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Samarco Joint Venture Production Reduction

BHP Billiton's 50 per cent owned Samarco joint venture (Brazil) today announced a reduction in pellet production in response to current weak market demand. Samarco will temporarily shut down two older iron ore pellet plants from the end of November 2008 to mid-January 2009, at which time the situation in the markets will be re-assessed. The third iron ore pellet plant that was commissioned in April 2008 will remain operating.

Samarco's total iron ore pellet production capacity is 21.6 million tonnes per annum (100 per cent basis). The capacity for the third pellet plant is 7.6 million tonnes per annum (100 per cent basis).

BHP Billiton Chief Executive of Ferrous and Coal, Marcus Randolph, said the global market conditions were proving challenging for the steel industry and its raw materials providers.

"There is no doubt that these are very challenging times across the whole industry, and there is substantial uncertainty around the short term outlook. While the adjustment at Samarco was entirely the decision of the Joint Venture's independent management team, BHP Billiton believes this is a sensible decision in the current climate. We will continue to monitor the situation and Samarco is also working closely with its customers through this period."