Managing MNCs in China JP Morgan China Conference 2007
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Managing MNCs in China JP Morgan China Conference 2007 Clinton Dines President BHP Billiton China Beijing - April 25, 2007
Transcript of Managing MNCs in China JP Morgan China Conference 2007
Managing MNCs in ChinaJP Morgan China Conference 2007
Clinton DinesPresident BHP Billiton ChinaBeijing - April 25, 2007
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Disclaimer
The views expressed here contain information derived from publicly available sources that have not been independently verified. Norepresentation or warranty is made as to the accuracy, completeness or reliability of the information. Any forward looking information in this presentation has been prepared on the basis of a number of assumptions which may prove to be incorrect. This presentation should not be relied upon as a recommendation or forecast by BHP Billiton.
Nothing in this release should be construed as either an offer to sell or a solicitation of an offer to buy or sell shares in any jurisdiction.
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BHP Billiton
CVRD
0102030405060708090
100110120130140
Mark
et C
ap. o
n 28
Mar
ch 20
07 (U
S$Bn
)The largest company in a consolidating sector
Market value of minerals industry US$892bnValue of Top Four US$367bnValue of BHP Billiton US$134.8bn
Source: Bloomberg (data as at 28 March 2007)1. Market Capitalisation on 28 March 20072. Market Capitalisation on 28 June 2001
BHP Billiton Market Cap 2007 (1) 2001(2)
US$ bn $134.8 $29.5
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Structure driven by customer needsPetroleum
Energy Coal
Metallurgical Coal Manganese Iron Ore
Stainless Steel Materials
Base MetalsAluminium
Diamonds & Spec Prod
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Early days in China
Sales ledger of The Broken Hill Proprietary Company, 1891
BHP’s relationship with China began in 1888 with the visit of a Board Director.
Our first business transaction with China was recorded in 1891 when BHP exported 50 tons of lead to Fuzhou.
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BHP Billiton in China• First sale to China in 1891• BHP Billiton China - Headquartered in Shanghai and with an office
in Beijing• Core functions in China are Sales/Marketing, Distribution,
Exploration, Market Research & Analysis, Technical R&D, Business Development and Corporate Affairs.
• More than 80 staff, 90%+ are Chinese nationals• Part of the North West Shelf LNG joint venture with CNOOC• Wheelarra Joint Venture – our mining joint venture with four of
China’s leading steel mills for the Wheelarra Iron Ore Project in Western Australia
• Strategic Technical Cooperation Agreement with Baosteel – aims to optimise the iron and steelmaking process
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BHP Billiton in China continued……..• A comprehensive and active posture of business research in
macro-economic and sectoral industry analysis• Technology Group engaged in resources-related research and
development with Chinese partners, including a Strategic partnership with China Academy of Sciences
• Exploration Group active in reconnaissance and grassroots exploration
• A well-developed suite of Community programs supporting a variety of partners in social and sustainability initiatives
• Supplying iron ore, coking coal, copper concentrates, copper cathode, nickel, alumina, aluminium, energy coal, LNG, manganese ore, zinc concentrates, oil, etc. into China
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0
500
1,000
1,500
2,000
2,500
3,000
3,500
4,000
FY02 H1 03 H2 03 H1 04 H2 04 H1 05 H2 05 H1 06 H2 06 H1 07Petroleum Aluminium Base Metals Iron Ore Met Coal Manganese Energy Coal SSM
China• Sales into China increasing but overall diversification remains strong• Half year ended 31 December 2006, 18.1% of total company revenues
US$M
431785
1,0751,357
371
1,588
Europe
Japan
Other AsiaNth America
China
AustraliaROW
2,407
2,946
3,6113,999
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Global commodity consumption
Data for 2005*Source: CRU, Brook Hunt, BP Statistical Review of Energy, IISI, BHP Billiton
India
USAJapan
China
Europe
OtherChina
Other
Europe
USA
Japan
India
China
India
USAJapan
Europe
Other Other
Europe
China
USA
Japan
India
Aluminium
Steel*
Copper
Oil*
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China’s raw material and energy needs are prompting increased levels of overseas investment
Source: NBS
0.1 0.1 0.2 0.2 0.6 0.5 0.6
2.32.9
5.5
12.3
0
2
4
6
8
10
12
1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005
US$ Billion
Note: Outward investment refers to non-financial institution investment and excludes funds going to Hong Kong and Macau.
China’s outward investment 1995-2005
2.1
16.4
8.5
40.7
1.2
8.5
C hina US Japan EU India W orld
Outward Investment as a percentage of 2005 GDP
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State-owned enterprises were the major investors* and mining was the major investment destination
Source: Ministry of Commerce
State-owned Enterprise
65%
Private Enterprise
28%
Foreign Company7%
2004 China’s outward investment by ownership
Mining 32%
Wholesale and retail
15%
Others 10%
2004 China’s outward investment by industry
Manufacturing 14%
Lease and Business
Services 14%
Storage, post and transportation
15%
More support from government and financial institutes to SOEs
*There are many more private firms in terms of numbers of firms
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As at 31 December 2006Size of bubble indicates proposed capital expenditure; bold outer border signifies sanctioned project.
$US 200M$US 200M
Deep inventory of growth projectsBROWNFIELD
GREENFIELD
Blackwater CPP
StybarrowStybarrow
KoalaUG
KoalaUG
ZamzamaPhase 2
PyreneesPyrenees
Worsley E&GWorsley E&G
MaruwaiMaruwai
GEMCO
2009CY2007 2008 2010 2011
BakhuisBakhuis
ShenziShenzi
Cliffs Nickel Project
RavensthorpeRavensthorpe
KipperKipper
NWS T5NWS T5
NWSAngelNWSAngel
Newcastle Third Port
WA Iron OreRGP 4+
WA Iron OreRGP 4+
Mt ArthurCoal UG
Mt ArthurCoal UG
MaruwaiStage 1
Navajo SouthMine Ext
Navajo SouthMine Ext
SSM
Petroleum
DiamondsEnergy Coal
AluminiumIron OreMet CoalManganese
CSGGenghis KhanGenghis Khan
Atlantis SouthAtlantis South
AtlantisNorth
AlumarAlumar
Douglas –MiddelburgDouglas –
Middelburg
WA Iron OreRGP 3
WA Iron OreRGP 3
YabuluYabulu
SamarcoSamarco
NeptuneNeptune
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• Understanding supply and demand dynamics• Matching supply to demand, now and in the future• Managing relationships with customers• Managing image and reputation with key stakeholders• Understanding China’s strategic challenges• Understanding long term policy directions and imperatives
BHP Billiton’s strategic management challenges in China
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BHP Billiton’s tactical management challenges in China• People and skills• Institutional knowledge and information sharing• Capturing synergies• Maximizing value from our relationship with China• Managing relationships• Living our Charter Values – Safety, Community initiatives, Olympic
Sponsorship, Respect, etc.
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Diversified Minerals & Medals Sponsor of the 2008 Beijing Olympic Games
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