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1. Cost efficiencies Focused on further gains

Cost efficiences

  • Cost efficienciesSince FY2012, we have reduced unit costs across the business by more than 40 per cent1, securing annualised productivity gains of US$11 billion.
  • In FY20182:
    • Average unit costs for Conventional Petroleum are expected to be around US$10 per barrel.
    • Western Australia Iron Ore unit costs are projected to fall to less than US$14 per tonne.
    • At Escondida, we expect unit costs of approximately US$1 per pound.
  • Our simplified portfolio, standardised systems and greater connectivity across the Company position us to further improve safety and productivity.
  • More from CEO Andrew Mackenzie on our productivity gains.



    Delivering unit cost reductions
2. Latent capacity Attractive returns, limited risk

Latent capacity

  • We have opportunities across the portfolio to optimise and debottleneck our existing mine, port, rail and processing facilities.
  • In April 2017, we approved the Caval Ridge Southern Circuit (CRSC) project. CRSC is an 11km conveyor system which will transport coal from our mine at Peak Downs in Queensland to the processing plant at the nearby Caval Ridge Mine – instead of using trucks. This means we can fully utilise our coal processing capacity of 10 million tonnes per year (Construction of Caval Ridge Southern Circuit approved).3
  • Going forward, latent capacity projects could generate average returns of 75 per cent4, for low risk.
  • We plan to increase capacity to a record 290 million tonnes per annum5 at our Western Australia Iron Ore business during FY2019 by improving our rail signalling system to increase trains scheduled and better utilising car dumpers and trucks. This will help make full use of the port, rail network and mines we've already built.
  • We’re investing A$350 million in Olympic Dam smelter operations, improving operational performance and unlocking capacity. This project will underpin an expected increase in copper production to approximately 215 thousand tonnes in FY2019, and will provide a stable base for the potential to increase capacity to 280 thousand tonnes in FY2022 (BHP invests A$350 million in Olympic Dam smelter operations).5
  • More on latent capacity opportunities in our global portfolio
3. Onshore US Value and flexibility

Onshore US

  • We are focused on realising the full value of our shale business through disciplined development, larger completions, acreage swaps, gas hedging and divestments where acreage is worth more to others. 
  • Technology and productivity improvements mean much lower break even prices for our wells.
  • BHP now competes well with and in many cases is among the best in the fields where we operate.
  • We’ve been recognised in Wood Mackenzie's Permian Upstream Awards as having the most productive wells6 and being one of the lowest cost (D&C) operators in the Delaware Basin.
  • Our improved performance, combined with disciplined capital allocation, is expected to generate competitive returns on incremental investments.
  • This gives us confidence to increase rig activity and deliver value accretive production growth. However, we will continue to be flexible with our plans in response to market conditions.



    BHP is one of the lowest cost (D&C) operators within our coverage of the Delaware Basin.
4. Growth projects Timed for value and returns

Growth projects

  • We have a pipeline of potential growth projects that could create significant value. This includes opportunities in conventional oil, copper, coal and potash.
  • The Mad Dog Phase 2 project, in the Deepwater Gulf of Mexico, was approved in February 2017 and is an extension of the existing Mad Dog field. The new project is expected to produce up to 140,000 barrels of crude oil per day (gross) from up to 14 production wells. Production is expected to begin in FY2022.
  • At our Spence copper mine in Chile, we have the potential to add 200,000 tonnes of copper concentrate capacity per annum by the end of the decade. We expect to seek Board approval in August 2017.
  • At Olympic Dam, our heap leach test program could allow us to expand capacity to 450,000 to 500,000 tonnes of copper per annum using a much less capital intensive way to extract metals from ore mined underground.
  • Our Jansen Potash Project in Canada is one of the best undeveloped potash resources in the world. We have made significant progress on the development of the shafts as part of our phased approach to increase optionality and reduce risk. We could seek Board approval for an initial 4 million tonnes per annum stage as early as June 2018, with possible first production from FY2023
  • More on our growth projects.



    Mt Arthur Coal
5. Exploration Positive results reduce risk for future wells

Exploration

  • Within the Petroleum exploration program, recent successes have de-risked future wells and provide us with the confidence to accelerate our counter-cyclical investment.
  • In Trinidad and Tobago, commercial evaluation of the gas discovery at LeClerc is well advanced. Initial estimates indicate a significant ‘in-place’ resource in a region with large installed LNG capacity that is short of gas.
  • After success at Shenzi North and Caicos in the Gulf of Mexico, we have brought forward the appraisal well for the larger Wildling structure in the same sub-basin.
  • We have acquired more leases in the Western Gulf of Mexico including the successful bid for the Trion discovered resource where we will partner with the Mexican Government agency PEMEX.
  • Our copper exploration program also continues to provide opportunities within the Americas and Australia.
  • More on our exploration program.


    Mad Dog
6. Technology Improves safety, lowers costs and unlocks resource

 Technology

  • We aspire to be an industry leader in technology, both in minerals and in oil and gas and we have a broad suite of technology initiatives.
  • At Western Australia Iron Ore, through better scheduling across the Pilbara network, we have added 47 additional trains equivalent to 1.6 million tonnes of ore in the first 12 weeks of implementation. 
  • We have replicated the Western Australia Iron Ore IROC (Integrated Remote Operations Centre) at Queensland Coal to help increase productivity.
  • At Escondida, we are trialling the use of sensors to analyse copper in real-time - while it remains in the ground. This technology can cut out the need for the usual process of manual sampling and analysis, return more accurate analysis and lets us mine more selectively.
  • More on our broad suite of technology initiatives to improve safety, lower costs and unlock resource.

BHP Chief Executive Officer Andrew Mackenzie updated progress on the Company’s roadmap to grow long-term shareholder value. See the presentation or listen to the audio webcast.

1. Based on a continuing operations basis excluding royalties; BHP Billiton's share of volumes from equity accounted investments; copper equivalent volumes calculated using FY16 realised prices.
2. Based on analyst consensus exchange rates of AUD/USD 0.75 and USD/CLP 663.
3. Caval Ridge and Peak Downs are part of BHP Billiton Mitsubishi Alliance (BMA). BHP Billiton share 50 per cent.
4. Returns at analyst 2017 consensus price forecasts; ungeared, post-tax, nominal return.
5. Assumes all internal and third party approvals received.
6. Based on 12 month cumulative oil for wells completed since the beginning of 2016.

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