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BHP Billiton PLC (BLT)

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Wednesday 21 November, 2018

BHP Billiton PLC

Capital Allocation Briefing

RNS Number : 9671H
BHP Billiton PLC
20 November 2018
 

 

 

 

Issued by:

BHP Group Plc

 

Date:

21 November 2018

 

To:

London Stock Exchange

JSE Limited

 

For Release:

Immediately

 

Contact:

Helen Ratsey +44 (0) 20 7802 7540

 

 

BHP  - Capital allocation briefing

 

 

UK Listing Authority Submissions

 

The following document has today been submitted to the National Storage Mechanism and will shortly be available for inspection at www.hemscott.com/nsm.do:

 

·    Capital allocation briefing.

 

The document may also be accessed via BHP's website - bhp.com

 

NEWS RELEASE

 

Release Time

IMMEDIATE

Date

21 November 2018

 

Release Number

26/18



 

Capital allocation briefing

 

BHP will be holding an investor and analyst briefing today in Melbourne on BHP's Capital Allocation Framework.

 

The purpose of the briefing is to provide greater detail in relation to BHP's capital allocation processes, and greater transparency on BHP's approach to capital allocation and investment decisions.  

 

The presentation is available on BHP's website at: https://www.bhp.com/-/media/documents/media/reports-and-presentations/2018/181121_CapitalAllocationBriefing.pdf

The webcast of the briefing will be available at: https://edge.media-server.com/m6/p/nxkxg8iw

 

 

Further information on BHP can be found at: bhp.com

 

 

APPENDIX

 

The following information is included in Peter Beaven's presentation slides.

 

Latent capacity

Options

IRR2

(%)

Risk3

(1-5)

Timing4

Capex

(US$m)

Description

WAIO
Debottlenecking

>100

<2 years

<250

Supply chain debottlenecking initiatives at the port and rail, and releasing latent capacity at Jimblebar to increase production to 290 Mtpa

Barracouta West

Petroleum

~20

Non operated

<2 years

~250

Brownfield tieback opportunity to existing infrastructure in the Bass Strait.

Escondida
EWS Expansion

>50

●●

<2 years

~500

Expansion of desalination plant to reduce groundwater usage and maximise concentrator throughput

Escondida
Debottlenecking

>100

●●

various

>500

Concentrator debottlenecking, sulphide leach reprocessing of ripios, truck and shovel fleet upgrades

Spence
Ripios processing

~60

●●

2-5 years

250-500

Reprocessing of ripios dumped since the beginning of the Spence operations

Queensland Coal
Latent capacity

>100

>5 years

>500

Investing in stripping capacity and pipeline of productivity initiatives to shift the bottleneck towards the coal handling plants

Spence
Debottlenecking

>15

●●●

>5 years

>500

Processing lower grade hypogene material with increased recoveries, concentrator debottlenecking, in-pit semi mobile ore conveying

Average/aggregate

>100



~US$4 bn

Up to ~2 Mt of incremental Cu eq. capacity with
~US$16 bn unrisked NPV

 

1.  Projects as presented in May 2018 at the Bank of America Merrill Lynch Global Metals, Mining & Steel Conference; IRR: Returns at 2018 consensus price forecasts; ungeared, post tax, nominal return; Risk profile is based on a BHP assessment of each project against defined quantified and non-quantified risk metrics rated out of 5; 5 represents more risk; Timing: Represents potential first production 

 

Future options

Options

Description

Potential execution timing

Capex (US$m)

GIP
tollgate1

IRR1

(%)

Risk1

(1-5)

Investment Considerations

Atlantis Phase 3
Petroleum

Tie back to existing Atlantis facility unlocked through Advanced Seismic Imaging

 <1 year

>500

Feasibility

~25

Non-
operated

-       Resilient to price

-       Low risk, robust economics

-       Non-operated JV

Ruby

Petroleum

Tie back into existing processing facilities in Trinidad & Tobago

<1 year

>150

Feasibility



-       Similar scope to existing tie backs

-       Utilisation of existing facility capacity

-       Early life sensitivity to oil price

Olympic Dam BFX
Copper

Accelerated development into the Southern Mine Area, debottlenecking of existing surface infrastructure to increase production

<5 years

>2,000

Pre-feasibility

~20

●●

-       Resilient to price

-       Improved Cu grades in the Southern Mine Area

-       Continued resource definition

-       Power network instability

Scarborough
Petroleum

Tie back development to existing LNG facility

<5 years

<2,000

Pre-Feasibility

>15

Non-
operated

-       Tier 1 resource

-       Ability to process through North West Shelf

-       Oversupply of LNG driving low price market environment

-       Remote field location, deep water, severe metocean conditions

Wards Well
Metallurgical Coal

Long-life, premium hard coking coal resource, greenfield underground long-wall mine

>5 years

>1,000

Opportunity assessment

~15

●●●●

-       Tier 1 resource

-       Proximity to existing operating assets

-       Geological definition required to de-risk

-       Risk of impact on market supply

-       Supply chain logistic complexities

Resolution
Copper

Underground block cave with attractive grade profile and competitive cost curve position

>5 years

<3,000

Conceptual

~15

Non-
operated

-       High copper grades

-       Resilient to price

-       Non-operated JV

-       Technical risk due to caving at the resource depth and tailings options.

-       Permitting requirements

Jansen Stage 12
Potash

Tier 1 resource with valuable expansion optionality

<5 years

~5,000

Feasibility

~13

●●●

-       Tier 1 resource, stable jurisdiction

-       Operating costs of ~US$100/t (FOB Vancouver)

-       Unrivalled position of land

-       Risk of market oversupply

-       New commodity entry

-       Sensitive to price

-       High capital cost and long payback

Jansen Stage 2-4
Potash

Sequenced brownfield expansions of up to 12 Mtpa (4 Mtpa per stage)

>15 years

~4,000

per stage

Opportunity assessment

~16

●●

-       Long term growth optionality and value generation

-       Risk of market oversupply

-       Complexities from project size

-       Significant capital requirement

-       Further de-risking required

Average/

aggregate




Feasibility

~17


Aggregate unrisked value of ~US$15 bn spanning commodities and time periods

 

 

 

 

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