Risk Management Policy

BHP Limited
4 December 2000




BHP ANNOUNCES PORTFOLIO RISK MANAGEMENT POLICY

BHP Limited (BHP) today announced it would adopt a 'self insurance' model to
commodity and currency price risks as part of a new risk management strategy
that will underpin the growth of shareholder value. 

The 'self insurance' model is based on detailed quantitative analysis that
determined a significant degree of risk mitigation is provided by the natural
diversification of the Company's asset portfolio. 

BHP Chief Financial Officer Chip Goodyear said: 'Our new Portfolio Risk
Management Policy applies leading financial market analysis to a portfolio of
natural resource assets and is focused on supporting BHP's financial objectives
while protecting the Company's financial security and flexibility.

'The new risk management policy also constitutes an important component of BHP's
portfolio management approach to the allocation of capital and supplements the
enhanced discipline for capital deployment adopted during the past 18 months,
including processes implemented by the Capital Projects Review Committee.'

The BHP Portfolio Risk Management policy, approved by the BHP Board in November,
follows a comprehensive nine-month review of the Company's approach to market
price risks including commodity price risk, foreign exchange risk, interest rate
risk and freight risk.

The analysis showed BHP benefits through the scale, diversity and flexibility of
its asset portfolio with 'natural' hedges reducing the need, and therefore the
cost, of hedging market price risks. The 'self insurance' model utilises these
natural hedges as the principal means of managing market risk.

The new policy means BHP will bear the residual market risk, that is, the risk
exposure net of the natural hedges provided by diversification. This residual
risk will be managed within a quantitative 'Cashflow at Risk' framework
measuring projected business cashflow 'at risk' from adverse movements in
foreign exchange rates, commodity prices or other market risks. 

Hedging transactions will only be undertaken when it is necessary to mitigate
risk from underlying exposures in order to support the Company's strategic
objectives, for example, following a large-scale acquisition. Based on the
current composition of BHP's portfolio, there is no requirement to hedge for the
forseeable future.

Importantly, BHP will now manage market risk at the portfolio level, taking into
account the Company's natural diversification benefits, rather than the previous
practice of hedging individual price risks on a transaction or asset basis.

BHP will allow its current hedged positions in oil and copper to mature over the
remainder of this financial year, and currency hedging positions to mature
through to 2004.

In addition to risk mitigation, the new policy enables BHP to capture value by
entering into strategic financial transactions when there is perceived to be a
significant under or over valuation of a commodity market represented within the
Company's portfolio. 

These transactions will only occur infrequently and to a limited extent. They
will be treated separately from hedging activities and will be strictly
controlled within defined limits. 

Attachment - Briefing Paper -  BHP 'Portfolio Risk Management' - A New Market
Risk Management Strategy.


Further information can be found on our Internet site: http://www.bhp.com 

Contact:
MEDIA RELATIONS                           INVESTOR RELATIONS
Mandy Frostick, Manager Media Relations   Robert Porter, Vice President      
Ph: 61 3 9609 4157 Mob: [phone]   Investor Relations
                                          Ph:61 3 9609 3540 Mob:[phone]