical Coal CSG is the world’s largest supplier of seaborne metallurgical coal. Metallurgical coal, along with iron ore and manganese, is a key input in the production of steel.

We have production assets in two major resource basins: the Bowen Basin in Central Queensland, Australia and the Illawarra region of New South Wales, Australia.

Bowen Basin

In comparison with other coal producing regions, the Bowen Basin is extremely well positioned to supply the seaborne market because of:

 

   

its high-quality metallurgical coals, which are more efficient in blast furnace use;

 

   

the relatively low cost of production because of its extensive near-surface deposits; and

 

   

its geographical proximity to Asian customers.

We also have access to key infrastructure, including a modern, integrated electric rail network and our own coal loading terminal at Hay Point, Mackay. This infrastructure enables us to maximise throughput and blending of products from multiple mines to optimise the value of our production and satisfy customer requirements.

Our Bowen Basin mines are owned through a series of joint ventures. We share 50–50 ownership with Mitsubishi Development Pty Ltd in BHP Billiton Mitsubishi Alliance (BMA), which operates the Goonyella Riverside, Broadmeadow, Peak Downs, Saraji, Norwich Park, Blackwater and Gregory Crinum mines, together with the Hay Point terminal. The two BHP Mitsui Coal (BMC) operations – South Walker Creek and Poitrel mines – are owned by BHP Billiton (80 per cent) and Mitsui and Co (20 per cent). The reserve lives of the Bowen Basin mines at target production rates range from six years to 65 years.

 

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Our export customers are steel producers around the world. In FY2010 most of our contracts were long-term or annual volume contracts with prices negotiated annually, however we are now moving predominantly to short-term pricing.

Total attributable production in FY2010 was approximately 30.8 million tonnes, compared with 30.1 million tonnes in FY2009. Production in FY2010 was higher due to improved operational and supply chain performance, supported by strong demand.

Illawarra

We own and operate three underground coal mines in the Illawarra region of New South Wales, which supply metallurgical coal to the nearby BlueScope Port Kembla steelworks, and other domestic and export markets. Total production in FY2010 was approximately 6.5 million tonnes and the reserve lives of the Illawarra mines at target production rates range from four years to 19 years.

Production figures for both the Bowen Basin and Illawarra include some energy coal (less than six per cent and 13 per cent, respectively).

Information on Metallurgical Coal mining operations

The following table contains additional details of our mining operations. The tables should be read in conjunction with the production (see section 2.3.2) and reserves tables (see section 2.14.2).

 

Name, location, mineralisation style,
type of mine and access

  

Ownership, operation and title/lease

  

History

  

Facilities and power source

Central Queensland Coal Associates (CQCA) joint venture

 

Bowen Basin, Queensland, Australia

 

Produces a range of products from premium-quality, low volatile, high vitrinite, hard coking coal to medium volatile hard coking coal, to weak coking coal, and some medium ash thermal coal as a by-product. Seams currently mined are from the Permian Moranbah and Rangal Coal Measures which are comprised of layered fine to medium grained siltstones and sandstones interbedded with coal.

 

Goonyella Riverside, Peak Downs, Saraji, Norwich Park and Blackwater are open-cut mines. Broadmeadow is a longwall underground mine.

 

The mines are accessible by public road. All coal is transported on government-owned railways to the port of Hay Point near Mackay (incorporating CQCA’s Hay Point Coal Terminal and the Dalrymple Bay Coal Terminal) and the port of Gladstone.

  

We own 50% of the CQCA joint venture. Mitsubishi Development Pty Ltd owns the other 50%.

 

BMA operates the mines.

 

Mining leases, including those associated with undeveloped tenements, have expiry dates between 2010 and 2037 and are renewable for such further periods as the Queensland Government/legislation allows. Renewal applications for mining leases expiring in CY2010 have been lodged.

  

Goonyella Mine, which commenced in 1971, merged with the adjoining Riverside mine in 1989 and is operated as the Goonyella Riverside Mine. Reserves at the Riverside mine were depleted in 2005.

 

Peak Downs commenced production in 1972. Saraji mine commenced production in 1974. Norwich Park commenced production in 1979.

 

Blackwater Mine commenced production in 1967. South Blackwater and Blackwater mines were integrated from late 2000.

 

Broadmeadow, an underground mine developed on the Goonyella mining lease, commenced longwall operations in 2005.

  

All coal is beneficiated at on-site processing facilities, which have a combined capacity in excess of 53.5 mtpa.

 

Power is sourced from the State of Queensland’s electricity grid.

Gregory joint venture

 

Bowen Basin, Queensland, Australia

 

Produces a high volatile, low ash hard coking coal, and a medium ash thermal coal. Mining is limited to the Lilyvale Seam, part of the Permian German Creek Coal Measures, which are composed of layered fine to medium grained sandstones and siltstones interbedded with coal.

 

Gregory is an open-cut mine.

Crinum is a longwall underground mine.

 

The mines are accessible by public road. All coal is transported on government-owned railways to the port of Hay Point near Mackay (incorporating CQCA’s Hay Point Coal Terminal and the Dalrymple Bay Coal Terminal) and the port of Gladstone.

  

We own 50% of the Gregory joint venture. Mitsubishi Development Pty Ltd owns the other 50%.

 

BMA operates the mines.

 

Mining leases, including those associated with undeveloped tenements, have expiry dates between 2014 and 2027 and are renewable for such further periods as the Queensland Government/legislation allows.

  

The Gregory Mine became operational in 1979.

 

Crinum Mine commenced longwall production in 1997.

  

All coal is beneficiated at an on-site processing facility, with a capacity in excess of 5 mtpa.

 

Power is sourced from the State of Queensland’s electricity grid.

 

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Name, location, mineralisation style,
type of mine and access

  

Ownership, operation and title/lease

  

History

  

Facilities and power source

BHP Mitsui Coal Pty Limited

 

Bowen Basin, Queensland, Australia

 

Produces a range of coking coal, pulverised coal injection (PCI) coal, and thermal coal products with medium to high phosphorus and ash properties. Production is sourced from the Permian Rangal Coal Measures are the main economic stratum and are comprised of layered sedimentary formations.

 

South Walker Creek and Poitrel are open-cut mines.

 

The mines are accessible by public road. All coal is transported on government-owned railways to the port of Hay Point near Mackay (incorporating CQCA’s Hay Point Coal Terminal and the Dalrymple Bay Coal Terminal).

 

  

We own 80% of BHP Mitsui Coal Pty Limited (BMC). Mitsui and Co owns the other 20%. BMA managed the mines during FY2010, however from 1 July 2010, management was transferred to BMC.

 

Mining leases, including those associated with undeveloped tenements, have expiry dates between 2010 and 2020 and are renewable for such further periods as the Queensland Government/legislation allows. Renewal applications for mining leases expiring in CY2010 have been lodged.

  

South Walker Creek became operational in 1996, producing PCI product and minor quantities of thermal coal.

 

Poitrel mine commenced operations in 2006, producing both coking coal and PCI.

  

South Walker Creek coal is beneficiated at on-site processing facilities with a capacity to produce 3.5 mtpa of coal.

 

Poitrel Mine has a joint venture agreement (Red Mountain Joint Venture) with the adjacent Millennium Coal mine to share coal processing and rail loading facilities. Poitrel has access to 3 mtpa capacity from the processing facilities.

 

Power is sourced from the State of Queensland’s electricity grid.

Illawarra Coal

 

Illawarra, New South Wales, Australia

 

Produces premium quality hard coking coal and some thermal coal from the Wongawilli and Bulli seams contained in layered sedimentary formations within the Permian Illawarra Coal Measures.

 

Dendrobium, Appin and West Cliff are all underground mines.

 

All the mines are accessible by public road. All coal is transported by road or rail to our major customer, BlueScope Steel’s Port Kembla steelworks, or to Port Kembla for export.

  

We are owner and operator of the Illawarra Coal mines.

 

Mining leases have expiry dates between 2010 and 2026 and are renewable for such further periods as the NSW Government/legislation allows. Renewal applications for mining leases expiring in 2010 have been lodged.

  

Appin commenced in 1962 with longwall mining starting in 1969.

 

West Cliff was commissioned in 1976.

 

Dendrobium Mine opened in 2005.

  

Coal is beneficiated at two processing facilities with a capacity to produce approximately 8 mtpa of coal.

 

Power is sourced from the State of New South Wales’ electricity grid.

Development projects

IndoMet Coal Project (Indonesia)

Indomet Coal includes the Maruwai and Juloi metallurgical coal concessions in Kalimantan, Indonesia and was discovered by BHP Billiton Exploration in the 1990’s. Following a strategic assessment of the importance of local participation in the development of the project in 2010, a 25 per cent interest in the project was sold to a subsidiary of PT Adaro Energy TBK. We retain 75 per cent of the project.

Study work is underway to identify development options across our mining areas of interest (Coal Contracts of Work).

Bowen Basin Expansions

BMA is currently investigating a number of brownfield and greenfield expansion options in the Bowen Basin, including:

 

   

Daunia Coal Mine (greenfield project);

 

   

Caval Ridge Mine (greenfield project);

 

   

Goonyella Riverside Mine Expansion (brownfield project);

 

   

Hay Point Coal Terminal Expansion (brownfield project).

Daunia, located to the east of the Poitrel mine, has been designed with capacity to produce up to 4 million tonnes per annum, and the production capacity of Caval Ridge, located to the north of the Peak Downs mine, would be up to 5.5 million tonnes per annum (100 per cent, or 2.75 million tonnes per annum BHP Billiton share) in addition to potential expansion of Peak Downs mine of 2.5 million tonnes per annum (100 per cent, or 1.25 million tonnes per annum BHP Billiton share). Both developments would include coal handling preparation plants. We are assessing the optimal time to advance these projects and we are continuing to progress owner and government approvals.

 

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To support this growth, BMA is progressing owner and government approvals to increase the capacity of the Hay Point Coal Terminal from 44 million tonnes per annum to 55 million tonnes per annum in a first phase expansion (HPX3). We have committed pre-approval expenditure for further project studies and items requiring long lead times. A potential further stage (HPX4) would increase capacity from 55 million tonnes per annum to approximately 75 million tonnes per annum. We were also awarded ‘preferred developer’ status for the construction of a new coal terminal at the X80 site at Abbot Point, with a capacity of at least 30 million tonnes per annum.

2.2.10 Energy Coal Customer Sector Group

Our Energy Coal CSG is one of the world’s largest producers and marketers of export energy coal (also known as thermal or steaming coal) and is also a significant domestic supplier to the electricity generation industry in Australia, South Africa and the United States. Our global portfolio of energy coal assets, our insights into the broader energy market through our sales of other fuels such as gas, uranium and oil, and our control of options for bulk freight provide our business with key advantages as a supplier. Like our other businesses, our Energy Coal CSG owns large, long-life assets with substantial options for expansion.

We generally make our domestic sales under long-term fixed-price contracts with power stations that are located in close proximity to the mine. We make export sales to power generators and some industrial users in Asia, Europe and the United States, usually under contracts for delivery of a fixed volume of coal. Pricing is either index-linked, or fixed, in which case we use financial instruments to swap our fixed-price exposure for exposure to market indexed prices.

We recognise that the need to control carbon dioxide emissions has substantial implications for the use of thermal coal as an energy source. We have committed to invest US$300 million over five years from June 2007 to support the research, development and demonstration of low-emissions technologies, including ‘clean coal’ and carbon sequestration technologies.

We operate three sets of assets: a group of mines and associated infrastructure collectively known as BHP Billiton Energy Coal South Africa (BECSA); our New Mexico Coal operations in the United States; and our NSW Energy Coal operations in Australia. We also own a one-third share of the Cerrejón Coal Company, which operates a coal mine in Colombia.

BHP Billiton Energy Coal South Africa

BECSA operates three coal mines in the Witbank region of Mpumalanga province of South Africa, which produced a total of approximately 30.5 million tonnes in FY2010. We have a major mine expansion project underway in South Africa (see Development projects below). In FY2010, BECSA sold approximately 64 per cent of its production to Eskom, the government-owned electricity utility in South Africa, and exported the rest via the Richards Bay Coal Terminal, in which we own a 24 per cent share. The reserve lives of the BECSA mines at current production rates range from 11 to 24 years.

New Mexico Coal

We own and operate the Navajo mine, located on Navajo land in New Mexico, and the nearby San Juan mine. Each of these mines transports its production directly to a nearby power station. The reserve lives of Navajo and San Juan at current production rates are 21 and 10 years, respectively. New Mexico Coal produced approximately 13.5 million tonnes in FY2010.

NSW Energy Coal

Our NSW Energy Coal operating asset is the Mt Arthur open-cut coal mine located in the Hunter Valley region of New South Wales, which produced approximately 12 million tonnes in FY2010 and has a reserve life at current production rates of 55 years. We have a project in execution and a number of studies underway to evaluate expansion opportunities for this operation (see Development projects below). In FY2010, we delivered approximately 18 per cent of Mt Arthur’s production to a local power station and exported the rest via the port of Newcastle.

Cerrejón Coal Company

Cerrejón Coal Company owns and operates one of the largest open-cut export coal mines in the world in La Guajira province of Colombia, together with integrated rail and port facilities through which the majority of production is exported. In FY2008, Cerrejón completed an expansion that increased capacity to 32 million tonnes per annum (100 per cent terms). At Cerrejón’s current rate of production, Cerrejón has a reserve life of 21 years.

 

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Information on Energy Coal mining operations

The following table contains additional details of our mining operations. The tables should be read in conjunction with the production (see section 2.3.2) and reserves tables (see section 2.14.2).

 

Name, location, mineralisation style,
type of mine and access

  

Ownership, operation and title/lease

  

History

  

Facilities and power source

SOUTH AFRICA         

Khutala

 

100 km east of Johannesburg, Gauteng Province, South Africa

 

Produces a medium rank bituminous thermal coal (non-coking).

 

Combination of open-cut and underground mines. The mines are accessible by public roads.

 

Domestic coal is transported via overland conveyor to the Kendal Power Station.

  

We own and operate the mine at Khutala.

 

BECSA is the holder of an Old Order Right.

 

An application for conversion to a New Order Right, submitted in 2004, is still being processed (see section 2.7.1).

  

Khutala was commissioned in 1984.

 

Open-cut operations began in 1996.

 

The mining of a thermal/metallurgical coal deposit for a domestic market commenced in 2003.

  

Beneficiation facilities consist of a crushing plant, for the energy coal with a nominal capacity of 18 mtpa. A separate smaller crusher and wash plant with a nominal capacity of 0.6 mtpa is used to beneficiate the metallurgical coal supplied from the open-cut operation.

 

Power is supplied by Eskom under long-term contracts.

Douglas/Middelburg

 

20 km southeast of Witbank, Mpumalanga Province, South Africa

 

Produces a medium rank bituminous thermal coal, most of which can be beneficiated for the European or Asian export market.

 

Open-cut mine

 

The mine is accessible by public roads.

 

Export coal is transported to RBCT by rail, while the domestic coal is transported via conveyor belt to the nearby Duvha Power Station.

  

We own and operate the mine (100%) after entering into an agreement with Xstrata Plc (through Tavistock Collieries Plc) to dissolve the joint venture (84:16). The dissolution transaction was completed on 1 December 2009.

 

BECSA and Tavistock are the joint holders of three Old Order Rights in the previous joint venture ratio (84:16) and BECSA is the 100% holder of a fourth Old Order Right. All four Old Order Rights were lodged with the Department of Mineral Resources for conversion in December 2008. BECSA and Tavistock previously amended their joint venture agreement such that, upon conversion of the four Old Order Rights, the mining area will be divided into an area wholly owned and operated by Tavistock and an area wholly owned and operated by BECSA as the new Douglas/Middelburg mine (see section 2.7.1).

   Douglas/Middelburg mine was commissioned in 1982. Middelburg Mine Services (MMS) and Duvha Opencast became one operation in 1996.   

Beneficiation facilities consist of the following: tips and crushing plants, two export wash plants, a middlings wash plant and a de-stone plant. The overall capacity is 30 mtpa. Replacement of these facilities is part of the DMO project currently in execution. (see Development projects below).

 

Power is supplied by Eskom under long-term contracts.

Klipspruit

 

30 km west of Witbank, Mpumalanga Province, South Africa

 

Produces a medium rank bituminous thermal coal, most of which can be beneficiated for the European or Asian export market.

 

Open-cut mine

 

Access to the mine is via public roads.

 

Export coal is transported to RBCT by rail.

  

We own and operate the mine at Klipspruit.

 

BECSA is the holder of an Old Order Right. An application for conversion to a New Order Right was submitted in 2004 and is still being processed (see section 2.7.1).

  

The project was approved by the Mpumalanga Department of Agriculture, Conservation and Environment in 2003. An initial mini-pit was started in August 2003 as a truck and shovel contractor operation.

 

The Klipspruit Expansion Project was completed in FY2010. The project included a 50% share in the Phola Coal Plant and is expected to increase ROM capacity of the mine to approximately 8.0 mtpa at full ramp-up.

  

Beneficiation facilities consist of a tip and crushing plant, as well as an export wash plant. We own 50% of the Phola Coal Plant in a joint venture with Anglo Inyosi Coal. The overall capacity of the plant is 16 mtpa (100% terms).

 

Power is supplied by Eskom under long-term contracts.

 

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Name, location, mineralisation style,
type of mine and access

  

Ownership, operation and title/lease

  

History

  

Facilities and power source

AUSTRALIA         

Mt Arthur Coal

 

Approximately 125 km from Newcastle, New South Wales, Australia

 

Produces a medium rank bituminous thermal coal (non- coking).

 

Open-cut mine

 

The mine is accessible by public road.

 

Domestic coal is transported by an overland conveyor to Bayswater Power Station.

 

Export coal is transported by a combination of private and public rail, approximately 125 km to the port of Newcastle.

  

We own and operate the mine at Mt Arthur.

 

We hold various mining leases and licences that expire between 2010 and 2028. Applications have been submitted to renew leases due to expire in CY2010.

   Coal production from the Mt Arthur area commenced in 2002.   

Main beneficiation facilities include coal handling, preparation and washing plants capable of producing in excess of 14 mtpa product (currently being upgraded as part of the expansion project - see Development projects below). Washery by-pass coal is also sold.

 

We are a 35.5% shareholder in a joint venture company that is operating a 30 mtpa export coal loading facility in the port of Newcastle. The first ship load of coal was dispatched in June 2010, and the port is expected to progressively ramp-up to nameplate capacity.

 

Power is supplied by local energy providers, from the eastern Australia power grid.

AMERICA         

BHP Navajo Coal Company

 

30 km southwest of Farmington, New Mexico, US

 

Produces a medium rank bituminous thermal coal (non-coking suitable for the domestic market only).

 

Open-cut mine

 

Navajo mine is accessible by public roads located on the Navajo Nation Indian Reservation. We transport all coal 21 km from the production areas via our dedicated railroad to the Four Corners Power Plant (FCPP).

  

We own and operate the mine.

 

The mine is subject to a long-term lease from the Navajo Nation. The lease continues for as long as coal can be economically produced and sold in paying quantities.

   The mine has been in operation since 1963, and coal sales are contracted to 2016.   

The mine has the capacity to produce and process 7.8 mtpa. Mined coal is sized and blended to contract specifications using stackers and reclaimers with no further beneficiation.

 

Power is supplied from FCPP.

San Juan Coal Company

 

25 km west of Farmington, New Mexico, US

 

Produces a medium rank bituminous thermal coal (non-coking suitable for the domestic market only).

 

The San Juan underground mine is accessible by public roads.

 

Transport of coal to the San Juan Generating Station (SJGS) is by truck and conveyor belt.

  

We own and operate the mine.

 

We hold mining leases from federal and state governments. The leases are viable as long as minimum production criteria are achieved.

   The San Juan mine began operating in 1973 as a surface mine. In October 2000, development of the San Juan underground mine was approved to replace production from the existing open-cut mine. Coal sales are contracted to December 2017.   

The mine has the capacity to produce 6.1 mtpa of coal. Mined coal is sized and blended to contract specifications using stockpiles with no further beneficiation.

 

Power is supplied from SJGS.

COLOMBIA         

Cerrejón Coal Company

 

Maicao, La Guajira state, Colombia

 

Produces a medium rank bituminous thermal coal (non-coking, suitable for the export market).

 

Open-cut mine

 

The export facility is 150 km northeast of the mine on the Caribbean coast at Puerto Bolivar and is connected to the mine by a single-track railway. Access to the mine is via public roads and by charter aircraft to the mine’s airstrip.

  

We own 33.33% of the Cerrejón Coal Company in a joint venture. The remaining 66.67% interest is owned by Anglo American Plc (33.33%) and Xstrata Plc (33.33%).

Mining leases expire in 2034.

   The original mine began as a joint venture between Exxon’s Intercor and the Colombian Government entity Carbocol in 1976. Over time, the partners have changed, nearby operations have been merged and progressive expansion resulted in the current 32 mtpa operation.   

Beneficiation facilities include a crushing plant with a capacity of 32 mtpa and a washing plant with a capacity of 2 mtpa.

 

Electricity is supplied through the local Colombian power system.

 

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Development projects

Douglas-Middelburg Optimisation Project

This project involves works to optimise the development of existing reserves across the Douglas and Middelburg collieries, the development of additional mining areas and the construction of a new 14 million tonnes per annum coal processing plant, which will replace the less efficient existing plant at Douglas. The work will enable us to maintain energy coal exports from the combined Douglas and Middelburg colliery at around current levels (approximately 10 million tonnes per annum) while also fulfilling our domestic contractual commitments. The capital investment is expected to be within budget and the new plant is currently being completed with the first train load of coal railed on 30 July 2010.

Mt Arthur open-cut expansions

On 24 July 2009, we announced the Mt Arthur Coal (MAC) mine expansion, which is designed to increase production of saleable thermal coal by an increment of approximately 3.5 million tonnes per annum. Known as the MAC 20 Project, it is expected to commence operation in the first half of CY2011 at an estimated capital investment of US$260 million.

We have submitted a development consent application to expand the production capacity of the mine to 32 million tonnes per annum open-cut and 4  million tonnes per annum underground. Studies are underway to examine the expansion of the mine to utilise this capacity.

2.3 Production

2.3.1 Petroleum

The table below details Petroleum’s historical net crude oil and condensate, natural gas and natural gas liquids production, primarily by geographic segment, for each of the three years ended 30 June 2010, 2009 and 2008. We have shown volumes of marketable production after deduction of applicable royalties, fuel and flare. We have included in the table average production costs per unit of production and average sales prices for oil and condensate and natural gas for each of those periods.

 

     BHP Billiton Group share of  production
Year ended 30 June
     2010    2009    2008

Production volumes

        

Crude oil and condensate (‘000 of barrels)

        

Australia

   31,540    32,496    30,386

United States

   41,522    20,818    12,437

Other

   11,325    13,014    14,621
              

Total crude oil and condensate

   84,387    66,328    57,444
              

Natural gas (1) (billion cubic feet)

        

Australia

   259.65    258.14    262.69

United States

   17.68    11.91    10.44

Other

   91.24    92.75    93.41
              

Total natural gas (1)

   368.57    362.80    366.54
              

Natural Gas Liquids (1) (2) (‘000 of barrels)

        

Australia

   8,652    7,977    9,253

United States

   2,545    1,128    809

Other

   1,552    2,071    1,471
              

Total NGL (1) (2)

   12,749    11,176    11,533
              

Total petroleum products production (million barrels of oil equivalent) (3)

        

Australia

   83.47    83.50    83.42

United States

   47.01    23.93    14.99

Other

   28.08    30.54    31.66
              

Total petroleum products production (million barrels of oil equivalent) (3)

   158.56    137.97    130.07
              

 

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     BHP Billiton Group share of  production
Year ended 30 June
     2010    2009    2008

Average sales price

        

Crude oil and condensate (US$ per barrel)

        

Australia

   74.12    70.32    98.00

United States

   71.55    62.90    97.69

Other

   75.57    60.69    91.60
              

Total crude oil and condensate

   73.05    66.18    96.27
              

Natural gas (US$ per thousand cubic feet)

        

Australia

   3.52    3.07    3.20

United States

   4.80    6.61    10.37

Other

   3.05    4.08    4.09
              

Total natural gas

   3.43    3.57    3.75
              

Natural Gas Liquids (US$ per barrel)

        

Australia

   48.20    44.71    56.97

United States

   39.51    48.19    58.98

Other

   49.40    38.88    49.83
              

Total NGL

   46.47    43.91    56.15
              

Average Production Cost (US$ per barrel of oil equivalent) (4)

        

Australia

   5.59    4.51    3.61

United States

   5.62    7.20    6.84

Other

   7.48    6.74    7.37
              

Average Production Cost (US$ per barrel of oil equivalent) (4)

   5.93    5.47    4.90
              

 

(1) Gulf of Mexico natural gas production was restated to a dry gas number. NGL production is now shown separately. The change resulted in 2,545 thousand barrels, 1,129 thousand barrels and 809 thousand barrels additional NGL production and 5.41 billion cubic feet, 2.05 billion cubic feet and 1.48 billion cubic feet lower natural gas production in the years ended 30 June 2010, 2009 and 2008, respectively. Prior amounts have been restated to ensure consistency.
(2) LPG and Ethane are reported as Natural Gas Liquids (NGL).
(3) Total boe conversion is based on the following: 6,000 scf of natural gas equals 1 boe.
(4) Average production costs include direct and indirect costs relating to the production of hydrocarbons and the foreign exchange effect of translating local currency denominated costs into US dollars but excludes ad valorem and severance taxes.

2.3.2 Minerals

The table below details our mineral and derivative product production for all CSGs except Petroleum for the three years ended 30 June 2010, 2009 and 2008. Production shows our share unless otherwise stated.

 

     BHP Billiton
Group
   BHP Billiton Group share of  production
Year ended 30 June
     interest %    2010    2009    2008

Aluminium

           

Alumina

           

Production (‘000 tonnes)

           

Worsley, Australia

   86.0    3,054    2,924    3,035

Paranam, Suriname (1)

   45.0    78    935    983

Alumar, Brazil

   36.0    709    537    536
                 

Total alumina

      3,841    4,396    4,554
                 

Aluminium

           

Production (‘000 tonnes)

           

Hillside, RSA

   100.0    710    702    695

Bayside, RSA

   100.0    98    99    168

Alumar, Brazil

   40.0    174    177    178

Mozal, Mozambique

   47.1    259    255    257
                 

Total aluminium

      1,241    1,233    1,298
                 

 

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     BHP Billiton
Group
   BHP Billiton Group share of  production
Year ended 30 June
     interest %    2010    2009    2008

Base Metals (2)

           

Copper

           

Payable metal in concentrate (‘000 tonnes)

           

Escondida, Chile

   57.5    448.1    417.6    679.5

Antamina, Peru

   33.8    98.6    109.0    111.7

Pinto Valley, US (3)

   100.0    —      33.3    26.8
                 

Total copper concentrate

      546.7    559.9    818.0
                 

Cathode (‘000 tonnes)

           

Escondida, Chile

   57.5    174.2    172.1    131.6

Cerro Colorado, Chile

   100.0    85.2    102.1    106.4

Spence, Chile

   100.0    159.6    172.7    142.7

Pinto Valley, US (3)

   100.0    6.2    6.2    6.9

Olympic Dam, Australia

   100.0    103.3    194.1    169.9
                 

Total copper cathode

      528.5    647.2    557.5
                 

Total copper concentrate and cathode

      1,075.2    1,207.1