Offer for QCT Resources-Pt 2

Broken Hill Proprietary Co Ld
29 August 2000


PART 2

             Offer by MetCoal Holdings (Qld) Pty Ltd (the Bidder)
           a company owned equally by wholly owned subsidiaries of
              The Broken Hill Proprietary Company Limited and
                       Mitsubishi Development Pty Ltd

                                 Intentions

1 Introduction

This section sets out the Bidder's, BHP's and Mitsubishi's intentions regarding:

(a) the continuation of the business of QCT;

(b) any major changes to be made to the business of QCT, including any
redeployment of the fixed assets of QCT; and

(c) the future employment of the present employees of QCT,

on the basis of facts and information concerning the QCT Group which are known
to them as at the date of this Bidder's Statement.

The Bidder is owned equally by wholly owned subsidiaries of BHP and Mitsubishi.
The directors of the Bidder are appointed by wholly owned subsidiaries of BHP
and Mitsubishi. Therefore, the current intentions of BHP and of Mitsubishi
represent the current intentions of the Bidder.

2 Compulsory acquisition of QCT Shares

If the Bidder becomes entitled to compulsorily acquire QCT Shares under part
6A.1 of the Corporations Law (as a result of the acquisition of QCT Shares under
the Offers or otherwise), it intends to exercise those rights and to seek the
removal of QCT from the official list of ASX.

Even if the Bidder does not become entitled to exercise compulsory acquisition
rights under part 6A.1 of the Corporations Law following the Offers, it may
nevertheless be or become entitled to exercise general compulsory acquisition
rights under part 6A.2 of the Corporations Law. The Bidder intends to exercise
such rights if they become available.

No offers are being made for QCT Options or QCT Shares issued as a result of the
exercise of QCT Options after the Register Date. However, if the Bidder is able
to proceed to compulsory acquisition of QCT Shares, it proposes to make a fair
offer to acquire the QCT Options and any QCT Shares issued after the Register
Date.

3 Co-ordination of the BHP Group's and Mitsubishi's interests

BHP and Mitsubishi have agreed to form a strategic alliance with respect to
their joint interests in metallurgical coal in the Bowen Basin. This alliance
will seek to utilise the complementary strengths of the two organisations with a
view to optimising their joint interests in the Bowen Basin. The Bid is the
first joint undertaking by BHP and Mitsubishi in furtherance of this alliance.

As an initial step in this alliance, BHP and Mitsubishi have agreed to establish
the Bowen Basin Coal Management Committee. The objective of this committee will
be to co-ordinate management of the BHP Group's and the Mitsubishi Group's joint
coal interests in the Bowen Basin and to explore the extent to which additional
value can be created from a joint approach to the management of their common
interests in the Bowen Basin. The Bowen Basin Coal Management Committee will
deal with, amongst other matters, marketing, business development and
operations.

The legal relationship between the BHP Group and the Mitsubishi Group in
relation to their respective coal interests in the Bowen Basin will continue to
be regulated by existing joint venture agreements. Any interest acquired by the
BHP Group and the Mitsubishi Group in QCT will be regulated by the Shareholders
Agreement.

After the end of the Offers, it is anticipated that the Bidder will transfer
half of the QCT Shares acquired by it to the BHP Group and half to the
Mitsubishi Group. Under the Shareholders Agreement, the parties have agreed to
do all things in their power to ensure that equal numbers of representatives of
the BHP Group and the Mitsubishi Group are appointed to the QCT Board. The
parties have also agreed to consult on all matters relating to the casting of
votes at a general meeting of QCT but, except when the matter relates to
appointment of directors, each of the BHP Group and the Mitsubishi Group can
vote as they think appropriate. BHP Coal and MDP Coal have agreed to form a
management committee to consult on co-ordination of voting for directors of QCT,
transfer of QCT Shares and ongoing management of the ownership of QCT Shares.

4 Intentions for QCT if all QCT Shares acquired

This section sets out the intentions of BHP and Mitsubishi if the Bidder
acquires all the QCT Shares.

BHP and Mitsubishi will undertake a detailed review of the QCT Group's
activities to evaluate their performance, profitability, prospects and strategic
relevance for the BHP Group and the Mitsubishi Group, in the light of the more
detailed information then available to them.

BHP and Mitsubishi believe that the assets of the QCT Group will generally
complement their other assets in the Bowen Basin. In particular, the BHP Group
and the Mitsubishi Group are joint venturers in the CQCA Joint Venture and the
Gregory Joint Venture together with the QCT Group and, if all QCT Shares are
acquired, the BHP Group and Mitsubishi will together own all of the interests in
these joint ventures.

Head office

BHP and Mitsubishi intend to carry out QCT's corporate head office functions
(such as company secretarial, treasury, finance and taxation) through their
existing resources and to close QCT's corporate head office.

Main assets and operation of the business

The QCT Group's principal asset is its non-operating interest in the CQCA Joint
Venture and the Gregory Joint Venture. BHP and Mitsubishi intend to retain this
interest. Furthermore, it is the intention of BHP and Mitsubishi that coal
produced by the CQCA Joint Venture and the Gregory Joint Venture, on behalf of
the QCT Group, will continue to be marketed through the existing sales agency
agreements.

The other main asset of the QCT Group is its 100% interest in the South
Blackwater mine, which consists of an open cut mining operation and two
underground mining operations, Kenmare and Laleham, as well as a coal
preparation plant and other related infrastructure. The QCT Group is the
operator of the South Blackwater mine.

In the 12 months to 30 June 1999, 2.8 million tonnes of raw coal was produced
from the Kenmare longwall underground mine at the South Blackwater mine. This
compared with 0.8 million tonnes from the Laleham underground mine and 2.6
million tonnes from open cut mining operations. In its 1999 Annual Report (for
the 12 months to 30 June 1999), QCT indicated it expected raw coal production
from Kenmare to increase in 1999/2000. QCT also indicated its intention to close
the Laleham operation in 12 months time and to relocate its productive equipment
and personnel to Kenmare to mine coal from areas not accessible by Kenmare's
longwall equipment.

However, production from the South Blackwater mine during the 12 months to 30
June 2000 was adversely affected by problems at the Kenmare mine.

The Kenmare longwall was relocated to the C seam from the overlying A seam early
in the 1999/2000 financial year. Difficult roof conditions were experienced for
much of the December 1999 quarter. These problems were first reported on 21
December 1999. Longwall mining through a large fault zone in the C seam gave
rise to a series of partial roof failures which had slowed production and
increased costs. On 15 February 2000 it was reported that longwall mining at
Kenmare had returned to normal production levels.
Production from Kenmare ceased in late March in preparation for a longwall
relocation. On 30 May problems in recovering longwall supports as part of a
relocation of mining equipment to another mining panel were reported. At the
time it was estimated that longwall production from Kenmare would be affected
until the end of July 2000.

On 3 August 2000, QCT reported that longwall equipment had been recovered from
the Kenmare C seam. QCT indicated there was uncertainty whether the C seam could
be economically mined using longwall technology. QCT also indicated it was
returning to the overlying A seam. Longwall mining at Kenmare was not expected
to resume before October 2000.

The other underground mine at South Blackwater is Laleham. In its presentation
dated 1 March 2000 of interim results for the 6 months to 31 December 1999, QCT
indicated that the previously announced Laleham closure had been deferred. In
the same presentation reference was made to delays in development of the
Southern open cut due to native title issues. QCT also indicated in this
presentation of interim results that the South Blackwater mine was under 'close
scrutiny' in the present low price market environment.

As part of its open cut operations, the QCT Group has mined approximately 1.143
million tonnes of raw coal in the 12 months to 30 June 2000 from a part of the
CQCA Joint Venture's Blackwater mine adjacent to South Blackwater, up from
approximately 695,000 tonnes in the previous year. The arrangements in
connection with which this coal is mined continue until 1 July 2001.

Shipments of coal from South Blackwater for the 12 months ended 30 June 2000
were 4.506 million tonnes, approximately 19% less than shipments for the 12
months ended 30 June 1999. This reduction in shipments reflects reduced
production from the Kenmare underground mine.

The reported production difficulties and the uncertainty in relation to their
resolution have adversely affected the ability of BHP and Mitsubishi to
formulate their intentions for the South Blackwater mine. Consequently, there
will be no decision made by BHP and Mitsubishi concerning their intentions with
respect to the South Blackwater mine until a detailed review of the asset has
been undertaken when relevant information becomes available. However, at this
stage, the alternative which is considered most likely to benefit the BHP Group
and the Mitsubishi Group is the integration of the assets and operations of the
South Blackwater mine with those of the adjacent CQCA Joint Venture owned
Blackwater open cut mine. This may include the closure of some of the existing
open cut and underground mines and associated infrastructure at South
Blackwater. However, retaining South Blackwater mine as a stand-alone mining and
marketing operation remains a possible course of action.

Depending on decisions made in relation to future production from the South
Blackwater mine, strategies will be developed to take account of the South
Blackwater mine's existing coal marketing arrangements as well as utilisation of
its coal processing and handling infrastructure. As stated above, no decisions
can be made in relation to these issues until a detailed review of the South
Blackwater mine has been conducted.

Employees

The detailed review by BHP and Mitsubishi will include consideration of the
continued employment of the employees of the QCT Group. It is expected that the
employment of some present employees of the QCT Group will end.

The planned closure of the QCT head office will lead to a reduction in the
number of employees involved in head office functions for a number of reasons.
These include the expectation that some functions such as the monitoring of the
QCT Group's interests in the CQCA Joint Venture and the Gregory Joint Venture
will no longer be required. In addition, other head office functions may be able
to be provided more efficiently by the BHP Group or Mitsubishi.

The likelihood, extent and timing of reductions in the number of employees
working at or connected with the South Blackwater mine will depend on the extent
to which existing open cut and underground mines of the South Blackwater mine
are closed (see the discussion above on possible integration and mine closure
under the heading 'Main assets and operation of the business' in this section).

Directors

BHP and Mitsubishi will seek the resignation of the existing directors of QCT
and appoint, in their place, equal numbers of nominees of BHP and Mitsubishi.

Financial arrangements

It is the intention of BHP and Mitsubishi to review financial arrangements,
particularly borrowings and hedging, entered into by the QCT Group. An
assessment will be made whether it would benefit the BHP Group and the
Mitsubishi Group for alternative arrangements to be entered into.

Uncertain benefits

It is likely that the various courses of action open to BHP and Mitsubishi, in
the circumstance where the Bidder acquires all of the QCT Shares, will generate
benefits for the BHP Group and the Mitsubishi Group that are not currently
available to shareholders in QCT. However, the extent of any benefits to be
captured by the BHP Group and the Mitsubishi Group is uncertain. Any attempt to
quantify these potential benefits would be speculative as it depends on the
state of affairs within the QCT Group, particularly with respect to the South
Blackwater mine.

5 Intentions for QCT as a partly owned company

If, following the close of the Bid, QCT becomes a controlled entity but not a
wholly owned subsidiary of the Bidder, it is the present intention of each of
BHP and of Mitsubishi to attempt to procure that the QCT Board implement the
steps outlined in section 4 to the extent possible and appropriate.

In addition, it is BHP's and Mitsubishi's present intention in these
circumstances to:

(a) maintain QCT as a company with official quotation on ASX to the extent
permitted by the ASX Listing Rules;

(b) seek the appointment of an equal number of nominees of BHP and Mitsubishi to
the QCT Board in such a proportion as at least equates to their    proportionate
shareholding interests in QCT;

(c) review the carrying amounts of all non-current assets, particularly the
South Blackwater mine, to determine whether they are in excess of their
recoverable amounts and, in the event the carrying amount of a non-current asset
exceeds its recoverable amount, the asset will be written down to the lower
value; and

(d) undertake a review of QCT's capital funding requirements and, in light of
this review, the appropriate level of dividends to be paid by QCT.

The extent to which BHP's and Mitsubishi's intentions for QCT described above
may be realised, if QCT is not wholly owned, will be subject to:

(a) the law and the ASX Listing Rules which may, in some circumstances, require
approval of the remaining QCT shareholders for arrangements between the QCT
Group and the BHP Group or Mitsubishi Group;

(b) the legal obligation of the then QCT Board to act for proper purposes and in
the best interests of the QCT shareholders as a whole; and

(c) the outcome of the detailed review referred to in section 4.

BHP and Mitsubishi are unable to assess the value of the benefits that would be
available if the Bidder does not acquire all of the QCT Shares, but they believe
that this value would be less than if QCT was 100% owned by the Bidder.


                                 BHP Fact Sheet

- BHP was incorporated in 1885 and is a major international resource company
with headquarters in Melbourne, Australia.

- As at 25 August BHP had a market capitalisation of approximately A$35 billion.

- BHP is listed on the stock exchange in Australia, the United Kingdom (London),
Germany (Frankfurt), New Zealand (Wellington), Switzerland (Zurich) and the
United States of America (New York).

- The BHP group's three principal business areas are Minerals, Petroleum and
Steel.

- Minerals produces iron ore, hot briquetted iron, metallurgical and thermal
coal, silver/lead concentrate and zinc concentrate in Australia. Elsewhere BHP
produces copper concentrate, copper cathode, diamonds, gold, thermal coal and
also has interests in iron ore and a number of prospective undeveloped minerals
reserves.

- Petroleum has production located in four countries. Major production assets
include Bass Strait (offshore south-eastern Australia), the North West Shelf
(offshore Western Australia), Griffin (offshore Western Australia), Liverpool
Bay (Irish Sea) and Bruce (North Sea).

- BHP commenced steelmaking in Australia in 1915. It is the sole integrated
producer in Australia of basic iron, raw steel, and related steel products,
supplying approximately 66% of Australia's steel requirements.

- BHP participates in a number of Australian coal mining ventures including both
the CQCA and Gregory Joint Ventures. BHP has a 52.10% interest in the
CQCA Joint Venture and a 64.14% interest in the Gregory Joint Venture.

- BHP Coal manages the CQCA Joint Venture which owns the Blackwater,
Goonyella, Peak Downs, Saraji and Norwich Park open cut mines located in the
Bowen Basin, Queensland and the Hay Point coal export terminal.

- BHP manages the Gregory Joint Venture which owns the Gregory open cut mine
and Crinum underground coal mine, located in the Bowen Basin, Queensland.


                  Mitsubishi Corporation Group Fact Sheet

- The Mitsubishi Corporation Group is one of the world's most diverse
enterprises. Mitsubishi Corporation was incorporated in 1950 and is listed on
the stock exchanges in Japan (Tokyo and 5 local markets), the United Kingdom
(London) and France (Paris).

- As at 21 August 2000 Mitsubishi Corporation had a market capitalisation of
approximately A$19.6 billion.

- Based in Tokyo, Mitsubishi Corporation has a network of 45 offices in Japan
and 117 offices and subsidiaries in 74 locations worldwide.

- Mitsubishi is engaged in a broad range of fields including information
technology, fuels, metals, machinery, chemicals, food products, textiles and
materials.

- The activities of Mitsubishi are divided into eight business groups:
Professional Services Group; New Business Initiatives Group; IT & Electronics
Business Group; Fuels Group; Metals Group; Machinery Group; Chemicals Group; and
Living Essentials Group.

- The Metals Group participates in all business areas related to the iron and
steel industries, as well as non-ferrous metals. Activities range from the
development of natural resources to the manufacturing, marketing and
distribution of metal products throughout the world.

- Mitsubishi currently participates in a number of coal mining ventures in
Australia. Mitsubishi Development Pty. Ltd. is a wholly-owned subsidiary of
Mitsubishi Corporation and is the holding company of Mitsubishi's coal
investments in Australia. Mitsubishi is one of Australia's leading coal
producers.

- In 1968 Mitsubishi was a founding partner in the CQCA Joint Venture. It
currently has a 15.53% interest in the CQCA Joint Venture and a 3.49% interest
in the Gregory Joint Venture.

- The CQCA Joint Venture owns the Blackwater, Goonyella, Peak Downs, Saraji
and Norwich Park open cut mines located in the Bowen Basin, Queensland and
the Hay Point coal export terminal.

- The Gregory Joint Venture owns the Gregory open cut mine and Crinum
underground coal mine, located in the Bowen Basin, Queensland.


            Central Queensland Coal Associates (CQCA) Joint Venture

CQCA is a joint venture owned by BHP (52.10%), Mitsubishi (15.53%) and QCT
Resources (32.37%). Total CQCA shipments in the 12 months ending 30 June 2000
were 29,500,000 tonnes, up 6.9% on the previous year.

The assets of the CQCA joint venture are:

Blackwater Mine
- An open-cut mine that commenced mining in 1967
- Located 24 kilometres south of the town of Blackwater
- Produces coking, weak coking and thermal coals
- Shipments totalled 6,813,000 tonnes in the 12 months ending 30 June 2000

Goonyella Mine
- An open-cut mine that commenced mining in 1971
- Located 27 kilometres north of the town of Moranbah
- Produces coking coal
- Shipments totalled 7,117,000 tonnes in the 12 months ending 30 June 2000

Peak Downs Mine
- An open-cut mine that commenced mining in 1972
- Located 37 kilometres south of the town of Moranbah
- Produces coking coal
- Shipments totalled 6,868,000 in the 12 months ending 30 June 2000

Saraji Mine
- An open-cut mine that commenced mining in 1974
- Located 24 kilometres north of the town of Dysart
- Produces coking and weak coking coal
- Shipments totalled 4,685,000 tonnes in the 12 months ending 30 June 2000

Norwich Park Mine
- An open-cut mine that commenced mining in 1979
- Located 24 kilometres south of the town of Dysart
- Produces coking and weak coking coal
- Shipments totalled 4,017,000 tonnes in the 12 months ending 30 June 2000

Hay Point Port
- Commenced operating in 1971
- Located 19 kilometres south of the City of Mackay
- Operational capacity is more than 30 million tonnes of coal per annum

                            Gregory Joint Venture

Gregory is a joint venture owned by BHP (64.14%), Mitsubishi (3.49%) and QCT
Resources (32.37%). Shipments from the Gregory Joint Venture totalled 4,663,000
tonnes in the 12 months ending 30 June 2000, up 10.5% on the previous year.

The assets of the Gregory joint venture are:

Gregory Mine
- An open-cut mine that commenced mining in 1979
- Located 62 kilometres north east of the town of Emerald
- Produces coking and thermal coals

Crinum Mine
- An underground mine that commenced longwall operations in 1998
- Located 45 kilometres north-east of the town of Emerald
- Produces coking and thermal coals

- Coal from both mines is processed at the Gregory coal preparation plant


                               South Blackwater

- The South Blackwater mine is wholly owned by QCT Resources.
- It is located 42 kilometres south of the town of Blackwater and consists of an
open-cut mine and two underground mines Laleham and Kenmare). It adjoins
and is to the south of the CQCA owned Blackwater mine.

- The Laleham underground mine is a 'board and pillar' operation. The Kenmare
underground mine is a longwall operation that commenced mining in 1994.
- The mines produce coking and thermal coals.
- Shipments from the mines in the 12 months ending 30 June 1999 totalled
5,590,000 tonnes. In the 12 months ending 30 June 2000 shipments fell to
4,506,000 tonnes.