20-F 1 d20f.htm FORM 20-F Form 20-F
Table of Contents

SECURITIES AND EXCHANGE COMMISSION
Washington, D.C.
 

 
FORM 20-F
(Mark One)
 
[   ]
  
REGISTRATION STATEMENT PURSUANT TO SECTION 12(b)
    
OR 12(g) OF THE SECURITIES EXCHANGE ACT OF 1934
OR
[X]
  
ANNUAL REPORT PURSUANT TO SECTION 13 OR 15 (d) OF  
    
THE SECURITIES EXCHANGE ACT OF 1934 FOR THE FISCAL
    
YEAR ENDED JUNE 30, 2002
OR
[   ]
  
TRANSITION REPORT PURSUANT TO SECTION 13 OR 15 (d)
    
OF THE SECURITIES AND EXCHANGE ACT OF 1934
 
Commission file number: 0-15496
 
BHP BILLITON LIMITED (ABN 49 004 028 077)
(Exact name of Registrant as specified in its charter)
 
VICTORIA, AUSTRALIA
(Jurisdiction of incorporation or organization)
 
BHP TOWER, 600 BOURKE STREET, MELBOURNE, VICTORIA 3000 AUSTRALIA
(Address of principal executive offices)
 
Securities registered or to be registered
pursuant to section 12 (b) of the Act.
 
Title of each Class

 
Name of Exchange on which Registered

Ordinary Shares
 
New York Stock Exchange
 

 
Securities registered or to be registered pursuant to Section 12(g) of the Act.
None
 

 
Securities for which there is a reporting obligation pursuant to Section 15(d) of the Act.
None
 

 
Indicate the number of outstanding shares of each of the issuer’s classes of capital or common stock as of the close of the period covered by the annual report.
 
Fully Paid Ordinary Shares
 
3,724,893,687
 
Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.
 
Yes X    No     
 
Indicate by check mark which financial statement item the registrant has elected to follow.
 
Item 17      Item 18 X
 


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CONTENTS
 
    
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In this annual report, the terms we, our, us, BHP Billiton and BHP Billiton Group refer to BHP Billiton Limited and BHP Billiton Plc, together with their respective subsidiaries. BHP Billiton Plc Group refers to the group that is BHP Billiton Plc and its subsidiary companies. BHP Billiton Limited Group refers to the group that is BHP Billiton Limited and its subsidiary companies. BHP Billiton Plc refers to the parent entity that was formerly Billiton Plc before the implementation of the DLC structure and BHP Billiton Limited refers to the parent entity that was formerly BHP Limited before the DLC structure.


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FORWARD LOOKING STATEMENTS
 
This annual report contains forward-looking statements, including statements regarding:
 
 
 
estimated reserves;
 
 
 
plans, strategies and objectives of management;
 
 
 
closure or divestment of certain operations or facilities (including associated costs);
 
 
 
anticipated production or construction commencement dates;
 
 
 
expected costs or production output;
 
 
 
the anticipated productive lives of projects, mines and facilities; and
 
 
 
contingent liabilities.
 
These forward-looking statements are not guarantees or predictions of future performance, and involve known and unknown risks, uncertainties and other factors, many of which are beyond our control, which may cause actual results to differ materially from those expressed in the statements contained in this annual report.
 
For example, our future revenues from our operations, projects or mines described in this annual report will be based, in part, upon the market price of the minerals, metals or petroleum produced, which may vary significantly from current levels. Such variations, if materially adverse, may impact the timing of the feasibility of the development of a particular project, or the expansion of certain facilities or mines. Other factors that may affect the actual construction or production commencement dates, costs or production output and anticipated lives of operations, mines or facilities include our ability to profitably produce and transport the minerals, petroleum and/or metals extracted to applicable markets, the impact of foreign currency exchange rates on the market prices of the minerals, petroleum or metals we produce, activities of government authorities in certain of the countries where we are exploring or developing these projects, facilities or mines, including increases in taxes, changes in environmental and other regulations and political uncertainty and other factors identified in the risk factors listed above. We cannot assure you that our estimated reserve figures, closure or divestment of such operations or facilities, including associated costs, actual production or commencement dates, cost or production output, or anticipated lives of the projects, mines and facilities discussed in this annual report will not differ materially from the statements contained in this annual report.
 
This annual report contains forward-looking statements relating to the combination of the operations of BHP Billiton Plc and BHP Billiton Limited through the implementation of the DLC structure. These forward-looking statements may later prove to be inaccurate due to circumstances and risks, known and unknown, the effect of which cannot be foreseen.

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GLOSSARY OF TERMS
 
Technical Terms
 
In the context of ADSs and listed investments, the term “quoted” means “traded” on the relevant exchange.
 
Reference herein is made to tonnes, each of which equals 1000 kilogrammes, approximately 2,205 pounds or 1.102 short tonnes. Measures of distance referred to herein are stated in kilometers, each of which equals approximately 0.62 miles, or in meters, each of which equals approximately 3.28 feet.
 
Brownfield project means the expansion of an existing operation.
 
Coal Reserves have the same meaning as ore reserves, but specifically concern coal.
 
Coking Coal, by virtue of its carbonisation properties, is used in the manufacture of coke, which is used in the steelmaking process.
 
Crude oil is a mixture of hydrocarbons that exist in liquid form in natural underground reservoirs, and remain liquid at atmospheric pressure after being produced at the well head and passing through surface separating facilities. Condensate is a liquid and consists of a mixture of hydrocarbons that are recoverable from gas.
 
Condensate is a liquid at atmospheric conditions and consists of a mixture of hydrocarbons that are recoverable from gas.
 
Direct reduced iron (DRI) is metallic iron formed by removing oxygen from iron ore without the formation of, or passage through, a smelting phase. DRI can be used as feedstock for steel production.
 
Dry gas is a mixture of hydrocarbon gases, inerts and other gases that are in the gaseous phase at pipeline conditions with no free liquids at operating conditions. It is principally composed of methane, ethane and low levels of propanes and butanes depending upon processing and pipeline specifications.
 
Energy coal is used a fuel source in electrical power generation, cement manufacture and various industrial applications. Energy coal may also be referred to as steam or energy coal.
 
Ethane, where sold separately, is largely ethane gas that has been liquified through pressurization. One tonne of ethane is approximately equivalent to 26.8 thousand cubic feet of gas.
 
Federal unit is a combination of two or more US Minerals Management Service (“MMS”) defined blocks approved by MMS in circumstances where it can be demonstrated that the blocks are part of the same geological formation.
 
Green field project means the development of a new project.
 
Gigajoules = 1,000,000,000 joules (where joules is a measure of energy).
 
Heap leaching is the process by which a soluble mineral can be economically recovered by dissolution from ore piled in a heap.
 
Hot briquetted iron (HBI) is densified direct reduced iron where the densification is carried out at a temperature greater than 650 degrees Celsius. The resultant product has density greater than 5g/cm3. HBI can be used as feedstock for steel production.
 
Leaching is the process by which a soluble mineral can be economically recovered from ore by dissolution.

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Liquified natural gas (LNG) consists largely of methane that has been liquified through chilling and pressurization. One tonne of LNG is approximately equivalent to 45.9 thousand cubic feet of natural gas.
 
Liquified petroleum gas (LPG) consists of propane and butane and a small amount (less than 2%) of ethane that has been liquified through pressurisation. One tonne of LPG is approximately equivalent to 11.6 barrels.
 
Marketable Coal Reserves represents beneficiated or otherwise enchanced coal product and should be read in conjunction with, but not instead of, reports of coal reserves.
 
Megajoules = 1,000,000 joules (where joules is a measure of energy).
 
Metallurigical coal is a broader term which includes all coals used in steelmaking, such as coal used for the Pulverised Coal Injection (PCI) process.
 
Ore reserves are that part of a mineral deposit which could be economically and legally extracted or produced at the time of the reserve determination.
 
Petajoules = 1,000,000,000,000,000 joules (where joules is a measure of energy).
 
Petroleum coke is a residue from the refining of heavy fraction oil into light fraction oil.
 
Probable ore reserves are reserves for which quantity and grade and/or quality are computed from information similar to that used for proven (measured) reserves, but the sites for inspection, sampling and, measurement are farther apart or are otherwise less adequately spaced. The degrees of assurance, although lower than that for proven (measured) reserves, is high enough to assure continuity between points of observation.
 
Proven ore reserves are the reserves for which (a) quantity is computed from dimensions revealed in outcrops, trenches, workings on drill holes; grade and/or quality are computed from the results of detailed samplings and (b) the sites for inspection, sampling and measurement are spaced so closely and the geologic character is so well defined that size, shape, depth and mineral content of reserves are well established.
 
Recoverable coal reserves are the combination of those proved and probable ore reserves which specifically concern coal.
 
Take or pay means an obligation on a customer to pay for an agreed minimum quantity of a commodity even if it fails to “take” that agreed minimum quantity.
 
Terajoules = 1,000,000,000,000 joules (where joules is a measure of energy).
 
Financial Terms
 
UK Terminology

 
US equivalent

 
Australian equivalent

Equity Shareholders’ Funds
 
Stockholders’ Equity
 
Total Equity
Called up share capital
 
Subscribed Capital Stock
 
Contributed Equity
Ordinary Shares
 
Common Stock
 
Ordinary Shares
Profit and Loss Account
 
Retained Earnings
 
Retained Profits
   
Appropriated Surplus
 
Reserve, e.g. General Reserve. Forms part of Shareholders’ Equity

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UK Terminology

 
US equivalent

 
Australian equivalent

Share Premium Account
 
Paid-in Surplus
 
Share Premium Reserve
Provision – accrued liability,
i.e., not part of Total Equity
 
Reserve – can represent either part of Stockholders’ Equity, accrued liability or estimated depletion in the cost of an asset
 
Provision – accrued liability, i.e., not part of Total Equity
Tangible Assets
 
Property, Plant and Equipment
 
Property, Plant and Equipment
Bonus Issue
 
Stock Dividend
 
Bonus Issue
Subsidiary
 
Subsidiary
 
Controlled Entity
Turnover
 
Sales Revenue
 
Sales Revenue
Depreciation
 
Depreciation and depletion
 
Depreciation
Profit for the financial year
(attributable profit)
 
Net income
 
Net profit attributable to members

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ITEM 1. IDENTITY OF DIRECTORS, SENIOR MANAGEMENT AND ADVISERS
 
A. Directors and Senior Management
 
Not applicable.
 
B. Advisers
 
Not applicable.
 
C. Auditors
 
Not applicable.

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OFFER STATISTICS AND EXPECTED TIMETABLE
 

 
ITEM 2. OFFER STATISTICS AND EXPECTED TIMETABLE
 
A. Offer Statistics
 
Not applicable.
 
B. Method and Expected Timetable
 
Not applicable.

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KEY INFORMATION
 

 
ITEM 3. KEY INFORMATION
 
A. Selected Financial Data
 
Set forth below is selected consolidated financial information for (i) the BHP Billiton Group, which reflects the combined operations of both the BHP Billiton Limited Group and the BHP Billiton Plc Group, (ii) the BHP Billiton Limited Group and (iii) the BHP Billiton Plc Group as a separate, stand-alone group. BHP Billiton Limited and BHP Billiton Plc each report as their primary financial statements under the requirements of the US Securities and Exchange Commission, the BHP Billiton Group’s consolidated financial statements prepared in accordance with generally accepted accounting principles in the United Kingdom and presented in US dollars. These financial statements account for the dual listed company structure as a business combination and accordingly consolidate BHP Billiton Limited, BHP Billiton Plc and their respective subsidiaries. The selected consolidated financial information for the BHP Billiton Limited Group has been derived from the BHP Billiton Limited Group Consolidated Financial Statements, presented in Australian dollars and prepared in accordance with accounting policies that are in compliance with Australian GAAP. The selected consolidated financial information for the BHP Billiton Plc Group on a stand-alone basis has been derived from the BHP Billiton Plc Group Consolidated Financial Statements, presented in US dollars and prepared in accordance with accounting policies that are in compliance with UK GAAP, except that these financial statements have been prepared as if the DLC merger has not occurred.
 
Under UK GAAP, the DLC structure has been accounted for as a merger (pooling of interests) in accordance with UK Financial Reporting Standard 6: Acquisitions and Mergers. Under Australian GAAP, the DLC structure has been accounted for as a combination in accordance with PN71: Financial Reporting by Australian Entities in Dual Listed Company Arrangements. Australian regulatory requirements do not allow the combination of the results of the BHP Billiton Limited Group with those of the BHP Billiton Plc Group for periods prior to June 29, 2001. Under US GAAP, the DLC structure is accounted for as a purchase business combination with the BHP Billiton Limited Group acquiring the BHP Billiton Plc Group on June 29, 2001. In a merger or a combination, the assets, liabilities and equity of the BHP Billiton Plc Group and the BHP Billiton Limited Group are combined at their respective book values as determined under UK GAAP and Australian GAAP. Under US GAAP, the reconciliation of shareholders’ equity includes the purchase adjustments required under US GAAP to recognize the BHP Billiton Plc Group assets and liabilities at their fair values, and to record goodwill.
 
BHP Billiton Limited’s independent chartered accountant in Australia for the two years ended June 30, 2001 was Arthur Andersen. On June 15, 2002, Arthur Andersen LLP, Arthur Andersen’s U.S. affiliated firm, was convicted by a jury in Houston, Texas on a single charge of obstructing justice in connection with its actions regarding Enron Corp. As of August 31, 2002, Arthur Andersen LLP has ceased to practice before the SEC. As a U.S. listed company, BHP Billiton Limited is required to file with the SEC annual financial statements audited by its independent certified public accountant. The SEC has said that it will continue accepting financial statements audited or reviewed by Arthur Andersen so long as Arthur Andersen is able to make certain representations to us. In connection with its audit of the BHP Billiton Limited financial statements for the two years ended June 30, 2001 and the revision to note 50 of such financial statements, which is dated March 22, 2002, included in this annual report, Arthur Andersen has made the representations to us that are required by the SEC. In the future, our access to the capital markets and our ability to make timely SEC filings could be impaired if the SEC ceases accepting financial statements audited by Arthur Andersen, or if Arthur Andersen becomes unable to make the required representations to us. Further, it is possible that events arising out of the indictment may adversely affect the ability of Arthur Andersen to satisfy any claims arising from its provision of auditing and other services to us, including claims that may arise out of Arthur Andersen’s audit of our financial statements.

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KEY INFORMATION
 

 
BHP Billiton Group
 
The selected consolidated financial information for the BHP Billiton Group set forth below should be read in conjunction with, and is qualified in its entirety by reference to, the audited BHP Billiton Group Annual Financial Statements and the accompanying notes included in this annual report.
 
    
Year ended June 30,

 
Consolidated Profit and Loss Account
  
2002

    
2001

    
2000

 
    
(US$ millions except per share data)
 
Amounts in accordance with UK GAAP
                          
Group turnover – total
  
 
15,906
 
  
 
17,789
 
  
 
17,415
 
Group turnover – from continuing operations
  
 
13,562
 
  
 
14,771
 
  
 
12,744
 
Profit before borrowing costs and taxation
                          
-   excluding exceptional items – total
  
 
3,468
 
  
 
3,873
 
  
 
3,194
 
-   including exceptional items – total
  
 
3,256
 
  
 
2,785
 
  
 
2,434
 
-   excluding exceptional items – from continuing operations
  
 
3,382
 
  
 
3,633
 
  
 
2,798
 
-   including exceptional items – from continuing operations
  
 
3,170
 
  
 
2,567
 
  
 
2,191
 
Borrowing costs
  
 
(529
)
  
 
(722
)
  
 
(656
)
Income tax expense
  
 
(990
)
  
 
(811
)
  
 
(251
)
Net Profit before minority interests
                          
-   excluding exceptional items
  
 
1,981
 
  
 
2,214
 
  
 
1,764
 
-   including exceptional items
  
 
1,737
 
  
 
1,252
 
  
 
1,527
 
Net Profit attributable to members
                          
-   excluding exceptional items
  
 
1,934
 
  
 
2,189
 
  
 
1,743
 
-   including exceptional items
  
 
1,690
 
  
 
1,529
 
  
 
1,506
 
Dividends provided for or paid
  
 
784
 
  
 
754
 
  
 
788
 
Number of Ordinary Shares (millions)(a)
                          
-   at period end
  
 
6,044
 
  
 
6,023
 
  
 
5,817
 
-   weighted average
  
 
6,029
 
  
 
5,944
 
  
 
5,725
 
-   weighted average diluted
  
 
6,042
 
  
 
5,973
 
  
 
5,736
 
Per Ordinary Share:(a)
                          
-   Net profit attributable to members
                          
Excluding exceptional items(c)
                          
-  Basic
  
US$
0.321
 
  
US$
0.368
 
  
US$
0.304
 
-  Diluted
  
US$
0.321
 
  
US$
0.366
 
  
US$
0.304
 
Including exceptional items
                          
-  Basic
  
US$
0.280
 
  
US$
0.257
 
  
US$
0.263
 
-  Diluted
  
US$
0.280
 
  
US$
0.256
 
  
US$
0.263
 
-   Dividends provided for or paid – BHP Billiton Plc
  
US$
0.130
 
  
US$
0.120
 
  
US$
0.113
 
-   Dividends provided for or paid – BHP Billiton Limited
  
US$
0.130
 
  
A$
0.247
 
  
A$
0.247
 
Amounts in accordance with US GAAP
                          
Sales revenue – from continuing operations
  
 
13,552
 
  
 
8,100
 
  
 
7,467
 
Other income – from continuing operations
  
 
321
 
  
 
516
 
  
 
268
 
Operating income – from continuing operations
  
 
2,574
 
  
 
1,198
 
  
 
270
 
Net income – total
  
 
1,249
 
  
 
882
 
  
 
400
 
Net income – from continuing operations
  
 
1,513
 
  
 
746
 
  
 
257
 
Net (loss)/income – from discontinued operations
  
 
(264
)
  
 
136
 
  
 
143
 
Per Ordinary Share(a):
                          
Net income attributable to members
                          
-   Basic – from continuing operations
  
US$
0.251
 
  
US$
0.202
 
  
US$
0.070
 
-   Diluted – from continuing operations
  
US$
0.251
 
  
US$
0.201
 
  
US$
0.070
 
-   Basic – from discontinued operations
  
US$
(0.044
)
  
US$
0.037
 
  
US$
0.039
 

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KEY INFORMATION
 

 
    
Year ended June 30,

Consolidated Profit and Loss Account
  
2002

    
2001

  
2000

    
(US$ millions except per share data)
-  Diluted – from discontinued operations
  
US$
(0.044
)
  
US$
0.037
  
US$
0.039
-  Basic – total
  
US$
0.207
 
  
US$
0.239
  
US$
0.109
-  Diluted – total
  
US$
0.207
 
  
US$
0.238
  
US$
0.109
Per ADS:
                      
Net income attributable to members
                      
-  Basic – total
  
US$
0.414
 
  
US$
0.478
  
US$
0.218
-  Diluted – total
  
US$
0.414
 
  
US$
0.476
  
US$
0.218
 
    
At June 30,

Balance Sheet
  
2002

  
2001

  
2000

    
(US$ millions)
Amounts in accordance with UK GAAP
              
Total assets
  
29,552
  
28,028
  
27,335
Total non-current portion of interest bearing liabilities(b)
  
5,534
  
6,521
  
5,040
Contributed equity
  
4,895
  
4,791
  
5,356
Equity attributable to members
  
12,356
  
11,340
  
11,036
Amounts in accordance with US GAAP
              
Total assets – total
  
35,775
  
35,232
  
17,698
Total assets – of continuing operations
  
33,003
  
32,562
  
13,046
Total non-current portion of interest bearing liabilities – total
  
6,350
  
6,607
  
3,501
Total non-current portion of interest bearing liabilities – of continuing operations
  
6,296
  
6,544
  
3,412
Equity attributable to members
  
17,147
  
16,602
  
6,333

(a)
 
The calculation of the number of ordinary shares used in the computation of basic earnings per share is the aggregate of the weighted average number of ordinary shares outstanding during the period of BHP Billiton Plc and BHP Billiton Limited after deduction of the number of shares held by the Billiton share repurchase scheme and the Billiton Employee Share Ownership Trust and adjusting for the BHP Billiton Limited bonus share issue. Included in the calculation of fully diluted earnings per share are the BHP Billiton Limited options and partly paid shares and the BHP Billiton Plc executive share awards.
(b)
 
Includes limited recourse finance and finance leases not repayable within 12 months.
(c)
 
Whilst the presentation of earnings per share excluding exceptional items is acceptable under UK GAAP, this presentation is not permitted under US GAAP. Profit and earnings per share before exceptional items are not measures of financial performance under US GAAP and should not be considered an alternative to, or more meaningful than income from operations, net income or cash flows as defined by US GAAP as a measurement of the BHP Billiton Group’s profitability or liquidity. All registrants do not calculate profit and earnings per share before exceptional items in the same manner, and accordingly, profit and earnings per share before exceptional items may not be comparable with other registrants. Refer to note 2 of the BHP Billiton Group’s financial statements for details of exceptional items that have been excluded.

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KEY INFORMATION
 

BHP Billiton Limited Group
 
The selected consolidated financial information for the BHP Billiton Limited Group for the year ended June 30, 2001, the 13 months ended June 30, 2000 and the year ended May 31, 1999 and at June 30, 2001 and 2000 set forth below has been derived from the audited consolidated financial statements for the BHP Billiton Limited Group included in this annual report and should be read in conjunction with and is qualified in its entirety by reference to those financial statements, including the accompanying notes. The selected consolidated financial information for the BHP Billiton Limited Group for the year ended May 31, 1998 and at May 31, 1999 and 1998 set forth below has been derived from the audited consolidated financial statements of the BHP Billiton Limited Group, which are not included in this annual report.
 
Statement of Financial Performance
 
    
Year ended
June 30,
2001

  
13 months ended June 30,
2000(h)

  
Year ended May 31,

 
          
1999

    
1998

 
    
(A$ millions)
  
(A$ millions)
  
(A$ millions)
 
Amounts in accordance with Australian GAAP
                               
Sales Revenue
  
 
20,698
  
 
21,506
  
 
19,229
 
  
 
21,189
 
Profit/(loss) from ordinary activities before taxation and borrowing costs
  
 
3,128
  
 
2,433
  
 
(1,413
)
  
 
(274
)
Borrowing costs
  
 
553
  
 
723
  
 
732
 
  
 
739
 
Income tax attributable to profit/(loss) from ordinary activities
  
 
1,066
  
 
117
  
 
164
 
  
 
518
 
Net profit/(loss)
  
 
1,509
  
 
1,593
  
 
(2,309
)
  
 
(1,531
)
Net profit/(loss) attributable to members of BHP Billiton Limited
  
 
2,007
  
 
1,627
  
 
(2,312
)
  
 
(1,474
)
Net profit/(loss), attributable to members of BHP Billiton Limited, of continuing operations
  
 
2,007
  
 
1,627
  
 
(2,312
)
  
 
(1,474
)
Dividends provided for or paid(a)
  
 
912
  
 
903
  
 
884
 
  
 
866
 
Number of ordinary shares:(b)
                               
- at period end
  
 
3,704
  
 
3,679
  
 
3,599
 
  
 
3,521
 
- weighted average
  
 
3,689
  
 
3,653
  
 
3,577
 
  
 
3,492
 
- weighted average diluted
  
 
3,767
  
 
3,753
  
 
3,577
 
  
 
3,492
 
Per Ordinary Share:(b)(c)(d)
                               
- Net profit/(loss) attributable to members of BHP Billiton Limited
                               
- Basic
  
A$
0.544
  
A$
0.445
  
A$
(0.646
)
  
A$
(0.422
)
- Diluted
  
A$
0.539
  
A$
0.441
  
A$
(0.646
)
  
A$
(0.422
)
- Net profit/(loss), attributable to members of BHP Billiton Limited, of continuing operations
                               
- Basic
  
A$
0.544
  
A$
0.445
  
A$
(0.646
)
  
A$
(0.422
)
- Diluted
  
A$
0.539
  
A$
0.441
  
A$
(0.646
)
  
A$
(0.422
)
- Dividends provided for or paid
                               
- A$ per share – as declared
  
A$
0.510
  
A$
0.510
  
A$
0.510
 
  
A$
0.510
 
- US$ per share – as declared
  
US$
0.260
  
US$
0.305
  
US$
0.333
 
  
US$
0.319
 
- A$ per share – as declared, adjusted for the bonus issue
  
A$
0.247
  
A$
0.247
  
A$
0.247
 
  
A$
0.247
 
- US$ per share – as declared, adjusted for the bonus issue
  
US$
0.126
  
US$
0.147
  
US$
0.161
 
  
US$
0.155
 
Per ADS:(c)(d)(e)
                               
- Net profit/(loss) attributable to members of BHP Billiton Limited
                               
- Basic
  
A$
1.088
  
A$
0.890
  
A$
(1.292
)
  
A$
(0.844
)
- Diluted
  
A$
1.078
  
A$
0.882
  
A$
(1.292
)
  
A$
(0.844
)
 

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KEY INFORMATION
 

 
    
Year ended June 30,
2001

  
13 months ended June 30,
2000(h)

  
Year ended May 31,

 
          
1999

    
1998

 
    
(A$ millions)
 
-   Net profit/(loss), attributable to members of BHP Billiton Limited, of continuing operations
                               
-   Basic
  
A$
1.088
  
A$
0.890
  
A$
(1.292
)
  
A$
(0.844
)
-   Diluted
  
A$
1.078
  
A$
0.882
  
A$
(1.292
)
  
A$
(0.844
)
-   Dividends provided for or paid
                               
-   A$ per ADS – as declared
  
A$
1.020
  
A$
1.020
  
A$
1.020
 
  
A$
1.020
 
-   US$ per ADS – as declared
  
US$
0.520
  
US$
0.610
  
US$
0.666
 
  
US$
0.638
 
-   A$ per ADS – as declared, adjusted for the bonus issue
  
A$
0.494
  
A$
0.494
  
A$
0.494
 
  
A$
0.494
 
-   US$ per ADS – as declared, adjusted for the bonus issue
  
US$
0.252
  
US$
0.294
  
US$
0.322
 
  
US$
0.310
 
Amounts in accordance with US GAAP
                               
Sales Revenue
  
 
20,698
  
 
21,506
  
 
19,229
 
  
 
21,189
 
-   Net profit/(loss) attributable to members of BHP Billiton Limited
  
 
1,557
  
 
911
  
 
(1,870
)
  
 
(586
)
Per Ordinary Share:(b)(c)
                               
Net profit/(loss) attributable to members of BHP Billiton Limited
                               
-   Basic
  
A$
0.422
  
A$
0.249
  
A$
(0.523
)
  
A$
(0.168
)
-   Diluted
  
A$
0.420
  
A$
0.249
  
A$
(0.523
)
  
A$
(0.168
)
-   Dividends provided for or paid
                               
-   A$ per share – as declared
  
A$
0.510
  
A$
0.510
  
A$
0.510
 
  
A$
0.510
 
-   US$ per share – as declared
  
US$
0.260
  
US$
0.305
  
US$
0.333
 
  
US$
0.319
 
-   A$ per share – as declared, adjusted for the bonus issue
  
A$
0.247
  
A$
0.247
  
A$
0.247
 
  
A$
0.247
 
-   US$ per share – as declared, adjusted for the bonus issue
  
US$
0.126
  
US$
0.147
  
US$
0.161
 
  
US$
0.155
 
Per ADS:(c)(d)(e)
                               
-   Net profit/(loss) attributable to members of BHP Billiton Limited
                               
-   Basic
  
A$
0.844
  
A$
0.498
  
A$
(1.046
)
  
A$
(0.336
)
-   Diluted
  
A$
0.840
  
A$
0.498
  
A$
(1.046
)
  
A$
(0.336
)
-   Dividends provided for or paid
                               
-   A$ per ADS – as declared
  
A$
1.020
  
A$
1.020
  
A$
1.020
 
  
A$
1.020
 
-   US$ per ADS – as declared
  
US$
0.520
  
US$
0.610
  
US$
0.666
 
  
US$
0.638
 
-   A$ per ADS – as declared, adjusted for the bonus issue
  
A$
0.494
  
A$
0.494
  
A$
0.494
 
  
A$
0.494
 
-   US$ per ADS – as declared, adjusted for the bonus issue
  
US$
0.252
  
US$
0.294
  
US$
0.322
 
  
US$
0.310
 
 

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KEY INFORMATION
 

Statement of Financial Position
 
    
At June 30,

  
At May 31

    
2001

  
2000(h)

  
1999

  
1998

    
(A$ millions)
Amounts in accordance with Australian GAAP
                   
Total assets
  
29,187
  
29,344
  
31,487
  
37,082
Total non-current portion of interest bearing liabilities(f)
  
6,138
  
5,830
  
9,942
  
12,738
Contributed equity(g)
  
6,013
  
7,093
  
6,533
  
8,269
Equity attributable to members of BHP Billiton Limited
  
11,004
  
10,353
  
8,646
  
11,585
Amounts in accordance with US GAAP
                   
Total assets
  
66,965
  
29,472
  
32,679
  
37,846
Total non-current portion of interest bearing liabilities(f)
  
13,097
  
5,830
  
9,942
  
12,738
Equity attributable to members
  
32,859
  
10,546
  
10,000
  
12,526

(a)
 
Includes equivalent dividends for Bonus Share Plan participation.
(b)
 
Comparative data has been adjusted to take into account the bonus share issue effective July 5, 2001.
(c)
 
All amounts are adjusted for stock dividends during the periods indicated.
(d)
 
Based on the weighted average number of shares on issue calculated as if the shares previously held by Beswick Pty Ltd were treated as treasury stock.
(e)
 
Assumes that, for the periods indicated, each ADS represents two Ordinary Shares.
(f)
 
Includes non-recourse finance and finance leases not repayable within 12 months.
(g)
 
Includes amounts held in the share premium reserve prior to the abolishment of par values on July 1, 1998.
(h)
 
Directors announced on December 17, 1999 that the financial year end for the BHP Billiton Limited Group would change from May 31 to June 30 with effect from June 30, 2000. Pursuant to Section 340 of the Australian Corporations Act, the Australian Securities and Investments Commission granted relief from the requirements of paragraph 323D(2)(b) of such Act permitting BHP Billiton Limited to change its financial period end and adopt a transitional 13 month financial year of June 1, 1999 to June 30, 2000. Additional transitional reporting information in relation to the one month ended June 30, 1999 and the 12 months ended June 30, 2000 is included in Note 52 to BHP Billiton Limited’s Annual Report for the year ended June 30, 2001.

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KEY INFORMATION
 

BHP Billiton Plc Group
 
The selected consolidated financial information for the BHP Billiton Plc Group for the period July 1, 2000 to June 28, 2001 and the two years ended June 30, 2000 set forth below has been derived from the audited consolidated financial statements for the BHP Billiton Plc Group included in this annual report and should be read in conjunction with, and is qualified in its entirety by reference to, those financial statements, including the accompanying notes. The selected consolidated financial information for the BHP Billiton Plc Group for the year ended June 30, 1998 set forth below has been derived from the audited consolidated financial statements of the BHP Billiton Plc Group, which are not included in this annual report.
 
    
Period ended
June 28,
2001

    
Year ended June 30,

 
       
2000

    
1999

    
1998

 
    
(US$ millions)
 
Consolidated Profit and Loss Account
                                   
Amounts in Accordance with UK GAAP
                                   
Group turnover
  
 
7,333
 
  
 
5,550
 
  
 
5,174
 
  
 
6,060
 
Profit from ordinary activities before taxation and borrowing costs
                                   
- excluding exceptional items
  
 
1,338
 
  
 
987
 
  
 
736
 
  
 
1,036
 
- including exceptional items
  
 
1,198
 
  
 
987
 
  
 
736
 
  
 
1,036
 
Borrowing costs
  
 
(315
)
  
 
(157
)
  
 
(163
)
  
 
(213
)
Income tax attributable to profit from ordinary activities
  
 
(311
)
  
 
(223
)
  
 
(143
)
  
 
(263
)
Income tax attributable to exceptional items
  
 
15
 
  
 
—  
 
  
 
—  
 
  
 
—  
 
Net profit before minority interest
                                   
- excluding exceptional items
  
 
706
 
  
 
607
 
  
 
430
 
  
 
560
 
- including exceptional items
  
 
587
 
  
 
607
 
  
 
430
 
  
 
560
 
Net profit attributable to members of BHP Billiton Plc
                                   
- excluding exceptional items
  
 
693
 
  
 
566
 
  
 
382
 
  
 
429
 
- including exceptional items
  
 
608
 
  
 
566
 
  
 
382
 
  
 
429
 
Dividends provided for or paid
  
 
278
 
  
 
232
 
  
 
218
 
  
 
225
 
Number of Ordinary Shares (millions)
                                   
- at period end
  
 
2,319
 
  
 
2,138
 
  
 
2,136
 
  
 
2,138
 
- weighted average
  
 
2,255
 
  
 
2,076
 
  
 
2,108
 
  
 
2,105
 
- weighted average diluted
  
 
2,269
 
  
 
2,076
 
  
 
2,108
 
  
 
2,105
 
Per Ordinary Share(a):
                                   
- Net profit attributable to members of BHP Billiton Plc
                                   
Excluding exceptionals(b)
                                   
- Basic
  
US$
0.307
 
  
US$
0.273
 
  
US$
0.181
 
  
US$
0.204
 
- Diluted
  
US$
0.305
 
  
US$
0.273
 
  
US$
0.181
 
  
US$
0.204
 
Including exceptionals
                                   
- Basic
  
US$
0.270
 
  
US$
0.273
 
  
US$
0.181
 
  
US$
0.204
 
- Diluted
  
US$
0.268
 
  
US$
0.273
 
  
US$
0.181
 
  
US$
0.204
 
Dividends provided for or paid
                                   
- US$ per share – as declared
  
US$
0.120
 
  
US$
0.113
 
  
US$
0.105
 
  
US$
0.105
 
Amounts in Accordance with US GAAP
                                   
Sales revenue
  
 
7,333
 
  
 
5,550
 
  
 
5,174
 
  
 
6,060
 

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KEY INFORMATION
 

 
    
Period ended
June 28,
2001

  
Year ended June 30,

       
2000

  
1999

  
1998

Profit from ordinary activities before taxation and borrowing costs
  
 
988
  
 
927
  
 
675
  
 
1,000
Net profits, attributable to members of BHP Billiton Plc
  
 
482
  
 
528
  
 
341
  
 
433
Per Ordinary Share:
                           
- Net profit, attributable to members
                           
- Basic
  
US$
0.214
  
$
0.254
  
$
0.162
  
$
0.206
- Diluted
  
US$
0.212
  
$
0.254
  
$
0.162
  
$
0.206
Dividends provided for or paid
                           
- US$ per share – as declared
  
US$
0.120
  
US$
0.113
  
US$
0.105
  
US$
0.105

(a)
 
Based upon the weighted average number of shares on issue.
(b)
 
While the presentation of earnings per share excluding exceptional items is acceptable under UK GAAP, this presentation is not permitted under US GAAP. Profit and earnings per share before exceptional items are not measures of financial performance under US GAAP and should not be considered an alternative to, or more meaningful than income from operations, net income or cash flows as defined by US GAAP as a measurement of the BHP Billiton Group’s profitability or liquidity. All registrants do not calculate profit and earnings per share before exceptional items in the same manner, and accordingly, profit and earnings per share before exceptional items may not be comparable with other registrants. Refer to note 2 of the BHP Billiton Group’s financial statements for details of exceptional items that have been excluded.

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KEY INFORMATION
 

 
Exchange Rates
 
The BHP Billiton Group publishes its consolidated financial statements in US dollars. The financial statements of the BHP Billiton Limited Group included in this annual report are published in Australian dollars. The financial statements of the BHP Billiton Plc Group included in this annual report are published in US dollars.
 
In this annual report, unless otherwise specified or the context otherwise requires, references to “US$” or “US dollars” are to United States dollars, references to “A$” are to Australian dollars. For the convenience of the reader, this annual report contains translations of certain Australian dollar amounts into US dollars at the rate or rates indicated. We have translated Australian dollars into US dollars at the noon buying rate in New York City for cable transfers in Australian dollars as certified for customs purposes by the Federal Reserve Bank of New York (the “noon buying rate”). The noon buying rate on December 20, 2002 was A$1.00 = US$0.5618. These translations should not be construed as representations that the Australian dollar amounts actually represent such US dollar amounts or could be converted into US dollars at the rate indicated.
 
The following table sets forth exchange rate information expressed in terms of US$ at the noon buying rate for A$1.00.
 
Year ended June 30,

    
At Period End

    
Average Rate(1)

    
High

    
Low

1998
    
0.6208
    
0.6809
    
0.7537
    
0.5867
1999
    
0.6611
    
0.6273
    
0.6712
    
0.5550
2000
    
0.5971
    
0.6284
    
0.6703
    
0.5685
2001
    
0.5100
    
0.5320
    
0.5996
    
0.4828
2002
    
0.5628
    
0.5240
    
0.5748
    
0.4841
June 2002
                  
0.5748
    
0.5583
July 2002
                  
0.5688
    
0.5370
August 2002
                  
0.5534
    
0.5280
September 2002
                  
0.5518
    
0.5419
October 2002
                  
0.5585
    
0.5422
November 2002
                  
0.5660
    
0.5563
December 2002 (to December 20, 2002)
                  
0.5660
    
0.5589
 
 
(1)
 
The average of the noon buying rates on the last day of each full month during the period.
 

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KEY INFORMATION
 

 
B. Capitalization and Indebtedness
 
BHP Billiton Group capitalization at June 30, 2002
 
The following tables set out the capitalization of the BHP Billiton Group at June 30, 2002 in accordance with UK GAAP and US GAAP.
 
There has been no material change in short and long-term debt and no reduction in shareholders funds since June 30, 2002 except for €750 million of notes which were issued by BHP Billiton in October 2002 from its US$1.5 billion European Medium Term Note Programme and the demerger of BHP Steel in July 2002 which will reduce shareholders funds by an estimated US$1,576 million—refer to note 3 to the BHP Billiton Group Annual Financial Statements. The notes will mature in October 2007 and the proceeds from the issue were used by BHP Billiton to repay short-term debt and for general corporate purposes.
 
      
At June 30, 2002

      
Actual

      
(in US$ millions unaudited)
Amounts in Accordance with UK GAAP
      
Short-term debt
    
2,787
      
Long-term debt
      
Unsecured
    
5,087
Secured
    
447
      
Total long-term debt
    
5,534
      
Shareholders’ funds
      
Share capital(1)
      
-   BHP Billiton Limited
    
3,143
-   BHP Billiton Plc
    
1,752
Profit and loss account
    
7,461
      
Total shareholders’ funds
    
12,356
      
Total capitalization
    
20,677
      
Amounts in Accordance with US GAAP
      
Short-term debt
    
1,797
      
Long-term debt
      
Unsecured
    
5,903
Secured
    
447
      
Total long-term debt
    
6,350
      
Shareholders’ funds
      
Share capital(1)
      
-  BHP Billiton Limited
    
2,515
-  BHP Billiton Plc
    
7,449
Other equity items
    
224
Retained profits
    
6,959
      
Total shareholders’ funds
    
17,147
      
Total capitalization
    
25,294
      
 

(1)
 
The amount of issued capital yet to be paid at June 30, 2002 was US$21 million for BHP Billiton Limited and nil for BHP Billiton Plc.

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KEY INFORMATION
 

 
C. Reasons for the Offer and Use of Proceeds
 
Not applicable.
 
D. Risk Factors
 
We believe that, because of the international scope of our operations and the industries in which we are engaged, numerous factors have an effect on our results and operations. The following describes the material risks that could affect us.
 
Fluctuations in commodity prices may negatively impact the BHP Billiton Group’s results
 
The prices we obtain for our oil, gas, minerals and other commodities are determined by, or linked to, prices in world markets, which have historically been subject to substantial variations because of fluctuations in supply and demand. We expect that volatility in prices for most of our commodities will continue for the foreseeable future. This volatility creates the risk that our operating results will be materially and adversely affected by unforeseen declines in the prevailing prices of our products.
 
Our profits may be negatively affected by currency exchange rate fluctuations
 
Our assets, earnings and cash flows are influenced by a wide variety of currencies due to the geographic diversity of the countries in which we operate. Fluctuations in the exchange rate of those currencies may have a significant impact on our financial results. The US dollar is the currency in which the majority of our sales are denominated. Operating costs are influenced by the currencies of those countries where our mines and processing plants are located and also by those currencies in which the costs of imported equipment and services are determined. The Australian dollar, South African rand and US dollar are the most important currencies influencing our operating costs. Given the dominant role of the US currency in our affairs, the US dollar is the currency in which the BHP Billiton Group measures its financial performance. It is also the natural currency for borrowing and for holding surplus cash. An exception to this is our borrowings denominated in South African rand, which at June 30, 2002 was 5% of our total debt on a UK GAAP basis. This view-based strategy is based on the historical depreciation of the South African rand against the US dollar and the interest rate differential between the two currencies. We do not generally believe that active currency hedging provides long-term benefits to our shareholders. Currency protection measures may be deemed appropriate in specific commercial circumstances and are subject to strict limits established by our Boards. Therefore, in any particular year, currency fluctuations may have a significant impact on our financial results.
 
Our losses due to legacy foreign currency hedging amounted to US$331 million for the year ended June 30, 2002, compared to losses of US$360 million and US$175 million in the years ended June 30, 2001 and 2000, respectively.
 
Failure to discover new reserves or enhance existing reserves could negatively effect the BHP Billiton Group’s results and financial condition
 
Because a substantial portion of our revenues and profits are related to our oil and gas and minerals operations, our results and financial conditions are directly related to the success of our exploration efforts and our ability to replace existing reserves. A failure in our ability to discover new reserves or enhance existing reserves in sufficient quantities to maintain or grow the current level of our reserves could negatively affect our results and financial conditions.

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KEY INFORMATION
 

 
We may have fewer mineral reserves than our estimates indicate
 
Our reserves estimations may change substantially if new information subsequently becomes available. Fluctuations in the price of commodities, variation in production costs or different recovery rates may ultimately result in our estimated reserves being revised. If such a revision were to indicate a substantial reduction in proven or probable reserves at one or more of our major projects, it could negatively affect our results, financial condition and prospects.
 
Compliance with health, safety and environment regulations may impose burdensome costs
 
The nature of the industries in which we operate means that our activities are highly regulated by health, safety and environmental laws. As regulatory standards and expectations are constantly developing, we may be exposed to increased litigation, compliance costs and unforeseen environmental remediation expenses. The December 1997 Kyoto Protocol established a set of emission targets for developed countries ratifying the Protocol. It is uncertain at this stage how the Kyoto Protocol will effect our operations and our customers. There is a risk that the Kyoto Protocol may negatively impact our operations and our financial results. We may also be exposed to increased operational costs due to the costs and lost worker’s time associated with the HIV/AIDS infection rate of our Southern African workforce. These compliance costs, litigation expenses, remediation expenses and operational costs could negatively affect our financial results.
 
Land tenure disputes may negatively impact the BHP Billiton Group’s operations
 
We operate in several countries where ownership of land is uncertain, and where disputes may arise in relation to ownership. These disputes cannot always be predicted, and hence there is a risk that this may cause disruption to some of our mining projects and prevent our development of new projects.
 
In Australia, the Native Title Act 1993 provides for the establishment and recognition of native title under certain circumstances. Like land ownership disputes, native title could materially and adversely affect new projects of the BHP Billiton Group.
 
In South Africa, the Extension of Security of Tenure Act (1997) prevents evictions from taking place in the absence of a court order. Occupiers who reside on the owner’s land, with the requisite consent of the owner, have rights to remain in occupation unless they breach their statutory obligations as occupiers. A process exists for long-term occupiers to enjoy life long tenure. However, the legislation provides for the option of provision of suitable alternative land for occupation. Furthermore, the Restitution of Land Rights Act (1994) permits dispossessed communities to reclaim land but only where such dispossession occurred after 1913 and as a consequence of a discriminatory practice or law. Both these Acts could materially and adversely effect new projects of the BHP Billiton Group.
 
Actions by governments in the countries in which we operate could have a negative impact on our operations and results
 
Our operations could be adversely affected by government actions such as controls on imports, exports and prices, new forms of taxation, and increased government regulation in the countries in which we operate or service customers.
 
Additional risks associated with emerging markets may negatively impact some of the BHP Billiton Group’s operations
 
We operate in emerging markets which may involve additional risks that could have an adverse impact upon the profitability of an operation. Such risks could include civil unrest, nationalization, re-negotiation or nullification of existing contracts, leases, permits or other agreements, and changes in laws and policy as well as other unforeseeable risks. If one or more of these risks occurs at one of our major projects, it could have a negative affect on our operating results or financial condition.
 

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Table of Contents

KEY INFORMATION
 

 
We may not be able to integrate successfully our acquired businesses
 
We have grown our business in part through acquisitions. There are numerous risks encountered in business combinations and we may not be able to successfully integrate acquired businesses or generate the cost savings and synergies anticipated, which could negatively affect our financial condition and results of operations.
 
The BHP Billiton Group may not recover its investments in exploration and new mining and oil and gas projects
 
There is a risk that we will not be able to recoup the funds we spend identifying new mining and oil and gas properties through our exploration program. Increasing requirements relating to regulatory, environmental and social approvals can potentially result in significant delays in construction and may adversely impact upon the economics of new mining and oil and gas properties, the expansion of existing operations and our results of operations.
 
Since BHP Billiton Limited and BHP Billiton Plc reside outside the United States and a substantial portion of their assets is located outside the United States, there is a risk that service of process, enforcement of judgments and bringing of original actions will be more difficult.
 
BHP Billiton Limited is a corporation organized under the laws of the State of Victoria, Australia. BHP Billiton Plc is a public limited company incorporated under the laws of England and Wales. Substantially all the directors and officers of these companies, and some of the experts named in this document, reside outside the United States, principally in Australia. A substantial portion of the assets of these companies, and the assets of the directors, officers and experts, is located outside the United States. Therefore, you may not be able to effect service of process within the United States upon these companies or persons so that you may enforce judgments of United States courts against them based on the civil liability provisions of the United States federal securities laws. In addition, you may have difficulty bringing an original action in an Australian or UK court to enforce liabilities against us or any person based on US federal securities laws.
 

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Table of Contents

INFORMATION ON THE COMPANY
 

 
ITEM 4. INFORMATION ON THE COMPANY
 
A. History and Development of BHP Billiton
 
Background
 
We are one of the world’s largest diversified resources groups with a combined market capitalization of approximately US$32.9 billion as of June 30, 2002 and combined revenues of approximately US$17.8 billion for the year ended June 30, 2002. We hold industry leader or near-leader positions in a range of products, including:
 
 
 
world’s largest exporter of energy coal;
 
 
 
world’s largest exporter of metallurgical coal for the steel industry;
 
 
 
world’s third largest producer of iron ore;
 
 
 
world’s third largest producer of copper;
 
 
 
Western world’s fourth largest producer of primary aluminium; and
 
 
 
world’s largest producer of manganese, chrome and ferroalloys.
 
We also have substantial interests in oil, gas, liquefied natural gas, nickel, diamonds, silver and titanium minerals.
 
On March 19, 2001, we announced that the Directors of BHP Limited and Billiton Plc had agreed to form a Dual Listed Companies structure, to establish a diversified global resource group, to be called BHP Billiton. The implementation of the DLC structure was completed on June 29, 2001. BHP Limited changed its name to BHP Billiton Limited and Billiton Plc changed its name to BHP Billiton Plc.
 
BHP Billiton Limited and BHP Billiton Plc are now run by a unified Board and management team, with headquarters in Melbourne, Australia, and with a significant corporate management center in London. The existing primary listings on the London and Australian stock exchanges continue to be maintained, as is the secondary listing of BHP Billiton Plc on the Johannesburg and Paris stock exchanges and an American Depositary Receipt listing of BHP Billiton Limited on the New York Stock Exchange.
 
If either BHP Billiton Limited or BHP Billiton Plc proposes to pay a dividend to its shareholders, then the other company must pay a matching cash dividend of an equivalent amount per share to its shareholders. If either company is prohibited by law, or is otherwise unable to declare, pay or otherwise unable to declare, pay or otherwise make all or any portion of such a matching dividend, then BHP Billiton Limited or BHP Billiton Plc will, so far as is practicable to do so, enter into such transactions with each other as the Boards agree to be necessary or desirable so as to enable both companies to pay dividends as nearly as practicable at the same time.
 
The shareholders of BHP Billiton Limited and BHP Billiton Plc take key decisions on matters affecting the combined group through a procedure in which the shareholders of both companies have equal voting rights per share. Accordingly, shareholders of BHP Billiton Limited and BHP Billiton Plc effectively have an interest in a single group combining all of the assets of both companies with a unified Board of Directors and management. Should any future corporate action benefit shareholders in only one of the two companies, an appropriate action will be taken to ensure parity between BHP Billiton Limited and BHP Billiton Plc shares.

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INFORMATION ON THE COMPANY
 

 
We have grouped our major operating assets into the following customer sector groups:
 
 
 
Aluminium (aluminium and alumina);
 
 
 
Base Metals (copper, silver, zinc and lead);
 
 
 
Carbon Steel Materials (metallurgical coal, iron ore and manganese);
 
 
 
Stainless Steel Materials (chrome, nickel and ferroalloys);
 
 
 
Energy Coal (energy coal);
 
 
 
Diamonds and Specialty Products; and
 
 
 
Petroleum (oil, gas and liquefied natural gas).
 
The table below sets forth the contribution to combined turnover and profit (before tax) of each of these customer sector groups for the three years ended June 30, 2002.
 
    
Turnover

    
Profit before tax

 
    
Year ended June 30,

    
Year ended June 30,

 
    
2002

    
2001

    
2000

    
2002

    
2001

    
2000

 
    
(US$ millions)
 
Group including share of joint ventures and associates
                                         
Aluminium
  
2,857
 
  
2,971
 
  
2,357
 
  
492
 
  
523
 
  
438
 
Base metals(1)
  
1,821
 
  
1,719
 
  
1,933
 
  
200
 
  
462
 
  
465
 
Carbon steel materials
  
3,306
 
  
3,349
 
  
2,826
 
  
1,084
 
  
918
 
  
548
 
Stainless steel materials(1)
  
868
 
  
994
 
  
1,156
 
  
3
 
  
72
 
  
204
 
Energy coal
  
1,919
 
  
1,982
 
  
1,597
 
  
536
 
  
382
 
  
137
 
Diamonds and Specialty Products
  
1,480
 
  
1,318
 
  
500
 
  
272
 
  
188
 
  
167
 
Petroleum
  
2,815
 
  
3,361
 
  
2,971
 
  
1,073
 
  
1,407
 
  
1,061
 
Steel
  
2,785
 
  
3,760
 
  
5,393
 
  
101
 
  
270
 
  
402
 
Group and unallocated(1)
  
495
 
  
209
 
  
329
 
  
(573
)
  
(595
)
  
(395
)
Exceptional Items
  
—  
 
  
—  
 
  
—  
 
  
(212
)
  
(1,088
)
  
(760
)
Net interest
  
—  
 
  
—  
 
  
—  
 
  
(249
)
  
(476
)
  
(489
)
Intersegment
  
(568
)
  
(584
)
  
(660
)
  
—  
 
  
—  
 
  
—  
 
    

  

  

  

  

  

Total
  
17,778
 
  
19,079
 
  
18,402
 
  
2,727
 
  
2,063
 
  
1,778
 
    

  

  

  

  

  


(1)
 
A new segment, Diamonds and Specialty Products, has been created encompassing Diamonds, Titanium Minerals, Integris (metals distribution) and Exploration and Technology. This new segment reflects management responsibility for these businesses. As a consequence, the former Exploration, Technology and New Business and Other Activities segments ceased to exist and any remaining portions have been included in Group and Unallocated Items. In addition, HBI Venezuela and Ok Tedi, previously reported in Carbon Steel Materials and Base Metals, respectively, are now included in Group and Unallocated Items and Columbus Stainless Steel, previously reported in Other Activities, is now included in Stainless Steel Materials. Comparatives have been restated accordingly.

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The table below sets forth the contribution to combined turnover and net profit (before tax and net interest) by geographic origin for the three years ended June 30, 2002.
 
    
Turnover

  
Profit before tax and net interest

    
Year ended June 30,

  
Year ended June 30,

    
2002

  
2001

  
2000

  
2002

  
2001

    
2000

    
(US$ millions)
Geographic origin
                               
Australia
  
7,729
  
8,254
  
8,499
  
1,680
  
1,619
 
  
700
Europe
  
2,080
  
1,987
  
1,147
  
130
  
194
 
  
268
North America
  
2,351
  
2,126
  
1,875
  
43
  
117
 
  
68
South America
  
2,255
  
2,350
  
2,078
  
301
  
444
 
  
644
Southern Africa
  
2,696
  
3,107
  
3,319
  
712
  
498
 
  
483
Rest of World
  
667
  
1,255
  
1,484
  
110
  
(333
)
  
104
    
  
  
  
  

  
Total
  
17,778
  
19,079
  
18,402
  
2,976
  
2,539
 
  
2,267
    
  
  
  
  

  
 
The table below sets forth the analysis of combined turnover by geographic market for the three years ended June 30, 2002.
 
    
Turnover

    
Year ended June 30,

    
2002

  
2001

  
2000

    
(US$ millions)
Geographic market
              
Australia
  
2,957
  
3,091
  
4,078
Europe
  
4,407
  
4,302
  
3,291
Japan
  
2,095
  
2,565
  
2,319
South Korea
  
1,110
  
976
  
1,021
Other Asia
  
2,158
  
2,317
  
2,083
North America
  
2,735
  
3,057
  
2,862
Southern Africa
  
1,239
  
1,159
  
1,337
Rest of World
  
1,077
  
1,612
  
1,411
    
  
  
Total
  
17,778
  
19,079
  
18,402
    
  
  
 
Contractual commitments for capital expenditure outstanding at June 30, 2002 amounted to US$1.6 billion. These commitments relate mainly to Petroleum in connection with developments in Algeria (US$0.3 billion), Gulf of Mexico (US$0.2 billion), North West Shelf (US$0.1 billion), and Minerva (US$0.1 billion); Aluminium in connection with Hillside 3 (US$0.2 billion) and Mozal II (US$0.1 billion); Base Metals in connection with Escondida Phase IV (US$0.1 billion); Energy coal in connection with Mount Arthur North (US$0.1 billion); and Carbon Steel Materials in relation to Mining Area C (US$0.1 billion). Of the total of US$1.6 billion, US$1.3 billion is expected to be expended in the year ending June 30, 2003. We expect that these contractual commitments for expenditure, together with other expenditure and liquidity requirements, will be met from internal cash flow and, to the extent necessary, from external sources.

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Capital expenditures and financial investment totalled US$2,621 million in 2001-2002, a US$1,014 million decrease compared with 2000-2001. Expenditure on growth projects amounted to US$1,590 million, including Escondida Phase IV, the ROD oil and Ohanet wet gas projects in Algeria, Mozal II and Petroleum projects in the Gulf of Mexico. Maintenance capital expenditure was US$891 million. Exploration expenditure was US$390 million, an increase of US$49 million, compared with 2000-2001.
 
During 2001-2002, we committed approximately US$2.5 billion to new growth projects, including: US$790 million on Gulf of Mexico oil and gas developments (Maddog, Atlantis and the transportation system); US$123 million on the Minerva gas field and US$50 million on the Bream Gas Pipeline (Petroleum); US$449 million on the Hillside 3 expansion (Aluminium); US$411 million on Mount Arthur North (Energy Coal); US$480 million on the Mining Area C and Port Capacity expansion projects and US$170 million on the Dendrobium metallurgical coal mine (Carbon Steel Materials).
 
The ore reserves tabulated in this annual report are all held within existing, fully permitted mining tenements. The BHP Billiton Group’s minerals leases are of sufficient duration (or convey a legal right to renew for sufficient duration) to enable all reserves on the leased properties to be mined in accordance with current production schedules. Ore reserves are presented in the accompanying tables subdivided for each of the Customer Sector Groups.
 
All of the ore reserve figures presented are reported in 100% terms, and represent estimates at June 30, 2002. All tonnes and grade information has been estimated more precisely than the rounded numbers that are reported, hence small differences may be present in the totals.
 
As the reported reserves contained in this annual report have been reported based on historical average commodity prices in accordance with Industry Guide 7, they differ in some respects from the reserves we report in our home jurisdictions of Australia and the UK. Those jurisdictions require the use of the Australasian Code for reporting of Mineral Resources and Ore Reserves, September 1999 (the JORC Code), which comtemplates the use of reasonable investment assumptions in calculating reserve estimates.
 
Reserves are estimated based on prices reflecting current economic conditions determined by reference to the three year historical average for each commodity. The prices used to estimate the reserves contained in this annual report are as follows:
 
    
Price

Copper
  
$0.75/lb
Zinc
  
$0.45/lb
Nickel
  
$2.92/lb
Aluminium (used for Alumina)
  
$1,477/t
Silver
  
$4.45/oz
Lead
  
$0.22/lb
 
B. Business Overview
 
Aluminium
 
Our Aluminium customer sector group is principally involved in the production of aluminium and alumina. The map below sets forth the geographic locations of our key aluminium assets.
 
LOGO

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Hillside
 
We own the Hillside aluminium smelter, which we commissioned between July 1995 and June 1996. Hillside is located in Richards Bay, 200 kilometers north of Durban, KwaZulu-Natal, South Africa. Hillside currently produces approximately 500,000 tonnes of aluminium per year using the Aluminium Pechiney AP30 technology. In February 2002, the Board of Directors approved an increase in Hillside’s production capacity by adding a third (half-size) potline, which is expected to add a further 132,000 tonnes per annum of primary aluminium capacity. The cost of this expansion is estimated at US$449 million with full production expected for mid-2004.
 
We mostly produce primary aluminium. We sell most of our primary aluminium in standard ingot form, principally to export markets in the Far East, Northern Europe and the United States. We also sell aluminium in liquid metal form to our Bayside operations, which casts it into products for the manufacture of aluminium value-added products such as alloy wheels.
 
We own all of Hillside’s property, plant and equipment, including the land on which it is located. In addition, we own silos, buildings and overland conveyors at Richards Bay Port which sit on leased land. Our lease is for ten years, which expires in 2009 and we have extension options. We have to reline the pots we use in our reduction process every five to six years. Our first relining cycle at Hillside is complete.
 
The principal raw materials required for our aluminium production operations at Hillside are alumina, petroleum coke, liquid pitch and electricity. Alumina requirements are sourced 50% from our Worsley business and 50% from Alcoa. We import approximately 195,000 tonnes per year of calcined petroleum coke from American suppliers and approximately 45,000 tonnes of liquid pitch each year primarily from Deza and D.C. Chemicals. We purchase our electricity from Eskom, the local state-owned power generation company under a long-term contract with pricing linked to the aluminium price on the London Metal Exchange.
 
Bayside
 
We own the Bayside aluminium smelter, which was commissioned in 1971. Bayside is located at Richards Bay, KwaZulu Natal, South Africa. Bayside currently produces approximately 180,000 tonnes of aluminium per year. We are currently upgrading our smelter to bring its air emissions within our permit limits set for 2003. We expect this upgrade will be completed by June 2003. The smelter uses Alusuisse pre-bake and Soderberg self-bake technologies.
 
We generate approximately 85% of our sales revenue from the domestic market, which consists of South Africa and the surrounding countries. Our main products include wheel rim alloy, for use in the manufacturing of vehicle rims, extrusion billets, for use in the building industry, rods, for use mainly as electrical cables, and rolling ingot, for use mainly in the production of aluminium sheeting.
 
The principal raw materials required for our aluminium production at Bayside are alumina, petroleum coke, liquid pitch and electricity. Our alumina is sourced approximately 50% from Worsley and 50% from Alcoa. We purchase approximately 70,000 tonnes per year of calcined petroleum coke from American suppliers. We purchase most of our liquid pitch requirements from Suprachem (Pty) Ltd and we purchase our electricity from Eskom under a power supply agreement which links the cost of electricity to the aluminium price on the London Metal Exchange.
 
Mozal
 
We own a 47% interest in the Mozal aluminium smelter, which was commissioned in June 2000. The remaining interest in Mozal is owned by Mitsubishi, which owns a 25% interest, Industrial Development Company of South Africa Limited, which owns a 24% interest, and the government of Mozambique, which owns a 4% interest. The smelter is located in southern Mozambique, on the east coast of Southern Africa, 17 kilometers from Maputo. It is located approximately 5 kilometers from the nearest port facilities. The smelter uses the Aluminium Pechiney AP30 technology.

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Mozal produced its first metal in June 2000 and has a nameplate design capacity of 250,000 tonnes per year. Our share of production for 2001-2002 was 127,000 tonnes. The joint venture has approved an increase in Mozal’s production capacity by adding a second potline, which is expected to double Mozal’s production capacity. The cost of this expansion is estimated at US$860 million. Under the project agreements relating to this expansion, it is intended that the ownership interest in this expansion will remain the same as the current ownership in Mozal.
 
The joint venture produces standard ingot. Based on our ownership interest, we are allocated 47% of Mozal’s total production. We export most of our share of Mozal’s production to Europe.
 
The principal raw materials required for the aluminium production operations at Mozal are alumina, petroleum coke, liquid pitch and electricity. We furnish approximately 480,000 tonnes of alumina per year to Mozal, which represents its entire alumina requirements. We purchase most of our petroleum coke requirements from American suppliers. The joint venture purchases its electricity from the South African grid from Motraco, a joint venture between Elecricidade de Mozambique, Eskom and the Swaziland Electricity Board, under a power supply agreement which in the first 12 years is at a fixed tariff and thereafter is linked to the aluminium price on the London Metal Exchange.
 
Worsley
 
We increased our interest in the Worsley joint venture from 30% to 86% in January 2001. The Worsley joint venture is an integrated bauxite mining and alumina refining operation located in Western Australia. The other participants in the venture are Nissho Iwai Alumina Pty. Limited, which owns a 4% interest, and Kobe Alumina Associates (Australia) Pty Limited, which owns a 10% interest. The refinery is located approximately 55 kilometers southwest of Bunbury and the bauxite mining operation is linked to the refinery via a 51 kilometers overland conveyor.
 
The mine produces approximately 11 million tonnes of bauxite per year from extensive near surface deposits. The venture operates its mine on a 2,600 square kilometer mining lease. The joint venture was granted an initial 21-year lease by the government of Western Australia in 1983, with two 21-year renewal options. The joint venture may also benefit from a third 21-year renewal under renegotiated terms. At current production rates, the venture expects the mining life of the reserves at Worsley to be approximately 30 years.
 
The refinery, utilizing the Bayer process, currently produces approximately 3.1 million tonnes of alumina per year, having reached this design output in April 2001 following the completion of a major expansion. The joint venture produces mostly metallurgical grade alumina, which is used as feedstock for aluminium smelting. Our share of alumina production at the refinery is approximately 2.7 million tonnes per year. Our alumina is railed to a shared berth facility at the port of Bunbury, and dispatched from there by ship directly to end-use customers.
 
The principal raw materials required for alumina production at Worsley, apart from bauxite, are caustic soda and coal for the power station. We currently source our caustic soda requirements from the Middle East and Japan. Supply agreements are usually negotiated for periods of two to three years, with pricing linked to industry published data as opposed to fixed prices. The power and steam needed by the refinery is provided by a venture owned onsite coal fired power station and a non-venture owned onsite gas fired power station. Coal for the power station is supplied from the nearby Collie colliery under a medium term contract at competitive rates.
 
Suriname
 
We own a 76% interest in a mining joint venture with Suriname Aluminium Company, L.L.C. (Suralco), a subsidiary of Alcoa. We are the operator of the joint venture. We also own a 45% interest in a refining joint venture with Suralco, in which Suralco is the operator. Both are unincorporated joint ventures.
 
The mining joint venture exploits the Lelydorp deposit, an open pit mine located in the coastal plain of Suriname, approximately 25 kilometers south of Paramaribo. The mining joint venture produces metallurgical grade bauxite, which is

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processed by the refining joint venture’s alumina plant at Paranam, located 17 kilometers east of the Lelydorp III mine. The Lelydorp deposit has a nominal production capacity of 2.25 million tonnes per annum. The refining joint venture owns and operates port facilities located at Paranam, at the Suriname River. Alumina exports take place from the Paranam port.
 
Suralco holds the exploitation license to the Lelydorp III mine, and has made it available to the mining joint venture. The Lelydorp III bauxite reserves are expected to be depleted by 2007. We hold exploitation licenses with respect to the Para and Kankantrie deposits. These deposits are being reevaluated as the bauxite remnants at these earlier mined deposits could potentially provide additional bauxite supply to the refinery. In addition to these exploitation licenses, we hold title to 70,123 acres of terrain under three exploration licenses. Our exploration licenses expired in 2001. An extension has been filed with the relevant authorities and we are awaiting approval. In the meantime, exploration is continuing. We hold an option on two two-year renewals of these licenses provided the terrain is reduced by 25% for each two-year period and that our planned exploration expenditures are met.
 
The mining joint venture completed its engineering study and development plans for Lelydorp III in 1993, after which time it started developing the mine. The development was completed in 1997. The mining joint venture’s stripping and mining equipment, excavator and conveying system and dragline are all in good condition. The stripping equipment is powered by electricity. Suralco supplies the mine with electricity.
 
The refining joint venture’s alumina plant is a low temperature plant which uses standard Bayer plant technology. We deliver our share of the mining joint venture bauxite to the refinery and Suralco supplements its share of the mining joint venture bauxite, with material from its own mine in eastern Suriname. The refinery produces approximately 1.9 million tonnes of alumina per year. Our share was 850,000 tonnes in 2001–2002.
 
All alumina produced is exported to Europe. The refinery has three thermal generators, which provide the steam necessary for the process and the electricity supplementary to the hydro electric energy provided by Suralco. The generators are run on fuel oil supplied by the local state oil company. Caustic soda used in the refinery process is imported from the United States.
 
Alumar
 
The Alumar Consortium (Alumar) is an unincorporated joint venture comprised of an alumina refinery, an aluminium smelter and support facilities. We own a 46.3% interest in the aluminium smelter and Alcoa Aluminio S.A. (Alcoa) owns the remaining 53.7%. We own a 36% interest in the alumina refinery, an affiliate of Alcan Aluminium Limited (Alcan) owns 10%, Alcoa owns 35.1% and Abalco S.A. (owned 60% by Alcoa and 40% by WMC Limited) owns the remaining 18.9% . The alumina and aluminium plants are integrated, located in the industrial district of São Luís, the capital of the state of Maranhão, in northern Brazil.
 
Total annual smelter production, using Alcoa technology, is approximately 370,000 tonnes of aluminium per year. Alumina arrives by conveyor from the adjoining refinery and electricity generated at the Tucuruí hydroelectric dam arrives via two transmission lines. We purchase our electric power requirements from Central Electricas de Norte under a long-term contract that will expire in 2004. Most of the production is standard ingots and we sell a quarter of our share of the ingots to domestic customers with the balance sold on the export market.
 
The refinery began production in 1984. Subsequently it has been expanded several times. Total production has now reached approximately 1.3 million tonnes per year. The required raw materials, caustic soda, coal, and bauxite, are delivered by ship to the Alumar port. Our share of the alumina is allocated to the Alumar smelter and to the Valesul smelter. Approximately 10% of our production share is sold on the export market.
 
We own 14.8% of Mineracao Rio Norte S.A. (MRN), a Brazilian mining company jointly owned by affiliates of Alcoa, Alcan, Companhia Brasileira de Aluminio, Companhia Vale do Rio Doce (CVRD) and Norsk Hydro. MRN was incorporated and began its operations in 1967. MRN extracts, processes and supplies bauxite to the Alumar refinery under

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a long-term contract. In March 2000, the MRN board approved a US$220 million expansion of bauxite mining production from 11 million tonnes to 16.3 million tonnes per annum. The additional production is expected to start at the beginning of 2003. Currently, MRN has estimated reserves that would allow it to produce 16.3 million tonnes of bauxite per annum for approximately 10 years. The mine is actively pursuing an evaluation program of bauxite plateaus within the remaining lease area to establish the overall life of the project. MRN holds valid mining rights to all its reserves until exhaustion of the reserves.
 
During 2001-2002, we joined two consortia with the objective of participating in auctions being held by the Brazilian Electricity Regulatory Agency for concession to build and operate a series of proposed Hydropower Plants. The first is a consortium made up of affiliates of Alcoa, CRVD, Companhia Braileira de Alumino and Carmargo Correa Energia S.A. We own a 20.6% interest in this consortium. In the past year the consortium won the auction for the Santa Isabel Baixa concession and has recently signed the concession contract. Our partners in the second consortium are affiliates of Alcoa, CRVD, Tractbel and Carmargo Correa Energia S.A. We own a 16.5% interest in this consortium. This consortium won the auction for the Estreito concession in July 2002. The Estreito concession contract has yet to be signed. We intend to participate in further auctions.
 
Valesul Aluminio SA
 
We own a 45.5% joint venture interest in Valesul Aluminio SA, an aluminium smelter located in Rio de Janeiro, Brazil. The balance is held by the CVRD group. The port of Sepetiba is less than 40 kilometers away and the Port of Rio de Janeiro is less than 60 kilometers away.
 
Valesul began production in 1981. It currently produces approximately 93,000 tonnes of aluminium per year based on P19 Reynolds technology. The Valesul cast house can supply a wide range of aluminium products for the extrusion, cable and automotive industries. The vast majority of alloys, ingots and billets are sold domestically to independent fabricators. A small portion is exported. With respect to required raw materials, alumina arrives by ship while petroleum coke and liquid pitch arrive by truck. Valesul owns four small hydroelectric stations and has an 8% effective participation in the Maesa hydroelectric consortium, which is finalizing the construction of the Machadinho dam. When Machadinho is fully operative in 2003, Valesul will only draw power from the grid outside of the peak power period.
 
Reserves and Production
 
The table below details our bauxite-ore reserves in metric tonnes, and are presented in 100% terms as estimated at June 30, 2002.
 
      
Proved Ore Reserve(1)(2)(3)(4)(7)

  
Probable Ore Reserve(1)(2)(3) (4)

  
Total Ore Reserve

  
BHP Billiton Interest

Deposit

    
Tonnes (millions)

    
Grade % Alumina

  
Tonnes (millions)

  
Grade % Alumina

  
Tonnes (millions)

  
Grade % Alumina

  
%

Australia(5)
                                      
Worsley
    
305
    
30.7
  
12
  
30.9
  
317
  
30.7
  
86
Suriname(5)
                                      
Lelydorp
    
11.4
    
52.5
  
0
  
—  
  
11.4
  
52.5
  
76
Brazil(6)
                                      
MRN Crude
    
36.2
    
—  
  
172.7
  
—  
  
208.9
  
—  
  
—  

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MRN Washed
 
25.7
 
48.8
  
125.4
  
50.9
  
151.1
  
50.6
  
14.8

(1)
 
Mine dilution and recovery are included in the reserve statements for each deposit.
(2)
 
Alumina as available alumina.
(3)
 
Approximate drill hole spacings used to classify the reserves are:
 
   
Proven Ore Reserves

 
Probable Ore Reserves

Worsley
 
100m or less grid spacing
 
200m or less grid spacing
Lelydorp
 
61.5m x 61.5m
 
No reserve quoted in this category
MRN
 
200m grid spacing or less with mining and metallurgical characterization (test pit/bulk sample) plus a reliable suite of chemical and size distribution data
 
<400m grid spacing or 400m spaced grid with a 200m offset fill-in plus a reliable suite of chemical and size distribution data
 
(4)
 
Third party reserve audits have not been conducted on our reserves for purposes of this annual report.
(5)
 
Worsley Alumina Pty Ltd (Worsley) and Lelydorp reserve tonnages are quoted on a dry basis.
(6)
 
Mineracao Rio de Norte washed reserve tonnages and grades are quoted on a nominal 5% moisture content basis.
(7)
 
Aluminium price used to test the economic viability of the ore reserves is US$1,477 per tonne.
 
The table below details our alumina and aluminium production for the three years ended June 30, 2002. Production data shown is our share unless otherwise stated.
 
           
BHP Billiton Group Share of Production

      
BHP Billiton
Group Interest

  
Year ended June 30,

         
2002

  
2001

  
2000

      
(thousands of tonnes)
Alumina
                     
- Worsley(1)
    
86%
  
2,696
  
1,632
  
592
- Suriname
    
45%
  
850
  
852
  
857
- Alumar
    
36%
  
396
  
454
  
429
           
  
  
Total
         
3,942
  
2,938
  
1,878
           
  
  
Aluminium
                     
- Hillside
    
100%
  
502
  
498
  
494
- Bayside
    
100%
  
174
  
178
  
177
- Mozal(2)
    
47%
  
127
  
93
  
—  
- Alumar
    
46.3%
  
152
  
172
  
171
- Valesul
    
45.5%
  
37
  
43
  
41
           
  
  
Total
         
992
  
984
  
883
           
  
  

(1)
 
Our interest in Worsley increased from 30% to 86% effective January 2001.
(2)
 
Mozal produced its first metal in June 2000 and achieved full commissioning of its 253,000 tonnes per annum capacity in December 2000.

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Regulatory and Fiscal Terms
 
Australia - Western Australia
 
In Western Australia, minerals in the ground belong to the government, and rights to mine are granted by the state. The Worsley joint venture operates under a State Agreement made under the Alumina Refinery (Worsley) Agreement Act 1973 (as amended). The Worsley joint venturers are permitted, under the State Agreement, to explore for and mine bauxite and to refine it into alumina.
 
South African Mining Charter
 
For a discussion of the South African mining charter you should see “Business Description – Carbon Steel Materials – Regulatory and Fiscal Terms – South African Mining Charter”.
 
Market Conditions
 
Half-way through 2002, the aluminium market remained in surplus and showed few signs of recovery following an extended period of price weakness. In 2001, market surplus was estimated to be approximately 700,000 tonnes. In early March 2002, the London Metal Exchange three-month aluminium price rose above US$1,400 per tonne. However, demand for aluminium is weak across all main consuming regions in the developed world.
 
In 2001, weak global demand more than offset the effects of enforced smelter closures, which, at their peak, exceeded 9% of global capacity. However, capacity in Brazil has been fully reactivated as well as some in the Pacific North West, signifying that the peak impact and market benefit of capacity closures has past. The remaining overhang of idle smelting capacity could impede price improvement should demand recover. The likelihood of further smelter curtailments by producers in response to weak market conditions is low but could occur were prices to fall to US$1,100 per tonne or below.
 
The prospect for the aluminium market for the remainder of 2002 is continued weakness with the possibility of the beginning of recovery in the first half of 2003.
 
The alumina market was weak in 2001 due to the combination of large capacity expansions, (namely Worsley, Nalco and in China), the Gramercy restart, and a significant demand shock attributable to enforced global smelter production cutbacks. The reported spot alumina price fell from about US$450 per tonne just before mid-2000 to below

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US$150 per tonne in December 2001. More importantly, the Australian alumina export price, which better reflects the contractual alumina market price, fell in December 2001, to US$160 per tonne, the lowest since June 1999.
 
The weak alumina price has induced the closure of some high cost capacity totaling some 4 million tonnes per annum. These include the permanent closure of St Croix (600,000 tonnes per annum) and temporary closures of Point Comfort (600,000 tonnes per annum), Oradea in Romania (240,000 tonnes per annum) and Burnside (600,000 tonnes per annum). Notwithstanding these closures, some of the world’s remaining high cost refining capacity operates at a loss.
 
Base metals
 
Our Base Metals customer sector group is comprised of our assets and interests in copper, lead, zinc, silver, gold and uranium. We provide base metals concentrates to smelters worldwide and copper cathodes to rod and brass mills and casting plants. The map below sets forth the geographic locations of Base Metals’ key assets.
 
LOGO
 
Copper
 
We are one of the world’s top three producers of copper. The Escondida mine is the world’s largest and one of the lowest-cost sources of copper. Our other key copper assets include the Cerro Colorado mine in northern Chile, the Tintaya and Antamina operations in Peru, and Alumbrera operation in Argentina. We also have a number of greenfield and brownfield expansion opportunities.
 
In December 2002, we announced we would continue our program of demand-based production in the Base Metals Group originally announced in November 2001. During calendar year 2003, we will target an annualized production rate of 1.05 million metric tonnes of copper at our Escondida mine (150,000 tonnes of cathode and 900,000 tonnes of copper contained in concentrate), and 34,000 tonnes of cathode at our Tintaya mine. We will continue to maintain our Pinto Valley and Robinson mines in the Southwest United States on standby status. As a consequence, we should produce 390,000 tonnes of copper (305,000 tonnes representing our share) below installed capacity in calendar year 2003 on an annualized basis. Production from our other copper mines are not planned to be affected.
 
Escondida
 
We hold a 57.5% interest in Escondida, an open-pit copper mine accessible by road and located in northern Chile’s Atacama Desert, at an altitude of approximately 3,100 meters, 160 kilometers southeast of the port city of Antofagasta. The other owners are affiliates of Rio Tinto plc, which hold a 30% interest, JECO which holds a 10% interest, (Mitsubishi Corporation, 6%, Mitsubishi Materials Corporation, 2%, Nippon Mining and Metals Company Limited, 2%), and the International Finance Corporation, which holds a 2.5% interest.
 
Escondida has committed about 50% of the currently forecast annual concentrate production under long-term contracts ranging from 9 to 13 years, the earliest of which expires at the end of 2002, and the latest of which expires in 2009, to smelter companies in Japan, Germany, Finland and Chile. Contracts of shorter duration, from three to seven years, have been concluded with smelters located worldwide. Approximately 75% of annual cathode production is sold under annual contracts to end-users and traders located primarily in Europe, the Far East and Brazil and the remainder of production is sold on a spot basis.
 
Original construction of the operation was completed in 1990 at a cost of US$836 million and the project has since undergone three phases of expansions and additions at an additional cost of US$1,181 million plus US$451 million for the construction of an oxide plant. The operation has two conventional processing streams, with high quality copper concentrate being extracted from sulphide ore through a flotation extraction process and pure copper cathode obtained in a plant applying leaching and subsequent solvent extraction and

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electro-winning to oxide ores. An open pit mine services both operations, with a current total movement of approximately 310 million tonnes of material each year, while dedicated pipeline and port facilities and a private railway are used to transport output.
 
Escondida’s past annual production has exceeded 900,000 tonnes of copper contained in concentrate and cathode. However, the total production for 2001–2002 was 762,000 tonnes due to the lower grade ore being fed to the concentrator and as a result of the curtailment in production described below. The average grade of these ores is expected to be approximately 1.5% of contained copper in 2004, before declining further after 2008. Based on a current ore feed grade of 1.6% of contained copper, the existing mine equipment and mill facilities are expected to produce 2.2 million tonnes of concentrate in 2002–2003, containing approximately 778,000 tonnes of copper. The oxide leach plant, commissioned December 1, 1998, and debottlenecked in 2001, has an annual capacity of 150,000 tonnes of copper cathode.
 
As ore grades decline further, annual copper production in concentrate was expected to decrease to below 600,000 tonnes. Phase IV expansion is expected to offset this decrease by increasing production capacity of the operation to over 1 million tonnes of copper contained in concentrate beginning in 2003. Development works for the project commenced in late 2000. The Phase IV expansion is budgeted at a total cost of US$1,045 million. The funding for the Phase IV expansion has been completed through a non-recourse syndicated bank loan, two non-recourse export credit agency loans and a subordinated shareholder loan.
 
The Phase IV Expansion Project consists of the following equipment and facilities, some of which will be integrated with the existing operations:
 
 
 
a new in-pit ore crusher and conveyor to a new concentrator, which is planned to expand concentrating capacity by 110,000 tonnes per day to 235,000 tonnes per day;
 
 
 
a new concentrate slurry pipeline from the new concentrator to the existing concentrator and refurbishment of an existing pipeline to the port at Coloso;
 
 
 
additional concentrate filtration and storage capacity at Coloso;
 
 
 
increases to the mining fleet to conduct the mining and related materials movements necessary to supply ore feed to the new Phase IV plant;
 
 
 
modifications to the Coloso port facilities; and
 
 
 
a new tailings disposal site.
 
The plant commenced commissioning in September 2002. The plant is projected to ramp-up to full capacity of 110,000 tonnes per day in the second half of 2002-2003. The estimated remaining mine life after the completion of the Phase IV Expansion Project is in excess of 20 years.
 
Escondida is a large porphyry copper deposit with current mine dimensions of 2.2 kilometers in an east-west direction, 3.2 kilometers in a north-south direction and a depth of 464 meters. The ultimate pit limits are estimated to be 3.5 kilometers by 4.8 kilometers, with a depth of 750 meters.
 
Escondida has the right of indefinite exploitation (mining) concessions for the mining of the Escondida ore body as well as exploration rights for some territory surrounding the existing operation. Exploitation concessions allow the concession holder to mine the area indefinitely contingent upon the annual payment of corresponding license fees.

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Separate transmission circuits provide power for the Escondida mine complex. These transmission lines, which are connected to Chile’s northern power grid, are company-owned and are sufficient to supply Escondida post Phase IV. Electricity is purchased under three contracts with local generating companies, Norgener and Nopel.
 
On November 8, 2001, Escondida announced its decision to temporarily reduce copper production at Escondida by 80,000 tonnes per annum, effective as of that date. This decision was taken in response to the fall in demand for copper, arising from unfavorable global economic conditions. In May 2002, Escondida decided to continue these cuts in production until the end of 2002. In December 2002, it was announced that Escondida will operate at a production level of 1.05 million tonnes of copper during calendar 2003, approximately 200,000 tonnes below its installed production capacity of 1.25 million tonnes. This would be achieved through the combination of mining lower grade ores and maintenance shutdowns in the older Los Colorados concentrator facility. The ramp-up of the Phase IV Expansion Project is continuing as planned.
 
Tintaya
 
Tintaya is an open-pit copper mine located in the Andes at an altitude of approximately 4,000 meters in southern Peru. We hold a 99.9% interest in Tintaya and the remaining interest is held by Peruvian shareholders. The mine site is accessible by road and is located near a public daylight airstrip that we maintain. The deposit is a copper gold skarn system associated with a low grade porphyry copper body and is approximately 3 kilometers long by 2.5 kilometers wide. We hold mining rights over 3,600 hectares and surface rights over 4,097 hectares on which the Tintaya mine and operations are located. These rights can be held indefinitely. Mine operations consist of conventional truck and shovel operations from multiple pit locations. Electricity for the Tintaya operations is sourced from the Peruvian power grid and supplied under contract with two Peruvian power companies.
 
Production commenced in 1984 and currently consists of a conventional flotation extraction process producing copper in concentrate from sulphide ore. Tintaya’s total annual production capacity is 90,000 tonnes of copper contained in concentrate along with gold and silver credits. An acid leach plant for oxide ore commenced commercial operation in June 2002 and is designed to produce 40,000 tonnes of copper cathode per year. Increased oxide ore reserves have been identified and are being proved with a new drilling program in 2002. Improved efficiency in the sulphide mining operations may result in sulphide concentrate copper production increasing. Thereafter, we expect annual production to remain stable until 2009 and then decrease as sulphide ore mining ceases and low grade stockpiles are processed to the end of the life of the mine, which we estimate will be in 2012-2016. As part of our work to improve mining operation efficiencies, we are reviewing our equipment requirements for future optimization of the mining operations and a plan is in place to replace much of the old mining fleet.
 
In January 2002, we temporarily curtailed all copper concentrate production at Tintaya. This decision was taken in response to the serious fall in demand for copper, arising from unfavorable global economic conditions. This decision was reviewed in April 2002 and the decision was made to continue with the suspension of concentrate operations until the market improves. Tintaya copper operations will remain on standby until at least mid-2003. Operation of the oxide leach plant is continuing as planned.
 
All copper cathode production is committed for sale to BMAG, a marketing and sales company, which is one of our subsidiaries.
 
Cerro Colorado
 
Cerro Colorado is wholly-owned through our subsidiary, Rio Algom Limited. It is an open-pit copper mine located in the Atacama Desert at an altitude of 2,600 meters, approximately 125 kilometers by road, east of Iquique, Chile. Cerro Colorado holds mineral rights over 16,664 hectares and surface rights over approximately 1,305 hectares on which the plant is located. These rights can be held indefinitely. We operate the mine.
 
At Cerro Colorado, we produce finished cathode copper by crushing, agglomeration and heap leaching followed by a solvent extraction-electrowinning process. The electrowinning process produces copper cathode.
 

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We source water requirements from an underground aquifer at Pampa Lagunillas, the rights to which we hold by grant from the state. Two suppliers under long-term contracts supply power to the facilities through the northern Chile power grid.
 
Rio Algom completed construction of the facilities in 1994 at a total cost of US$287 million and began commercial production in June 1994. Rio Algom completed an expansion of annual production capacity to 60,000 tonnes in 1995 at a cost of US$49 million and in 1998, Rio Algom completed the second expansion of Cerro Colorado at a cost of US$214 million increasing the mine’s annual production to a nominal 100,000 tonnes of refined copper.
 
The Cerro Colorado deposit is approximately 2 kilometers long east-west and 1.5 kilometers wide north-south. Two main zones are present. Mineralization is from 50 meters to 250 meters thick and is covered by from 50 meters to 150 meters of leached cap and post-mineral rocks. The east deposit contains multiple layers of oxide and sulphide mineralization with complex shapes. The west deposit generally consists of one oxide layer overlying one sulphide layer, but locally exhibits some of the complexities present in the east deposit.
 
We are implementing plant modifications at Cerro Colorado which include increases in the mine’s crushing capacity, leach pad area and mine fleet in order to maintain annual production capacity at a level of 120,000 tonnes per year for the next five years. The estimated cost of the modifications is US$15.6 million. With these modifications, we estimate that the remaining mine life will be 14 years.
 
Under current sales contracts that expire December 31, 2008, we are committed to deliver a total of 60,000 tonnes of cathode copper annually to two customers, one in Japan and the other in Germany. We sell the remaining production under annual and spot contracts to various international purchasers. Prices under all contracts are based on the monthly average London Metal Exchange cash settlement price in or around the month of delivery.
 
In May 1999, the London Metal Exchange approved the registration of Cerro Colorado cathodes. The London Metal Exchange registration enables Cerro Colorado to obtain full premium on its sales and to deliver copper directly to London Metal Exchange warehouses. The New York Commodity Exchange approved the Cerro Colorado cathodes in 2001.
 
Alumbrera
 
Through Rio Algom we hold 50% and Rio Tinto holds the other 50% interest in Musto Explorations (Bermuda) Limited, which itself holds a 50% interest in Minera Alumbrera Limited. M.I.M. Holdings Limited holds the remaining 50% interest in Minera Alumbrera Limited.
 
We have an effective 25% interest in Minera Alumbrera Limited, the company responsible for developing and operating the Alumbrera project. The Alumbrera mine is located in the Province of Catamarca, in the Argentine Andes at an altitude of 2,600 meters, approximately 1,100 kilometers northwest of Buenos Aires, 60 kilometers northwest of Andalgalá and 100 kilometers northeast of Belén. It is accessible by road or by propeller aircraft using an airstrip which was constructed for the project at Campo del Arenal, approximately 35 kilometers from the mine. The Alumbrera deposit lies below a bowl-shaped depression, 1,900 meters long in the northeast-southwest direction and 1,200 meters in the northwest-southeast direction.
 
Minera Alumbrera is responsible for developing and operating the Alumbrera project pursuant to an agreement with Yacimientos Mineros de Agua de Dionisio, the owner of the 600-hectare property over which Minera Alumbrera holds exploitation rights. The term of the agreement coincides with the useful life of the deposit. Yacimientos is entitled to a 20% net profits interest, after cost recovery, in the Alumbrera project. The Province of Catamarca is entitled to a 3% royalty on the value of production after deducting all processing costs, excluding mining costs, and transportation charges. Surface rights are held in fee simple and by legal easements, private easements and usufructs.

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Minera Alumbrera substantially completed construction of the project in 1997 and the first concentrate shipment took place in October 1997. The operation attained commercial production on February 1, 1998. Total project costs were US$1.2 billion. Ore from the open-pit is crushed and ground, with copper-gold concentrate produced by the flotation process. Some free gold is recovered by gravity methods to produce gold doré, which contains approximately 90% gold and other metals like silver and copper. The design capacity of the mill is 80,000 tonnes per day. Copper-gold concentrate produced in the mill is pumped through a 316-kilometer pipeline to a filter plant and load out facility at Cruz del Norte where water is removed, and filtered concentrate is shipped 830 kilometers by rail to Minera Alumbrera’s port facility near the city of Rosario. Most of the mine’s power needs are supplied under a long-term contract with Hidroelectrica CHACON, with the remainder purchased on the spot market.
 
In 1997, a US$670 million financing arrangement provided by a consortium of international lenders was arranged to partially finance the project, with the balance being provided by the project sponsors. At June 30, 2002, the outstanding balance owed to the lenders was US$358 million. Substantially all the assets of Minera Alumbrera have been pledged to the lenders as security for the loans. As the project has satisfied completion test criteria, the loans are now, subject to certain limited exceptions, non-recourse to our subsidiary, Rio Algom.
 
Minera Alumbrera is currently commissioning a third line mill and pebble crushing circuit, which was recently installed at an estimated cost of US$36 million. These expansions are funded from project cashflows and are designed to increase the mine’s processing capacity to 100,000 tonnes per day. The mine’s annual average production is expected to increase to 190,000 tonnes of copper in concentrate and 600,000 ounces of gold in concentrate and doré over eight years, before declining as low grade stockpiled ore is processed.
 
Minera Alumbrera has eight long-term concentrate sales contracts with purchasers located in Europe and Asia and one in North America covering approximately 60% of expected annual concentrate production with remaining terms ranging from two to seven years. The balance of the concentrate produced is sold under contracts that expire in one or two years and on a spot basis. Contract prices are based on monthly average London Metal Exchange copper cash settlement prices, generally two to three months after shipment.
 
Highland Valley Copper
 
Through Rio Algom, we own a 33.6% interest in Highland Valley Copper, a partnership with Teck Cominco Limited and its subsidiary, which hold a 61.4% interest, and Highmont Mining Company, which holds a 5% interest in the venture. Rio Algom shares management responsibility of the venture equally with Teck Cominco. Although the partnership was formed in 1986, with Highmont joining in 1988, production from the Lornex pit commenced in 1972.
 
The Highland Valley venture holds and operates large scale, open-pit copper-molybdenum mining and milling operations in the Highland Valley area near Logan Lake, British Colombia, Canada. These mining and milling operations produce copper and molybdenum in concentrates. The operation is accessible by highway and is located approximately 80 kilometers southwest of Kamloops and 200 kilometers northeast of Vancouver. The mine operates throughout the year. B.C. Hydro supplies power to the operations through a 138 kilovolt line. The venture’s property interests consist of mineral claims and leases, government grants and some properties in fee simple. Included in these property interests are 33,128 hectares of mineral rights and 2,698 hectares of surface rights. These rights can be held indefinitely.
 
Facilities include the Highland mill and the Lornex and Valley open-pit mines, which are adjacent to the concentrator. The Lornex pit is approximately 2.5 kilometers long and 1.5 kilometers wide and contains mainly chalcopyrite ore. The Valley pit is round in shape and approximately 2 kilometers in diameter. It contains mainly bornite ore. Both deposits are porphyry type. The mill uses semi-autogenous grinding and conventional flotation and has a nominal milling capacity of 120,000 tonnes per day. The venture transports crushed ore from the Valley mine, which comprises approximately 89% of the mill feed, via two 6,000 tonne per hour inclined conveyor belt systems. Two 60 x 89 gyratory semi-mobile crushers, located in the pit, feed the inclined conveyors. Ore from the Lornex mine is trucked to a

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third fixed gyratory crusher and conveyor system. The three conveyor systems are integrated to allow blending of ore to three mill stockpiles. The venture expects to remain in production for approximately eight years.
 
The venture sells more than 75% of its production under long-term contracts. The remaining terms of these contracts range from approximately two to seven years. The venture sells the remaining production on a spot basis. Contract prices are based on the monthly average London Metal Exchange cash settlement price, generally three months after delivery.
 
Ok Tedi Mine
 
On February 8, 2002, we announced the completion of our withdrawal from the Ok Tedi copper and gold mine in Papua New Guinea and transferred our 52% interest to the PNG Sustainable Development Program Limited, an independent company, which now holds such interest for the benefit of the Western Province and the Independent State of Papua New Guinea. The other equity participants, and their interests, in this project are the Independent State of Papua New Guinea, which holds a 30% interest, and Inmet Mining Corporation, which holds an 18% interest. The interest held by the Independent State of Papua New Guinea is held in defined parcels for each of Papua New Guinea, the Western Province of Papua New Guinea and mine area landowners.
 
As part of the agreement for our withdrawal from this project, we agreed to provide financial support to PNG Sustainable Development Program, if required, for three years. The facility is for US$100 million in the first year, US$85 million in the second year and US$70 million in the third year. The facility is not cumulative, which means that any amount drawn in one year reduces the amount available in subsequent years, with repayment arrangements if such funds are used. In addition, we have agreed to pre-purchase copper concentrate up to an agreed level if Ok Tedi Mining should so request in a drought situation. The agreement also provides us with protection from legal liability arising from operations after our withdrawal.
 
Also, as part of the withdrawal process, Mine Continuation Agreements between Ok Tedi Mining and communities affected by the mine’s operations were negotiated and executed.
 
Spence
 
In January 1997, Rio Algom announced the discovery of the Spence copper deposit in northern Chile. We hold 100% of the mineral rights in approximately 26,000 hectares and surface rights in approximately 16,000 hectares.
 
We are conducting a feasibility study to develop a project for an open pit mine with facilities capable of processing approximately 50,000 tonnes per day of ore through a combination of chemical and bio-leaching processes to produce 200,000 tonnes per year of electrowon copper cathode. A feasibility study independent peer review was conducted during August 2002. This review focused on the technical core of the Spence project. A further review in early 2003 will consider all aspects of the project which are relevant to a decision to proceed to project execution.
 
North American copper assets
 
Our North American copper assets, other than Highland Valley Copper described above and the San Manuel smelting facilities located in Arizona, continue on care and maintenance while producing a minor amount of cathode copper at some locations for a transitional period while various alternatives are evaluated.
 
In June 1999, we announced the cessation of these North American copper operations would occur in the August quarter of 1999 and recorded a charge to profit of A$1,800 million (no tax effect) for asset writedowns (net of estimated

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realization values attributed to the remaining assets) and provisions. The provisions relate mainly to site remediation which will take place over a significant number of years, together with provisions for other closure costs.
 
Formal closure plans are being developed and are planned to be submitted in accordance with local regulatory timetables. We expect that the expenditure will be incurred after the closure plans have been approved. Approval is anticipated in the next 3-5 years.
 
In January 2002, we announced the closure of the San Manuel smelting facilities and we are currently in the process of closing such facilities.
 
In the year ended June 30, 2002, a further charge to profit of US$101 million was recorded, following a reassessment of the Group’s asset disposal and closure plans relating to its South West Copper business in the US (where the Group ceased operations in 1999). This comprised US$171 million for impairment provisions, principally related to the San Manuel smelter partly offset by a reduction of US$70 million in provisions relating to the expected timing of site restoration expenditure.
 
Copper-Zinc
 
Antamina
 
The Antamina copper-zinc deposit is owned by Compania Minera Antamina S.A., in which our wholly-owned subsidiary, Rio Algom Limited, owns a 33.75% interest. Noranda Inc. holds a 33.75% interest, Teck Cominco Limited holds a 22.5% interest and Mitsubishi Corporation holds the remaining 10% interest in the Antamina project. The deposit was previously owned by Empresa Minera del Centro del Peru S.A. and was auctioned by CEPRI-Centromin, an agency of the Peruvian Government. The deposit is located in the Peruvian Andes at an altitude of 4,300 meters, approximately 270 kilometers north of Lima, Peru.
 
A feasibility study based on conventional open-pit mining, milling and flotation technology was completed in March 1998 on the potential of the Antamina deposit to produce 270,000 tonnes of copper and 160,000 tonnes of zinc annually over a 20-year mine life. Total development cost, including financing costs, working capital, payments to Centromin and sunk costs, was estimated at US$2,296 million. At June 30, 2002, it was not anticipated that the total development cost would exceed this amount.
 
In September 1998, the venture participants elected to proceed with development of the project. The agreement with Centromin requires the owners to invest US$2.5 billion in the project by June 6, 2002 or pay 30% of the shortfall to Centromin in lieu of further expenditures. In June 1999, the project company signed definitive documentation with a group of lenders for US$1.32 billion of financing for the project.
 
Substantially all the assets of the project company have been pledged to the lenders as security for the loans. Rio Algom has guaranteed its 33.75% pro rata share of the loans until such time as the project achieves completion, which involves the project satisfying certain financial, legal and operating tests prior to February 29, 2004 or, under certain circumstances, by February 28, 2005. Upon completion, the loans will be non-recourse to Rio Algom.
 
The property comprising the Antamina mine area consists of mining concessions, mining claims and surface rights covering an area of approximately 14,000 hectares. The project company also owns sufficient surface rights for mining infrastructure, the port facility at Huarmey and an electrical substation located at Huallanca. In addition, the project company holds title to all easements and rights of way required for the concentrate pipeline from the mine to the project company’s port at Huarmey. All of the rights can be held indefinitely.

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The Antamina deposit is a large copper skarn with zinc, silver, molybdenum and bismuth mineralization. It has a southwest to northeast strike length of more than 2,500 meters and a width of up to 1,000 meters. The deposit sits at the bottom of a U-shaped glacial valley surrounded by limestone ridges.
 
Power to the mine site is being supplied under long-term contracts with individual power producers through a 58 kilometer, 220 kilovolt transmission line constructed by the project company which is connected to the Peru national energy grid.
 
The project company has entered into 19 long-term copper and zinc concentrate sales contracts with 16 smelting companies, which, in aggregate, cover approximately 75% of the project’s expected annual production. All but two of the contracts are for terms extending to 2012 or 2013. The balance of production is expected to be sold on an annual or spot basis.
 
The Antamina project achieved mechanical completion in May 2001. The principal project facilities include a 115-kilometer access road, a truck-shovel pit operation, a 70,000 tonnes per day concentrator, a 300-kilometer concentrate pipeline with a single stage pumping station to transport concentrates in slurry form from the mine to the de-watering, drying, and port facilities at Huarmey, and housing for operating employees and their families in the City of Huaraz, located approximately 200 kilometers by road from the mine.
 
The Antamina project achieved commercial production in October 2001. Since the start of commercial production and as of June 30, 2002, approximately 19.9 million tonnes of ore had been milled, producing more than 242,500 tonnes of payable copper and 143,260 tonnes of payable zinc.
 
Selbaie
 
The wholly-owned Selbaie open-pit mine is situated 250 kilometers north of Rouyn-Noranda in northwestern Quebec, Canada. Production commenced in 1986 at a cost of C$125 million. Selbaie produces zinc and copper concentrates by means of conventional flotation, with gold and silver as by-products in the copper concentrate. Nominal capacity at Selbaie is 11,000 tonnes per day (or 4 million tonnes per year), and mill throughput is 10,800 tonnes per day (or 3.9 million tonnes per year). Power is supplied by Hydro-Quebec. The estimated remaining mine life is approximately two years. Leases at Selbaie are renewable as and when they expire. The most recent renewal extends to 2012.
 
Silver, Lead and Zinc
 
Cannington
 
Cannington is a mining and concentrating facility 100% owned and operated by us. The Cannington silver, lead and zinc deposit is located in northwest Queensland, Australia, and is accessible by sealed road 300 kilometers southeast of Mount Isa. The Cannington deposit is entirely contained within mining leases granted to us in 1994 and which expire in 2029 and 2044. The deposit consists of a shallow, low grade northern zone and a deeper, higher grade and more extensive southern zone. The southern zone contains a broadly zoned and faulted sequence of silver-lead-zinc, zinc and silver-lead lodes.
 
We use transverse, long hole open stoping for the extraction of the main, thicker, hanging wall orebodies of the deposit and we use predominantly new Tamrock underground mining equipment. Production commenced in October 1997 at a cost of US$250 million. Underground mine production for the year ended June 30, 2002 was 2.24 million tonnes. The annual production reflected the benefits of the mine optimization and equipment purchase program which had been undertaken during the year. Work also continued during the year to improve mill throughput and increase metal recovery, and we are continuing an ongoing program of mill improvement. Nominal capacity was 1.5 million tonnes per annum at the time of commissioning. A total of 518,022 wet metric tonnes of concentrate were shipped from the Townsville port

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facility or sold within Queensland during the year ended June 30, 2002. A 19 megawatt gas-fired power station located at Cannington is operated under contract to supply power solely to Cannington.
 
Cannington’s lead concentrate production for the year ending June 30, 2003, which is expected to be 338,000 tonnes, is fully committed under long-term contracts with smelters in Australia, Korea, Japan and Europe. Approximately 90% of the zinc concentrate production, which is expected to be 159,000 tonnes, is similarly committed over the same period, with the balance being allocated to the spot market.
 
The reserve as currently stated along with non-reserve mineralization is expected to support a remaining mine life of approximately 14 years.
 
Surface exploration is continuing on a number of geophysical and geochemical anomalies in the mine lease area. During 2000, a major airborne gravity survey was completed over the mine lease and areas held by us to the south of the mine lease. A substantial surface drilling program is underway to test these anomalies.
 
Zinc-Lead
 
Pering
 
The wholly-owned Pering mine is a zinc mine producing lead as a by-product. The mine is situated in the Northwest Province of South Africa. The deposit was brought into production in 1986 at a cost of US$33.5 million. The ore minerals are sphalerite and galena, both of which are associated with zinc and lead non-sulphide minerals in varying proportions and are generally fine grained. The operation comprises conventional open-pit, shovel and truck mining. Crushing and ball mill comminution is followed by conventional flotation. After filtering and air drying, the concentrates are transported by rail and road and sold to two smelters in South Africa. Pering has a nominal production capacity of 1.2 million dry metric tonnes per year, while its current power is supplied to the mine by the national public utility company. Pering owns the mineral rights, thus it does not have mineral leases. In June 2002 we announced that we would be closing Pering when the economically mineable reserve is depleted, which it is estimated will be towards the end of 2002.
 
Uranium
 
In June 2002, we announced the sale of our Smith Ranch uranium mine, subject to approval by various regulatory authorities, to Cameco Corporation of Canada. That sale was completed in July 2002. The operation phase of the remaining parts of Rio Algom Mining (RAM), our wholly-owned subsidiary, namely the Ambrosia Lake and Lisbon facilities, have ceased and RAM is now in the reclamation and remediation phase of the mine closure program for each facility. Both facilities consisted of mining and processing of uranium to produce uranium oxide for sale to the nuclear electricity generating industry. The Ambrosia Lake facility is located approximately 32 kilometers north of Grants, New Mexico and the Lisbon facility is located approximately 48 kilometers southeast of Moab, Utah.

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Reserves and Production
 
The table below details our copper, zinc, silver and lead reserves in metric tonnes, and are presented in 100% terms as estimated at June 30, 2002.
 
Base Metals(1)(2)(3)(4)(9)

  
Proved Ore Reserve

  
Probable Ore Reserve

  
Total Ore Reserves

  
BHP Billiton Group Interest%

Deposit

 
Ore type

  
Tonnes (millions)

  
Grade

  
Tonnes (millions)

 
Grade

  
Tonnes (millions)

 
Grade

  
Copper
           
% TCu(5)
  
% SCu(5)
 
g/tAu
      
% TCu
  
% SCu
  
g/tAu
      
% TCu
  
% SCu
  
g/tAu
    
Escondida(6)
 
Sulphide
  
681
  
1.52
  
—  
 
—  
  
485
 
1.11
  
—  
  
—  
  
1,167
 
1.35
  
—  
  
—  
  
57.5
   
Low grade float
  
32
  
0.67
  
—  
 
—  
  
48
 
0.67
  
—  
  
—  
  
80
 
0.67
  
—  
  
—  
  
57.5
   
Mixed
  
18
  
1.60
  
0.48
 
—  
  
2
 
1.75
  
0.71
  
—  
  
20
 
1.62
  
0.50
  
—  
  
57.5
   
Oxide
  
149
  
—  
  
0.76
 
—  
  
44
 
—  
  
0.55
  
—  
  
193
 
—  
  
0.71
  
—  
  
57.5
Tintaya(7)
 
Sulphide
  
56
  
1.41
  
—  
 
0.25
  
3
 
1.30
  
—  
  
0.21
  
59
 
1.40
  
—  
  
0.25
  
99.9
   
Oxide
  
23
  
1.68
  
1.37
 
—  
  
11
 
1.29
  
0.96
  
—  
  
34
 
1.55
  
1.24
  
—  
  
99.9
Cerro Colorado
 
Oxide & Sulphide
  
20
  
0.71
  
0.34
 
—  
  
202
 
0.79
  
0.41
  
—  
  
222
 
0.78
  
0.40
  
—  
  
100
Alumbrera(8)
 
Sulphide
  
274
  
0.56
  
—  
 
0.65
  
38
 
0.58
  
—  
  
0.68
  
312
 
0.56
  
—  
  
0.65
  
25
             
% TCu
  
%Mo
          
% TCu
  
%Mo
           
% TCu
  
%Mo
         
Highland Valley
 
Sulphide
  
270
  
0.41
  
0.0084
 
—  
  
53
 
0.44
  
0.006
  
—  
  
323
 
0.41
  
0.008
  
—  
  
33.6
Copper –Zinc
           
% TCu
  
%Zn
 
g/tAg
      
% TCu
  
%Zn
  
g/tAg
      
% TCu
  
%Zn
  
g/tAg
    
Antamina
 
Sulphide
  
297
  
1.29
  
1.05
 
14.2
  
246
 
1.15
  
0.98
  
13.1
  
543
 
1.22
  
1.02
  
13.7
  
33.75
             
g/t Au
  
g/t Ag
 
% Cu
      
g/t Au
  
g/t Ag
  
% Cu
      
g/t Au
  
g/t Ag
  
% Cu
    
Selbaie(10)
 
Pit and Stockpile
  
6.2
  
0.24
  
22
 
0.3
  
—  
 
—  
  
—  
  
—  
  
6.2
 
0.24
  
22
  
0.3
  
100
Silver Lead Zinc
           
g/tAg
  
%Pb
 
%Zn
      
g/tAg
  
%Pb
  
%Zn
      
g/tAg
  
%Pb
  
%Zn
    
Cannington
 
Sulphide
  
7.5
  
487
  
10.96
 
5.27
  
18.7
 
469
  
10.5
  
3.51
  
26.2
 
474
  
10.63
  
4.02
  
100

(1) All reserves quoted are diluted and include mining recovery.
 

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(2)
 
Metallurgical recoveries for the operations are:
 
    
% Metallurgical Recovery

 
    
TCu

  
SCu

  
Zn

  
Pb

  
Ag

  
Au

  
Other

 
Escondida
  
87
  
85
  
—  
  
—  
  
—  
  
—  
  
—  
 
Tintaya Sulphide
  
87.2
  
—  
  
—  
  
—  
  
59.4
  
65.7
  
—  
 
Oxide
  
—  
  
78.0
  
—  
  
—  
  
—  
  
—  
  
—  
 
Cerro Colorado
  
80.0
  
—  
  
—  
  
—  
  
—  
  
—  
  
—  
 
Alumbrera
  
Variable
  
—  
  
—  
  
—  
  
—  
  
—  
  
—  
 
Highland Valley
  
90.0
  
—  
  
—  
  
—  
  
—  
  
—  
  
—  
 
Antamina
  
88.5 – 95.1
  
—  
  
0 – 86.4
  
—  
  
65 – 90
  
—  
  
Mo 0-70
  %
Selbaie
  
76.4
  
—  
  
73.5
  
—  
  
62.8
  
65.6
  
—  
 
Cannington
  
—  
  
—  
  
71.0
  
88.0
  
88.0
  
—  
  
—  
 
 
(3)
 
Approximate drill hole spacings used to classify the reserves are:
 
   
Proven Ore Reserves

 
Probable Ore Reserves

Escondida
 
61 x 61m to 153 x 153m depending on geological domain.
 
96 x 96m to 240 x 240m depending on geological domain.
Tintaya Sulphide
 
30m to 34m drill spacing, minimum 2 holes.
 
45m to 51m drill spacing
Cerro Colorado
 
35m grid spacing
 
77m to 105m grid spacing depending on domain.
Alumbrera
 
Block kriging variance used, approx. 100m spacing or less.
 
Block kriging variance used, approx. >100m spacing.
Highland Valley
 
Valley area 110m spacing
Lornex area 104m spacing
Overall 108m spacing
 
Valley area 136m spacing
Lornex area 117m spacing
Overall 127m spacing
Antamina
 
3 holes within 55m and closest within 40m
 
Variable between domains, approximately 2 to 3 holes within 55m to 100m and closest within 25 to 55m
Selbaie
 
Ore reserves surrounded by mined area.
 
Optimized pit design done, feasibility study positive.
Cannington
 
12.5m x 15m spacing or less
 
25m x 25m spacing
 
(4)
 
Third party reserve audits have not been conducted on our reserves for purposes of this annual report.
(5)
 
%TCu means percent total copper and %SCu means percent soluble copper.
(6)
 
Change in the ore reserve tonnage compared to the previous statement results from the depletion through production, changes in the geological model, more rigorous resource classification, change in recovery factors due to the implementation of new long-term metallurgical performance predicitve models and recalculation of economic pit shells and associated cut-off grades, using current prices and costs. Previously reported low grade ore is now renamed “LG Float Ore”, a mixed ore reserve is reported for the first time, reflecting inclusion of this ore stream in the mine. The “LG Float Ore” has not already been mined and stockpiled; it is still in the ground. Mixed ore initially will be processed through the existing oxide leach facilities. The ultimate pit has been obtained by the use of proven and probable reserves only, excluding a large quantity of inferred resources from the pit optimization.
(7)
 
Tintaya sulphide production was temporarily halted in November 2001 as a reaction to oversupply in the global copper market, and the oxide operation was commissioned during the year.
(8)
 
The proved reserve includes 65 million tonnes at 0.4% Cu, 0.5 g/t Au of medium grade material stockpiled for future treatment.
(9)
 
Prices for the screen – traded metals used for ore reserves estimation are based on “current economics” defined as an average of the spot price over the last three years, including copper US$0.75 per pound, zinc US$0.45 per pound, lead US$0.22 per pound, silver US$4.45 per troy ounce and gold US$276 per troy ounce.
(10)
 
The proved reserve includes 5.7 million tonnes at 0.25 g/t Au, 20.72 g/t Ag and 0.3% Cu of material stockpiled for future treatment.

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The table below sets forth the BHP Billiton Group copper, gold, silver, lead and zinc production for the three years ended June 30, 2002. Production data shown is the BHP Billiton Group share unless otherwise stated.
 
      
June 30, 2002 BHP Billiton Group interest %

  
BHP Billiton Group Share of Production(1)

         
Year ended June 30,

         
2002

  
2001

  
2000

Copper (‘000 tonnes)
                     
Escondida (Chile)
    
  57.5
  
425.6
  
500.7
  
529.9
Tintaya (Peru)(2)
    
  99.9
  
46.2
  
88.1
  
87.3
Cerro Colorado (Chile)(3)
    
100
  
130.8
  
97
  
—  
Alumbrera (Argentina)(3)
    
  25
  
48.5
  
33.9
  
—  
Highland Valley (Canada)(3)
    
  33.6
  
62.1
  
45
  
—  
Antamina (Peru)(3)
    
  33.75
  
81.9
  
—  
  
—  
Selbaie (Canada)(4)
    
100
  
10.2
  
13.4
  
13.5
Ok Tedi (Papua New Guinea)(5)
    
  —  
  
—  
  
216.1
  
185.4
North American Copper(6)
    
100
  
19.1
  
26.7
  
31.3
           
  
  
Total
         
824.3
  
1,020.9
  
847.4
           
  
  
Gold (‘000 ounces)
                     
Escondida (Chile)
    
  57.5
  
52.3
  
65.7
  
75.8
Tintaya (Peru)(2)
    
  99.9
  
22.3
  
28.7
  
39.5
Alumbrera (Argentina)(3)
    
  25
  
192.9
  
110.5
  
—  
Selbaie (Canada)(4)
    
100
  
22.2
  
40.6
  
33.6
Ok Tedi (Papua New Guinea)(5)
    
  —  
  
—  
  
521.1
  
440.2
           
  
  
Total
         
289.8
  
766.6
  
589.1
           
  
  
Silver (‘000 ounces)
                     
Cannington (Australia)(7)
    
100
  
35,964
  
29,488
  
29,664
Antamina (Peru)(3)
    
  33.75
  
1,767
  
—  
  
—  
Alumbrera (Argentina)
    
  25
  
237
  
145
  
—  
Highland Valley (Canada)
    
  33.6
  
709
  
545
  
—  
Selbaie (Canada)(4)
    
100
  
2,073
  
1,550
  
2,646
           
  
  
Total
         
40,750
  
31,729
  
32,310
           
  
  
Lead (‘000 tonnes)
                     
Cannington (Australia)(7)
    
100
  
231.8
  
210.9
  
200.5
Pering (South Africa)
    
100
  
4.3
  
6
  
6.1
           
  
  
Total
         
236.1
  
216.9
  
206.6
           
  
  
Zinc (‘000 tonnes)
                     
Cannington (Australia)(7)
    
100
  
58.9
  
76.1
  
61.8
Antamina (Peru)(3)
    
  33.75
  
48.3
  
—  
  
—  
Selbaie (Canada)(4)
    
100
  
34.2
  
43.1
  
44.6
Pering (South Africa)
    
100
  
21.1
  
20.9
  
20.7
           
  
  
Total
         
162.5
  
140.1
  
127.1
           
  
  
Uranium (‘000 pounds)
                     
Rio Algom Mining(3)
    
100
  
974
  
1,640
  
—  
           
  
    

Notes to the minerals production tables
(1)
 
Mine production figures for minerals refer to the total quantity of payable metal produced.
(2)
 
As production at Tintaya is driven by ore grade and hardness, the decrease in production from 2000 to 2001 was due to lower grades and softer ores in 2001.
(3)
 
Included from October 6, 2000, the effective date of the acquisition of Rio Algom Limited. Antamina commenced commercial production on October 1, 2001. For Rio Algom Mining, the full year’s production is included. In July 2002, we completed the sale of our Smith Ranch uranium mine and ceased operations at the remaining parts of Rio Algom Mining.
(4)
 
The decrease in production is mainly due to the decrease in head grades as the mine approaches the end of its life.
(5)
 
On February 8, 2002, we announced the completion of our withdrawal from the Ok Tedi copper and gold mine in Papua New Guinea and transferred our 52% interest to the PNG Sustainable Development Program Limited, an independent company, which now holds such interest for the benefit of the Western Province and the Independent State of Papua New Guinea.
(6)
 
The North American copper assets were placed on care and maintenance in June 1999. These assets, other than the San Manuel, Arizona mining facilities, continue on care and maintenance while producing a minor amount of copper cathode at some locations for a transitional period while various alternatives are evaluated. In January 2002, we announced the closure of the San Manuel, Arizona mining facilities and we are currently in the process of closing such facilities.
(7)
 
Cannington commenced concentrate production on October 17, 1997. The increases in production for all metals reflect de-bottlenecking improvements carried out over the period.

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Regulatory and Fiscal Terms
 
Chile
 
The Mining Code of Chile provides for two kinds of mining concessions, namely the exploration concession and the exploitation concession. A concession is defined as an immovable real right that grants the holder the exclusive authority to explore, or explore and exploit, mineral substances within the concession, and become the owner of any extracted substances, in the case of an exploitation concession. As provided by the Mining Code and the Constitution of Chile, mining concessions are established by court ruling. An exploitation concession is of indefinite duration, provided that yearly license fees are paid. An exploration concession is granted for two years and may be renewed for another two-year period, provided that at least half of the concession area is surrendered. License fees are also applicable. Mining concessions are distinct from surface rights and the legislation provides for the ability to request mining easements in the case where the owner of the mining concession is not the same owner as that of the land surface. Mining easements may be established by mutual consent of the owners or by court ruling.
 
The Decree Law 600 provides the main legal framework for foreign investment in Chile. This law covers types of capital contributions, taxes, foreign exchange, repatriation of profits and capital and administrative procedures. It is based on economic and legal principles found in the Constitution of Chile, with economic equality between foreign investors and nationals being the most important. It offers all foreign investors on a most favoured nation basis the same treatment as nationals and guarantees a stable framework by means of an investment contract between foreign investors and the State of Chile. Such contracts cannot be modified unilaterally and are not affected by the passage of new laws. Investment can be made through convertible currencies, tangible assets, technologies that can be capitalized and loans tied to foreign investment projects. Repatriation of capital and profits is guaranteed through the formal currency market.
 
Peru
 
Minerals in Peru are legally owned by the State. The exclusive right to exploit mineral deposits is granted to individuals and private sector companies through mining concessions. Three types of concessions that have been established under the General Mining Law are mining, processing and transportation concessions. Mining concessions give rights to explore and extract minerals, but are distinct from property rights over the land surface. Miners must obtain the necessary rights of way to access mineral deposits from surface rights holders. The processing concession grants the holder the exclusive right to construct and operate the facilities necessary to transform minerals into a marketable product. A transportation concession would, for example, cover the construction and operation of a concentrate pipeline. Concessions under the General Mining Law are irrevocable provided that the nominal mining good standing fees are paid.
 

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The General Mining Law provides qualifying mining companies with a stability regime covering taxation, foreign exchange and trade regulations. Companies that invest at least US$20 million in the development of an operation of not less that 5,000 tonnes per day, or expand an existing operation by such amount, can enter into a contract with the State that guarantees the stability of the tax laws for a period of 15 years. Free disposition of foreign currency and repatriation of capital and profits are also guaranteed, as is conversion of foreign exchange at the most favorable rate of exchange available at the time of conversion. We also obtain the benefit of accelerated depreciation for machinery, equipment and all other fixed assets.
 
Market Conditions
 
We produce four primary products, namely copper concentrates, copper cathodes (metal), lead concentrates and zinc concentrates. In addition, since they are contained within these concentrates, we also receive payment credits for silver and gold recovered during the smelting and refining process.
 
We sell most of our copper, lead and zinc concentrates to third party smelters. The remainder of our production is mostly sold to merchants. We sell most of our copper cathodes to rod and brass mills and casting plants. Our customers are located around the world.
 
We compete against other mining companies producing copper, lead and zinc concentrates and other producers of copper cathode. Merchants can also provide short-term competition, but will not fundamentally affect supply and demand.
 
For the 12 month period ended June 28, 2002, the London Metal Exchange cash settlement price averaged US$0.68 per pound. Since September 2000, copper prices have declined from US$0.91 per pound to US$0.60 per pound in early November 2001. In early June 2002, prices reached the highest in 12 months at US$0.76 per pound but since then they have declined by about US$0.03 per pound. Copper price weakness is attributable primarily to the world economic slow down, which has adversely affected demand.
 
Leading industry experts have calculated a surplus of over 900,000 tonnes for calendar 2001, against a deficit of about 500,000 tonnes in calendar 2000. For calendar 2002, the world is expected to remain running a surplus of about 80,000 tonnes.
 
During calendar 2001 total copper supplies reached 15.6 million tonnes up 4.5% compared to 2000. Copper demand reached 14.7 million tonnes, down 3% from the previous year.
 
Carbon Steel Materials
 
Our Carbon Steel Materials group is a leading supplier of core raw materials and services to the global steel industry. The key raw materials for steel making are iron in various forms, metallurgical coal and manganese. The map below sets forth the geographic locations of our key carbon steel materials assets.
 
LOGO
 
 
Iron Ore
 
Mount Newman Joint Venture Mines
 
We hold an 85% joint venture interest in the Mount Newman project, located in the Pilbara region of Western Australia. We manage the project. Other participants in this venture are Mitsui-Itochu Iron Pty Ltd, which holds a 10% interest, and CI Minerals Australia Pty Ltd, which holds a 5% interest in the joint venture. The joint venture was

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granted a mineral lease in April 1967 under the Iron Ore (Mount Newman) Agreement Act 1964. This lease expires in 2009 with the right for successive renewals of 21 years.
 
The venture began production in 1969 at the Mount Whaleback orebody. Today, production continues to be sourced from the major Mount Whaleback orebody and is complemented by production from other ore bodies, namely Orebody 25, 29 and 30. At current price assumptions, blend grades and production rates, reserves from Mount Whaleback are expected to support production for at least 25 years.
 
The facilities at Mount Whaleback include primary and secondary crushing plants with a nominal capacity of 35 million tonnes product per year, a heavy media beneficiation plant with a capacity of eight million tonnes per year and a train-loading facility. The mining plant and port facilities were originally built in the late 1960’s and have been maintained and enhanced many times since then. An additional primary and secondary crushing plant is present at Orebody 25 with a nominal capacity of eight million tonnes per year.
 
All of the joint venture’s production is transported 426 kilometers on its own railway to the Nelson Point shipping facility at Port Hedland, Western Australia. Facilities at the port include three car dumpers, crushing and screening plants, stockpile reclaimers and ship loading equipment. We can load vessels of 250,000 deadweight tonnes in the sheltered harbor.
 
In 1998, an under-harbor tunnel between the Nelson Point and Finucane Island facilities was commissioned by the joint venture. The tunnel allows us to transport ore to our Boodarie Iron HBI plant and to ship ore directly by using the Finucane Island ship loading facilities. The current capacity of the Port Hedland facilities is in excess of 70 million tonnes per annum. This should be increased to 81 million tonnes per annum by 2004 and is expected to exceed 90 million tonnes per annum by 2011.
 
The venture mainly sells iron ore into Asia with minor sales to Australia and Europe. During 2001 and 2002, 33% of the project’s total dispatches were to Japan. Approximately 9% of shipments from Mount Newman were to BHP Steel Limited and our hot briquetted iron operations.
 
Yandi Joint Venture Mines
 
We hold an 85% joint venture interest in the Yandi project located 92 kilometers north of Newman in the Pilbara region of Western Australia. We manage the Yandi project. The other participants in the joint venture are CI Minerals Australia Pty Ltd, which holds an 8% interest, and Mitsui Iron Ore Corporation Pty Ltd, which holds a 7% interest in the venture.
 
The Yandi mine was granted a mining lease in September 1991 under the Iron Ore (Marillana Creek) Agreement Act 1991. This lease expires in 2012 with the right to extend for a further 42 years if required.
 
Development of the orebody began in 1991. This included construction of a rail spur to the existing Newman/Hedland rail line, crushing and screening facilities with a capacity of 10 million tonnes per annum, ore stacker, mine load-out tunnel, and on-site administration infrastructure. The project’s first shipment of iron ore was in March 1992. With minor modifications undertaken in 1994, the capacity of the plant was expanded to 15 million tonnes per annum.
 
In October 1995, the joint venture expanded the capacity of the Yandi mine by 10 million tonnes per annum to 25 million tonnes per annum. The expansion involved the construction of a new mine at Central Mesa 1, processing plant, train loading facilities and an additional 10-kilometer railway spur. The joint venture began railing of the first ore from the new mine in September 1996.
 
The joint venture completed pre-stripping activities at another mine called Central Mesa 5 during 2000–2001 , with ore from this deposit now being handled through an existing processing plant and train loading facilities. Again with

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minor modifications, the total capacity at Yandi was increased to approximately 30 million tonnes per annum. At current price assumptions, blend grades and production rates, it is expected that production from the Yandi mine will continue for at least 20 years.
 
On March 3, 2002, we announced that we would deliver up to four million tonnes per annum of a new lump product which will command a premium price over the existing fines. Additional infrastructure was added to the existing Ore Handling Plant 2 to support the on-site production of fine and lump ores, without affecting the quality of the two distinct products. Commissioning took place in June 2002 and has increased overall capacity from 30 million tonnes per annum to approximately 40 million tonnes per annum, in accordance with the terms of the Iron Ore (Marillana Creek) Agreement Act 1991.
 
The Yandi mine has produced lump on a trial basis since 1999, already shipping more than two million tonnes to customers. These trials indicated that Yandi lump performance is suitable for the iron-making process and provided strong support for its permanent addition to our product range. We are currently undertaking feasibility studies on a further expansion of the Yandi mine capacity.
 
During 2001-2002, 49% of the venture’s shipments went to Japan and 26% went to Korea. The Yandi deposits are mined by an independent contract mining company on behalf of the joint venture.
 
Jimblebar Mine
 
We own 100% of the Jimblebar mine, which is located approximately 40 kilometers east of Newman and is mined by an independent contract mining company on our behalf. We were granted a mining lease at Jimblebar in October 1988 under the Iron Ore (McCamey’s Monster) Agreement Authorization Act 1972. Our lease expires in 2009 with the right of renewal for successive 21-year periods. The ore we produce at the Jimblebar mine is blended with ore produced from the Mount Newman project’s Mount Whaleback and satellite orebodies. The primary and secondary crushing plant has a nominal capacity of eight million tonnes per year. At current price assumptions, blend grades and production rates, reserves from Jimblebar are expected to support production for at least 30 years.
 
Mount Goldsworthy Joint Venture Mines
 
We hold an 85% joint venture interest in the Mount Goldsworthy Mining Associates project, located at Yarrie, 210 kilometers east of Port Hedland in the Pilbara region of Western Australia. While we manage the project, mining operations are carried out by an independent contractor on the project’s behalf. The other participants in the joint venture are CI Minerals Australia Pty Ltd, which holds an 8% interest, and Mitsui Iron Ore Corporation Pty Ltd, which holds a 7% interest in the project. Mount Goldsworthy was commissioned in 1966. The original Goldsworthy mine was closed in 1982 and mining operations ceased at Shay Gap in 1993. Since then, mining has continued from the adjacent Nimingarra mine and Yarrie, 30 kilometers to the southeast.
 
The Mount Goldsworthy mines are covered by four separate mineral leases under the Iron Ore (Mount Goldsworthy) Agreement Act 1964 and the Iron Ore (Goldsworthy – Nimingarra) Agreement Act 1972. These leases were granted between 1965 and 1974 and the last one expires in 2014. We have the right of renewal over these leases for successive 21-year periods.
 
All production from the Mount Goldsworthy mines is transported on a venture-owned railway to Port Hedland. From there, the venture ships the ore through the Finucane Island facility, which has a capacity of approximately 12 million tonnes per annum. During 2001–2002, 47% of the venture’s sales were to Japan. At current price assumptions, blend grades and production rates, reserves at the Mount Goldsworthy mines are sufficient to support mining activities until at least 2005.

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Mining Area C and Products and Capacity Expansion Projects
 
During April 2002 we announced approval for the development of a new iron ore mine at Mining Area C and an expansion of the Port Hedland port and rail facilities, both in the Pilbara region of north Western Australia.
 
Mining Area C represents the largest undeveloped Marra Mamba resource in the Pilbara region. The project involves developing mine infrastructure and a rail spur link to the existing Yandi/Newman railway. Capital costs are expected to be US$213 million for development of the new mine (our share is US$181 million). As part of the Mining Area C development we have entered into an arrangement with POSCO to develop the ‘C Deposit’ section of Mining Area C.
 
Mining Area C, which is located 37 kilometers from our existing Yandi mine, is covered by the Iron Ore (Mount Goldsworthy) Agreement Act 1964. We hold a mineral lease for Mining Area C that expires on August 4, 2007 and is renewable for periods of 21 years.
 
‘C Deposit’, the initial deposit to be mined at Mining Area C, has an estimated mine life of 17 years. Production at Mining Area C will ramp up to the installed capacity of approximately 15 million tonnes per annum, with first railing expected to begin in the fourth quarter of calendar 2003.
 
The Products and Capacity Expansion Project involves a staged development of rail and port facilities to increase system capacity in line with market forecasts. The total capital costs are expected to be US$351 million (our share is US$299 million). The project comes under the Mount Newman and the Mount Goldsworthy Agreement Acts.
 
Western Australian Iron Ore – State Government Agreements
 
On March 31, 1994, the Western Australian government agreed to delete all of our secondary processing obligations in respect of the Mount Goldsworthy, McCamey’s Monster and Marillana Creek Agreement Acts and to remove all limits on production from Mining Area C, the Yandi and Jimblebar mines in exchange for a new secondary processing obligation.
 
The new secondary processing obligation required us, alone, or in association with others, to spend A$400 million on the further processing of iron ore or on an alternative investment approved by the Minister for Resources Development. Further processing is defined to include the production of iron, steel, hot briquetted iron, iron carbide sinter or pellets.
 
The completion of the Boodarie Iron hot briquetted iron plant at Port Hedland on February 18, 1999, satisfied our obligations with the Western Australian Government on February 18, 1999.
 
Samarco
 
We own 50% of Samarco Mineração S.A., a Brazilian company. The remaining 50% interest in Samarco is held by Companhia Vale do Rio Doce (CRVD).
 
Utilizing long-term mining concessions from the Brazilian Government, Samarco operates a complex of open-pit iron ore mines called the Samarco Alegria Complex, in the state of Minas Gerais, a concentrator at a site called Germano and pelletizing operations and a port at Ponta Ubu in the state of Espirito Santo, Brazil. Mining concessions were granted to Samarco for so long as it mines the Alegria Complex. Alegria and Germano are both located approximately 100 kilometers by road from Belo Horizonte. Samarco began production at the Germano mine in 1977. Except for minor trial cargoes and pellet screenings, all sales are under multi-year contracts.

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Samarco commenced production at the Alegria Complex in 1992. The Alegria Complex has now replaced the depleted Germano mine. Ore is transported from the Alegria mine to the Germano concentrator plant via a five-kilometer conveyer belt. The concentrator plant has a capacity of 15 million tonnes per annum of iron ore concentrates. From Germano, the concentrates are transported to Ponta Ubu through a 396-kilometer slurry pipeline. At Ponta Ubu, Samarco’s two pelletizing plants have a production capacity of 12.8 million tonnes per annum of pellets and up to two million tonnes per annum of concentrate and screens product. At current price assumptions and production rates, reserves at the Alegria mine are sufficient for at approximately 20 years.
 
Coal
 
Queensland Coal
 
With Mitsubishi Development Pty. Ltd., we own six open-pit coal mines, one underground coal mine and a port in the Bowen Basin, Queensland, Australia. These mines are separated into two joint venture structures, namely the Central Queensland Coal Associates (CQCA) joint venture in which we own a 50% interest and the Gregory joint venture in which we also own a 50% interest. In addition, we operate two other Bowen Basin mines for BHP Mitsui Coal Pty Ltd in which we own an 80% interest. The majority of our production is high quality metallurgical coal used for steel making. Some energy coal is also produced from three of these mines.
 
In November 2000, we jointly acquired effective control of QCT Resources Ltd with Mitsubishi. QCT Resources owned the South Blackwater mine as well as interests in the CQCA and Gregory joint ventures. Following this acquisition, our interest in the CQCA joint venture was 68.29% and our interest in the Gregory joint venture was 80.33%. On June 28, 2001, Mitsubishi acquired shares in QCT Resources from us to move to equal ownership interests in the CQCA and Gregory joint ventures. In this transaction, we transferred 18.29% of the CQCA joint venture and 30.33% of the Gregory joint venture to Mitsubishi for the sum of A$1,005 million. After completion of this transaction, our interest in the CQCA and Gregory joint ventures is now 50%. Together with Mitsubishi, we control operations through a jointly owned entity, BM Alliance Coal Operations Pty Ltd, and jointly market the coal produced.
 
Most of the coal from the CQCA northern area mines and some coal from the Gregory mine is shipped through the ventures’ owned and operated Hay Point coal terminal. The CQCA joint venture participants and the Gregory joint venture participants have entered into a rail transport agreement with Queensland Rail providing for the transportation of coal from their mines until June 30, 2006. Hay Point port, located at Mackay, handles around 34 million tonnes per annum of coal and can accommodate bulk carriers of up to 230,000 deadweight tonnes. The port has two berths with loading capacities of 6,000 and 4,500 tonnes per hour. Most of the coal from the Blackwater mine and Gregory joint venture mines is shipped through the R.G. Tanna Coal Terminal at Gladstone, which is owned by the Gladstone Port Authority. All of the coal from the CQCA and the Gregory joint venture mines is transported to ports on railroads owned and operated by the State of Queensland.
 
The ventures sell most of their metallurgical coal to the global steel industry. In 2001–2002, approximately 47% of the metallurgical coal sales were to north Asia, 10% to south Asia, 31% to western Europe and approximately 13% elsewhere. Virtually all of the sales are under annually priced term contracts with minimal spot sales.
 
In December 2001, the Queensland Competition Authority handed down its determination on a rail undertaking which will govern the terms and conditions for access to existing monopoly controlled rail infrastructure. This undertaking includes reduced rail access charges from January 1, 2002 and will also pave the way for the introduction of third-party operators to the rail network with the resultant competition expected to provide the opportunity for future savings in rail costs. The final framework for entry of competition will necessitate the development of an access agreement and other documentation through the course of 2002.

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Central Queensland Coal Associates Joint Venture
 
Through our 50% interest in the CQCA joint venture, we operate five open-pit mines, namely Blackwater, Goonyella, Peak Downs, Saraji and Norwich Park and the Hay Point coal terminal. The adjacent South Blackwater and Blackwater mines were integrated into a single 14 million tonnes per annum operation in mid-2002. These mines are all located in Queensland, Australia.
 
Goonyella mine commenced operations in 1971 and has a capacity to produce eight million tonnes per annum. Goonyella merged operationally with the adjoining Riverside mine in 1989 and is operated as the Goonyella Riverside mine. At current price assumptions and production rates, reserves from the Goonyella mine can support operations for approximately 70 years. Peak Downs mine produced its first coal in 1972 and has a capacity to produce eight million tonnes per annum. At current price assumptions and production rates, reserves from the Peak Downs mine can also support operations for approximately 70 years.
 
Saraji mine commenced production in 1974 and has a capacity of five million tonnes per annum. At current price assumptions and production rates, reserves from the Saraji mine are expected to be depleted in approximately 20 years. First coal was mined from the Norwich Park mine in 1979 and it has a production capacity of four million tonnes per annum. At current price assumptions and production rates, reserves from the Norwich Park mine are expected to be depleted in approximately 10 years. Blackwater mine commenced production in 1967 and has a production capacity of 14 million tonnes each year. At current price assumptions and production rates, reserves from the Blackwater mine are expected to be depleted in approximately 20 years.
 
The leases for the CQCA mines, except for the Blackwater mine, generally expire in 2010, with some expiring in 2004 and 2012. Some of the venture’s leases are renewable for two periods of 21 years each. The venture’s remaining leases are renewable for such further periods as the Queensland Governor-in-Council allows in each particular case. The venture’s leases for the Blackwater mine expire in 2008, 2009, 2011 and 2021 and are renewable. Leases for the South Blackwater mine expire in 2003, 2012, 2015, 2020, 2021 and 2023 and are renewable for periods of 21 years.
 
Gregory Joint Venture
 
Through our 50% interest in the Gregory joint venture, we operate an open-pit mine called Gregory and an underground mine called Crinum.
 
The Gregory mine became operational in 1979 and has a capacity to produce 1.25 million tonnes per year. At current price assumptions and production rates, reserves from the Gregory mine are expected to be depleted in approximately 2014. Crinum mine, which commenced longwall production in 1997, has a capacity of 4.25 million tonnes per year. At current price assumptions and production rates, reserves from the Crinum mine are also expected to be depleted in approximately 2014. All coals are beneficiated, using heavy media processes, to marketable specifications.
 
The venture’s leases for the Gregory and Crinum mines expire in 2006, 2014, 2018 and 2019 and, except for one lease, are renewable for periods of 21 years.
 
BHP Mitsui Coal
 
We have an 80% interest in BHP Mitsui Coal Pty Ltd. Mitsui & Co. Ltd Group owns the remaining 20% interest in BHP Mitsui Coal. Until June 28, 2001, we managed BHP Mitsui Coal’s coal mines at Riverside and South Walker Creek, located in central Queensland, Australia. BHP Mitsui Coal’s coal mines are now managed by the BHP Billiton Mitsubishi Alliance (BMA).
 
The joint venture commissioned Riverside, an open-pit mine producing metallurgical coal, in 1983. Riverside has a production capacity of three million tonnes per year. At current price assumptions and production rates, reserves from

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Riverside are expected to be depleted in 2004. South Walker Creek became operational in 1998. It is an open-pit mining operation, producing pulverized coal injection fuel and minor quantities of by-product energy coal. South Walker Creek has a production capacity of 4.3 million tonnes per year. At current price assumptions and production rates, reserves from South Walker Creek are expected to be depleted in approximately 2016. The venture contracted substantially all of the operations at South Walker Creek to Thiess Contractors for two years from November 30, 2000. Contract renewal discussions began in mid-2002. BHP Mitsui Coal has entered into a rail transport agreement with Queensland Rail providing for the transportation of coal from the Riverside and South Walker Creek mines until June 30, 2006. The principal markets for the coal are Europe, Japan, Korea and Brazil.
 
BHP Mitsui Coal’s mining leases expire in 2003, 2005 and 2020 and are renewable for such further periods as the Queensland Governor-in-Council allows in each particular case.
 
BHP Mitsui Coal holds significant undeveloped leases in the Bowen Basin (principally, Wards Well, Poitrel, Kemmis, Nebo-West).
 
Illawarra Coal
 
We wholly-own and operate five underground coal mines, namely Appin, Tower, Cordeaux, Elouera and West Cliff, in the Illawarra region of New South Wales, Australia. These five underground coal mines produce coking coal primarily used for steel production. We produce coal under leases expiring in 2010 and 2011. These leases have renewal rights under the New South Wales Mining Act 1992. Our current production capacity is 7.9 million tonnes of clean wet coal per year.
 
Appin was founded in 1962 with longwall mining starting in 1969. Appin currently produces approximately three million tonnes of clean wet coal each year and, at current price assumptions and production rates, its reserves are expected to be depleted in approximately 2024. Tower began its operations in 1978 and currently produces approximately 1.4 million tonnes of clean wet coal per year. During February 2002, we announced the closure of the Tower mine by the end of calendar year 2002. The Cordeaux mine began its operations in 1978 and was placed under care and maintenance from April 2001.
 
Elouera officially opened in 1993 with the amalgamation of the Nebo, Kemira and Wongawilli coal mining leases. Elouera currently produces approximately 2.1 million tonnes of clean wet coal per year and, at current price assumptions and production rates, its reserves are expected to be depleted during 2004-2005. West Cliff was commissioned in 1976 and currently produces approximately 2.5 million tonnes of clean wet coal per year. At current price assumptions and production rates, reserves from West Cliff are expected to be depleted in approximately 2019.
 
The BHP Billiton Board approved construction of the new Dendrobium mine in the Illawarra in December 2001. This mine will replace the Elouera mine when its reserves are depleted. The Dendrobium mine will be a modern longwall mine producing up to 5.2 million tonnes of raw coal per annum with a capital expenditure requirement of approximately US$170 million. Reserves at the Dendrobium mine are expected to support production for at least 20 years.
 
We also own a 16.7% shareholding interest in the lease of the Port Kembla Coal Terminal Limited, which operates a coal loading facility at Port Kembla in New South Wales, Australia. We manage the terminal under contract, on behalf of the shareholding companies.
 
The majority of metallurgical coal we produce at Illawarra Coal is consumed at BHP Steel Limited’s Port Kembla steelworks, New South Wales and One Steel Limited’s steelworks at Whyalla, South Australia. We export the remainder of our production and also sell a middlings by-product into the export energy market.

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Manganese
 
Our 60% owned global manganese ore and alloy business comprises operations in South Africa and Australia and is the world’s largest integrated producer of manganese units. Our South African operations are held through Samancor Limited, while the Australian assets are owned through a local subsidiary. Anglo American Corporation holds the remaining 40% in both entities.
 
Manganese ore is produced by Hotazel Manganese Mines, located in the Kalahari Basin in South Africa, and the Groote Eylandt Mining Company (GEMCO) in Australia’s Northern Territory. Approximately 60% of the ore production is sold to alloyers across the world, while the remaining 40% is converted into alloys at two plants, namely Metalloys in Meyerton, South Africa and the Tasmanian Electro Metallurgical Co. (TEMCO) in Tasmania, Australia. Through Samancor, we also hold a 50% interest in Advalloy, a refined manganese alloy joint venture, and a 51% interest in the Manganese Metal Company. With a production capacity of 44,000 tonnes per annum through its Nelspruit and Krugersdorp facilities, the Manganese Metal Company is the world’s leading producer of electrolytic manganese metal.
 
Hotazel Manganese Mines encompasses two mines in South Africa’s Northern Cape Province. Mamatwan, first commissioned in the mid 1960s, is an open-cut, medium grade ore producer, while Wessels, commissioned in the early 1970s, is a high-grade underground mechanised mine. The mines at Hozatel have a combined annual production capacity of 3.4 million tonnes of ore, which includes 1.1 million tonnes used for sinter production. All of the mineral leases will be affected by the new South African Mining Charter. Refer “Business Description – Carbon Steel Materials – Regulatory and Fiscal Terms – South African Mining Charter”.
 
At GEMCO, a high-grade manganese ore is extracted using open-cut, strip mining methods. The mine was first commissioned in 1965 and has a current production capacity of 2.4 million tonnes per annum. All of the GEMCO mineral leases are situated on Aboriginal land held under the Aboriginal Land Rights (Northern Territory) Act 1976. The current mineral leases, other than MLN 2 and MLN 3, are renewal leases of the original mineral leases granted for a term of 21 years. GEMCO leases are subject to renegotiations in 2006 and 2010. At current price assumptions and production rates, GEMCO’s reserves are expected to be depleted in approximately 22 years.
 
Our two manganese alloy plants, Metalloys in Gauteng, South Africa and TEMCO in Tasmania, Australia have a combined annual production capacity of some 700,000 tonnes of alloy, which is exported to steelmakers across the globe.
 
Manganese production for 2001–2002 was 3.5 million tonnes of manganese ore and 619,000 tonnes of manganese alloy. Our products include manganese ore, high and medium carbon ferro manganese, silico manganese and electrolytical manganese metal. In 2001–2002, approximately 30% of sales were to Asia, 24% to Europe and 22% to Northern America. The remainder of sales were mainly to Australia, the Middle East, South Africa and South America. Prices are determined through periodic client negotiations.
 
Hot Briquetted Iron
 
Boodarie Iron Western Australia
 
Our wholly-owned Boodarie Iron plant in Western Australia undertakes secondary processing of raw iron ore, purchased from the Mount Newman joint venture. We use Finmet technology to convert iron ore into hot iron briquettes for use in electric-arc furnace and integrated steelmaking operations. The North West Shelf supplies gas to the plant under a take-or-pay contract expiring in October 2013. We mainly export our briquettes to China, South Korea and Taiwan. We also provide briquettes to BHP Steel Limited’s operations at Port Kembla.
 
Following the commencement of trials on train 1, the remaining three trains (2–4) were brought on stream progressively from April 1999. The plant encountered process difficulties during 1999–2000, its first full year of operation. Technical problems during the processing of iron ore fines caused blockages and limited production. We have written-off the full value of the plant, which is approximately A$2.5 billion before taxes, because of the capital cost overruns during

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construction and commissioning, the difficulties we faced during production ramp-up and the significant deterioration of market conditions. The final write-down occurred in March 2000.
 
From April to December 2000, we carried out process development trials, which demonstrated solutions to overcome our major technology problems. In December 2000, we approved the continued operation of the plant, subject to key performance indicators being achieved, and authorized capital expenditure of A$110 million over 18 months. In October 2001, we successfully operated all four trains simultaneously for the first time and a monthly production record of 152,565 tonnes of briquettes was set in December 2001.
 
On March 26, 2002, we announced that “force majeure” had been declared on sales contracts and some supply contracts at Boodarie Iron. The declaration followed the temporary suspension of work at the plant following a tube failure in a gas re-heating furnace. Production re-commenced in one train in July. The remaining three trains were progressively brought back on line between July and October 2002.
 
Prior to the temporary suspension of operations the performance of the Boodarie Iron plant had been within the forecast band for ramp-up.
 
HBI Venezuela
 
In 1997, we entered into a joint venture agreement with International Briquettes Holding (IBH), a subsidiary of Siderurgica Venezolana SACA, pursuant to which we became a 50% shareholder in Orinoco Iron, Operaciones RDI and Brifer.
 
Orinoco Iron constructed a new hot briquetted iron facility in Peurto Ordaz, Venezuela using Finmet technology at a cost of approximately US$915 million. The plant commenced operations in May 2000 and is continuing its production ramp-up. Production was initially constrained by commissioning difficulties and, in more recent times, a shortage of operating funds to allow multiple train operation. From July 2001 to June 2002, the facility produced 557,000 tonnes of hot briquetted iron.
 
Operaciones RDI operated a plant in Puerto Ordaz that produced hot briquetted iron using Fior based technology, but the plant ceased operations in March 2001 following significant deterioration in market conditions.
 
Brifer is a Barbados-based technology company that co-owns the Finmet technology jointly with Voest Alpine Industrieanlagenbau GmbH.
 
In March 2001, we announced we would write-off our equity investment in HBI Venezuela, cease any further investment and raise provisions to support our total financial obligations in relation to the assets following a detailed review of the future economic value of the asset. As a result of the write-off, we took an after tax charge to profit of approximately US$410 million in the quarter ending March 31, 2001.
 
In March 2001, Orinoco Iron defaulted on an interest payment and in April 2001, the lenders to Orinoco Iron accelerated the maturity of the principal and interest outstanding under the bank credit facility and made demands on the guarantors. As one of Orinoco Iron’s guarantors, we paid 50% of the amounts due. We are working with the bank syndicates, the Venezuelan government and IBH to secure a financial restructuring package to enable the operation to continue. Negotiations are ongoing.

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Reserves and Production
 
The tables below detail our iron ore, metallurgical coal and manganese reserves in metric tonnes, and are presented in 100% terms as estimated at June 30, 2002.
 
Iron Ore Reserves(9)
             
Proved Ore Reserve

    
Probable Ore Reserve

  
Total Ore Reserve

  
BHP Billiton Group Interest
(%)

             
Tonnes
(millions)

  
Grade

    
Tonnes
(millions)

  
Grade

  
Tonnes
(millions)

  
Grade

  
Deposit(1)(2)(3)(4)(5)(6)(7)

    
Ore Type(8)

       
% Fe

  
% P

       
% Fe

  
% P

     
% Fe

  
% P

  
Western Australia:
                                                            
Mt. Newman JV
    
BKM
    
863
  
62.9
  
0.07
    
250
  
62.1
  
0.07
  
1,113
  
62.7
  
0.07
  
85
      
MM
    
61
  
62.0
  
0.07
    
19
  
61.2
  
0.05
  
80
  
61.8
  
0.07
  
85
Jimblebar
    
BKM
    
203
  
62.0
  
0.06
    
66
  
61.8
  
0.09
  
269
  
62.0
  
0.07
  
100
Mt. Goldsworthy JV
                                                            
Northern Areas
    
NIM
    
24
  
63.3
  
0.05
    
5
  
60.4
  
0.04
  
28
  
62.9
  
0.05
  
85
Mining Area C
    
MM
    
189
  
62.7
  
0.06
    
19
  
62.8
  
0.06
  
209
  
62.7
  
0.06
  
85
Yandi JV
    
CID
    
546
  
58.3
  
0.04
    
141
  
58.1
  
0.04
  
687
  
58.3
  
0.04
  
85
Brazil:
                                                            
Samarco
           
292
  
47.3
  
0.04
    
182
  
45.8
  
0.04
  
474
  
46.7
  
0.04
  
50

(1)
 
The reserves presented for each joint venture include a combination of high grade (direct crusher feed) and low grade (usually requiring beneficiation). All tonnages are in wet metric tonnes except for Samarco, which is in dry metric tonnes.
(2)
 
The reserve grades listed refer to in-situ head grades, iron (Fe) and phosphorus (P). Western Australia Iron ore is marketed as lump (direct blast furnace feed) and fines (sinter plant feed). Samarco is marketed predominantly as direct reduction and blast furnace pellets.
(3)
 
Mining dilution has been taken into account in the estimation of reserves for all Western Australian iron ore operations. Mining recovery (not included in the reserve estimate) is variable from deposit to deposit but in general is around 95% except for Yandi JV, which is 100%. For Samarco the mine recovery is 96.5% (not included in the reserve estimate) of the stated diluted reserve and beneficiation plant recovery is 57 to 59%.
(4)
 
Metallurgical recovery is 100% for all of the West Australian iron ores except for the low-grade part of the Mt Newman JV (350 million tonnes) where the beneficiation plant recovery is 65%. For both Mt Newman JV and Jimblebar the recovery of screened low-grade lump is 70% and 55%, respectively.
(5)
 
Third party reserve audits have not been conducted on our reserves for purposes of this annual report.
(6)
 
Drill spacings used to classify proven and probable reserves for the West Australian Iron Ore deposits are between 100m by 50m and 200m by 100m. For Samarco the drill spacings used are 50m by 50m and 150m by 100m for proven and probable reserves, respectively.
(7)
 
The reserves presented for Mining Area C have been updated with the results from the feasibility study (February 2002). The project was approved for development on April 3, 2002.
(8)
 
Ore types are BKM – Brockman, MM – Marra Mamba, NIM – Nimingarra and CID – Channel Iron Deposit.
(9)
 
Prices to establish the economic viability of the iron ore reserves are based on current contract prices.

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Manganese Reserves
 
         
Proved Ore Reserve

  
Probable Ore Reserve

  
Total Ore Reserve

  
BHP Billiton Group Interest (%)

Deposit(1)(2)(3)(4)(5)(6)

  
Ore Type

  
Tonnes (millions)

  
Grade (% Mn)

  
(% Fe)

  
Tonnes (millions)

  
Grade (% Mn)

  
(% Fe)

  
Tonnes (millions)

  
Grade
(% Mn)

  
(% Fe)

  
South Africa
                                                      
Wessels (UG)
       
3.4
  
48.1
  
—  
  
13.9
  
48.4
  
—  
  
17.3  
  
48.3
  
—  
  
60
Mamatwan (OC)
       
23.0
  
38.0
  
4.64
  
14.3
  
37.6
  
4.65
  
37.25
  
38.0
  
4.64
  
60
Australia
                 
Yield (%)
            
Yield (%)
            
Yield (%)
    
GEMCO (OC)
  
ROM
  
43.1
  
48.3
  
42
  
42.5
  
47.9
  
42
  
85.7  
  
48.1
  
42
  
60

(1)
 
Tonnages are on a dry basis. Mining dilution and recovery is included in the reserve estimate.
(2)
 
Mining method: OC = open-cut, UG = underground
(3)
 
No third party reserve audits have been undertaken in the last three years.
(4)
 
Metallurgical recovery for Wessels, Mamatwan and GEMCO varies with required market specifications.
(5)
 
For the South African manganese deposits, underground sampling and drill spacings of between 40m and 80m are used to classify proven and probable reserves. For Gemco, drill spacings of 60m by 120m and 120m by 120m are used for proven and probable reserves, respectively.
(6)
 
Prices to establish the economic viability of the manganese ore reserves are based on current contract prices.

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Metallurgical Coal Reserves(8)
                                      
Deposit(3)(4)(5)(6)
                                      
Assigned Reserves(7)

    
Mining Method (1)

    
Mined/ Mineable Recoverable Tonnes(2) (millions)

  
Marketable(2)

  
Sulphur (%)

  
BHP Billiton Group Interest (%)

            
Tonnes (millions)

  
Calorific Value (Btu/lb)

  
Volatile Matter (%)

     
Queensland Coal reserves at operating mines:
                                      
CQCA JV:
                                      
—  Goonyella
    
OC
    
818
  
592
  
13,980
  
23.6
  
0.52
  
50
—  Peak Downs
    
OC
    
869
  
551
  
13,970
  
20.2
  
0.60
  
50
—  Saraji
    
OC
    
162
  
108
  
13,970
  
18.7
  
0.62
  
50
—  Norwich Park
    
OC
    
61
  
41
  
13,640
  
17.3
  
0.65
  
50
—  Blackwater
    
OC
    
292
  
233
  
13,400
  
25.8
  
0.50
  
50
—  South Blackwater
    
OC
    
72
  
62
  
—  
  
—  
  
—  
  
50
             
  
                   
Sub-total
           
2,274
  
1,587
                   
             
  
                   
GREGORY JV:
                                      
—  Gregory
    
OC
    
17
  
13
  
13,900
  
33.1
  
0.60
  
50
—  Crinum
    
UG
    
66
  
54
  
13,900
  
33.1
  
0.60
  
50
             
  
                   
Sub-total
           
83
  
67
                   
             
  
                   
BHP Mitsui Coal:
                                      
—  Riverside
    
OC
    
13
  
7
  
13,840
  
23.2
  
0.55
  
80
—  South Walker Ck
    
OC
    
90
  
60
  
13,950
  
13.1
  
0.45
  
80
             
  
                   
Sub-total
           
103
  
67
                   
             
  
                   
Total Queensland coal reserves at operating mines
           
2,460
  
1,721
                   
Illawarra Coal reserves at operating mines:
                                      
—  Appin
    
UG
    
85
  
70
  
14,620
  
22.7
  
0.33
  
100
—  West Cliff
    
UG
    
56
  
45
  
14,830
  
20.8
  
0.36
  
100
—  Cordeaux
    
UG
    
58
  
39
  
14,630
  
21.1
  
0.54
  
100
—  Tower
    
UG
    
47
  
38
  
14,485
  
22.1
  
0.37
  
100
—  Elouera
    
UG
    
8.5
  
6
  
14,870
  
23.9
  
0.57
  
100
—  Dendrobium
    
UG
    
92
  
64
  
14,880
  
22.9
  
0.53
  
100
             
  
                   
Total Illawarra Coal reserves at operating mines
           
346.5
  
262
                   
             
  
                   
Unassigned Reserves(7)

                                      
Queensland Coal undeveloped reserves:
                                      
CQCA JV:
                                      
—  Daunia
    
OC
    
58.3
  
47
  
13,680
  
21.5
  
0.40
  
50
BHP Mitsui Coal:
                                      
—  Poitrel/Winchester
    
OC
    
112
  
88
  
13,050
  
22.8
  
0.40
  
80
—  Nebo West
    
OC
    
21.6
  
16
  
12,480
  
7.5
  
0.65
  
80
             
  
                   
Sub-total
           
134
  
104
                   
             
  
                   
Total undeveloped reserves
           
192
  
151
                   
             
  
                   

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(1)
 
Mining method: OC = open-cut, UG = underground.
(2)
 
Recoverable coal reserve (metric tonnes) is the sum of proven and probable coal reserve estimates, which include allowances for diluting materials and for losses that occur when the coal is mined and are at the moisture content when mined. Marketable coal reserve (metric tonnes) are the tonnages of coal available, at specified moisture and quality, for sale after beneficiation of the recoverable coal reserves. Note that where the coal is not beneficiated the recoverable tonnes are the marketable tonnes.
(3)
 
Coal wash plant recovery:
 
Queensland Coal:
         
Illawarra Coal:
    
Goonyella
  
72.3%
    
Appin
  
81.8%
Peak Downs
  
63.3%
    
West Cliff
  
79.7%
Saraji
  
66.9%
    
Cordeaux
  
67.2%
Norwich Park
  
68.1%
    
Tower
  
81.3%
Blackwater
  
80.4%
    
Elouera
  
69.2%
South Blackwater
  
80.0%
    
Dendrobium
  
70.5%
Gregory
  
79.8%
           
Crinum
  
82.1%
           
Riverside
  
59.0%
           
South Walker
  
67.3%
           
 
(4)
 
Third party reserve audits have not been conducted on our reserves for purposes of this annual report.
(5)
 
Reserves are quoted on an air-dried qualities, as this is the basis they are sold on the international market. As received moisture bases range from 8% to 10%, depending on mine and product.
(6)
 
A drill spacing of 1,000m is used to classify proven reserves and 1,000m to 2,000m to classify probable reserves.
(7)
 
The unassigned, undeveloped coal reserves are based on feasibility studies.
(8)
 
Prices to establish the economic viability of the metallurgical coal reserves are based on current contract prices.

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The table below details our coking coal, iron ore, manganese and hot briquetted iron production for the years ended June 30, 2002, June 30, 2001 and June 30, 2000. Production data shown is our share unless otherwise stated.
 
    
Coal Type(1)

    
BHP Billiton Group Share of Production

    
BHP Billiton Group Interest
%

         
Year ended June 30,

    
         
2002

    
2001

    
2000

    
    
(thousands of tonnes)
Iron Ore(2)(3)
                                
Mt. Newman (Australia)
         
23,374
    
20,950
    
19,396
    
85
Jimblebar (Australia)
         
5,201
    
4,643
    
4,923
    
100
Mt. Goldsworthy (Australia)
         
6,447
    
6,601
    
6,114
    
85
Yandi (Australia)
         
27,256
    
26,156
    
22,618
    
85
Whyalla (Australia)(4)
         
—  
    
909
    
2,817
    
100
Samarco (Brazil)(5)
         
5,629
    
7,508
    
6,765
    
50
           
    
    
      
Total Iron Ore
         
67,907
    
66,767
    
62,633
      
           
    
    
      
Queensland coal production
                                
CQCA joint venture(6)
                                
Goonyella
  
Met
    
3,776
    
3,978
    
3,453
    
50
Peak Downs
  
Met
    
3,828
    
3,129
    
3,612
    
50
Saraji
  
Met
    
2,547
    
2,075
    
2,319
    
50
Norwich Park
  
Met
    
2,073
    
1,828
    
2,069
    
50
Blackwater(7)
  
Met/Th
    
7,037
    
4,328
    
3,547
    
50
           
    
    
      
Total CQCA JV
         
19,261
    
15,338
    
15,000
      
           
    
    
      
                                  
Total Gregory JV(6)(8)
         
2,440
    
3,626
    
3,249
    
50
           
    
    
      
BHP Mitsui Coal(9)
                                
Riverside
  
Met
    
3,402
    
3,272
    
3,021
    
80
South Walker Creek
  
Met/Th
    
3,341
    
3,147
    
2,533
    
80
Moura(10)
  
Met/Th
    
—  
    
—  
    
554
    
80
           
    
    
      
Total BHP Mitsui Coal
         
6,743
    
6,419
    
6,108
      
           
    
    
      
Total Queensland Coal
         
28,444
    
25,383
    
24,357
      
           
    
    
      
Illawarra coal production
                                
Illawarra Collieries
  
Met/Th
    
7,088
    
6,574
    
6,276
    
100
Manganese Ore(11)
                                
(Australia)
         
1,668
    
1,612
    
1,501
    
60
(South Africa)
         
1,867
    
2,162
    
2,099
    
60
           
    
    
      
Total Manganese Ore
         
3,535
    
3,774
    
3,600
      
           
    
    
      
Manganese Alloys(11)
                                
(Australia)
         
212
    
246
    
215
    
60
(South Africa)
         
406
    
398
    
460
    
60
           
    
    
      
Total Manganese Alloys
         
619
    
644
    
675
      
           
    
    
      
Hot Briquetted Iron
                                
HBI Western Australia(12)
         
1,047
    
848
    
420
    
100
HBI Venezuela(13)
         
—  
    
198
    
160
    
50
           
    
    
      
Total HBI
         
1,047
    
1,046
    
580
      
           
    
    
      

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(1)
 
Coal Type: Met – metallurgical, Th – thermal.
(2)
 
The figures for the two years ended June 30, 2002 for iron ore are reported in wet tonnes as opposed to historical, which is in dry tonnes. The equivalent wet tonnes for the prior years would be approximately 5% higher than the numbers shown above.
(3)
 
West Australian iron ore production was higher than 2001 due to increased product demand and success with marketing Yandi lump. Also note that the year 2002 and 2001 figures are in wet tonnes. The year 2000 13 months figures are in dry tonnes (note 3).
(4)
 
Spun-off as part of OneSteel Limited in October 2000, and therefore production can no longer be attributed to the BHP Billiton Group.
(5)
 
Production statistics relate to pellet feed and pellets. Samarco production was 25% lower than 2001 mainly due to lower market demands for pellets.
(6)
 
BHP Billiton interest is 50% from June 28, 2001 (previously CQCA joint venture 52.1% and Gregory joint venture 64.14%).
(7)
 
We acquired our share of South Blackwater in July 2001. South Blackwater is equally owned by BHP Billiton and Mitsubishi Development Pty Ltd. Effective January 2002, South Blackwater production is included in Blackwater.
(8)
 
We report the production from Gregory and Crinum on a combined basis since the beginning of 2001-2002.
(9)
 
BHP Mitsui Coal production shown on a 100% basis before 20% outside equity interest.
(10)
 
Sale of Moura Mine was effective August 20, 1999, and therefore production can no longer be attributed to the BHP Billiton Group.
(11)
 
Saleable production shown on a 100% basis. BHP Billiton interest in saleable production is 60%.
(12)
 
Boodarie Iron commenced operations in February 1999. Following rectification of initial technical difficulties production has progressively ramped up since late in 2000. In October 2001, four trains were operated simultaneously for the first time. On March 26, 2002 we announced that we had declared “force majeure” on sales contracts and some supply contracts at the plant. The declaration followed the suspension of work following a tube failure in a gas re-heating furnace. The plant was progressively brought back on line commencing on July 2002.
(13)
 
The production at HBI Venezuela commenced in May 2000. The plant experienced a range of technical, process and operational problems during startup. In March 2001, BHP Billiton Limited announced it was writing off its investment and would cease to fund the operation. The plant has continued to operate notwithstanding a severe shortage of operating funds which has limited the capacity of the plant and constrained the capability to operate multiple trains simultaneously.
 
Regulatory and Fiscal Terms
 
Western Australia
 
In Western Australia, minerals in the ground belong to the government, and rights to mine are granted by the state. The Newman, Yandi and Goldsworthy mining, rail and port operations are conducted under agreements with the State of Western Australia. The agreements have been ratified by Acts of Parliament.
 
Queensland
 
In the State of Queensland, the government owns coal until it is mined. At that point it becomes the property of the holder of the mining lease subject to payment of a royalty to the State of Queensland. Matters of ownership of the coal and payment of the royalties are regulated under the Queensland Mineral Resources Act 1989 and the regulations made under this Act. The current royalty rate is 7% of the value of the coal as determined by the Minister, which is currently calculated on the basis of FOR value plus rail freight costs (or cost of production, processing and railing to port).
 
Brazil
 
Exploitation concessions are granted by the Federal Government, through the National Mining Department. A license is valid until the depletion of the reserve, subject to mining operations being performed in accordance with an

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approved plan. Financial compensation for the Exploitation of Mineral Resources is payable at a rate of 2% of net turnover from the sale proceeds. In addition to financial compensation for the Exploitation of Mineral Resources, Samarco pays royalties for ore extracted from reserves belonging to CRVD. Samarco blends the ore from its own reserves with that from CRVD’s reserves. The amount of royalties due to CRVD has been agreed at 4% of the total amount of dividends declared by Samarco per year.
 
Generally there are no restrictions on distribution and remittance of profits abroad. Payment of dividends and remittance of dividends are not subject to withholding tax.
 
South Africa
 
A specific category of State-owned mineral rights are known as Alienated State land. Here the State has disposed of the surface rights. The owner of the surface rights obtains the exclusive right to explore and exploit any minerals under their land. Mining companies acquired these exclusive rights by way of Nomination Agreements in perpetuity. However, the Minerals Act 1991 amended applicable provisions so that a mineral lease with the State had to be entered into in respect of such rights by December 31, 1996, or within such longer period as the Minister of Minerals and Energy may determine. Within the BHP Billiton Group, it is only these so-called Section 43 rights held by Samancor Manganese that have not yet been converted to a mineral lease and negotiations with the State are continuing and may be affected by the South African mining charter.
 
South African Mining Charter
 
The Mineral and Petroleum Resources Development Act and ancillary legislation, the Empowerment Charter, for the South African mining industry targets 26% ownership of South African mining assets by historically disadvantaged South Africans within 10 years. The Charter requires that the transfer of ownership must be at fair market value and we have indicated our willingness to enter into negotiations on that basis.
 
As the Act and Charter are both unclear on what will comprise the 26% (value or tonnage or a combination of both) a scorecard is currently being developed. This guideline has not yet been finalized.
 
Our South African mining operations, principally the Ingwe energy coal mines, Samancor manganese and chrome mines and our investment in Richards Bay Minerals, represent approximately 6% of our total net operating assets.
 
We have noted the Charter’s content and generally support its broad objectives, most of which accord with long established programs underway at BHP Billiton. The effect of the Charter will ultimately depend on the specifics of the implementation process. We are already a prominent participant in the South African empowerment processes, including the Eyesizwe Mining and Kuyasa Mining transactions, corporate social investment through the BHP Billiton Development Trust, and in employment and procurement equity across our operations. We have a long history of successful major partnerships in Southern Africa, many involving the Industrial Development Corporation. We believe that our South African operations will not be adversely affected materially by this Act or Charter.
 
Market Conditions
 
Weakening steel demand in North America and Europe saw the world steel industry modestly reduce production in the first part of 2001-2002. Poor market conditions in late calendar year 2001 resulted in an increased number of US steel companies entering Chapter 11 and Chapter 7 bankruptcy. However, the latter part of 2001-2002 saw a rebuilding of inventories which, coupled with rapidly strengthening Chinese demand, saw the global steel industry increase production to record levels of around 850 million tonnes. Production increases were led by China at production of 160 million tonnes and Japan at production of 104 million tonnes, with an increase in Japanese exports to China driving the higher production figures.
 
In March 2002, the United States imposed Section 201 tariffs on imported steel products ranging up to 30% for flat products, as well as quotas for imported slab. Retaliatory and World Trade Organization appeals by a number of affected countries have been delayed by subsequent exemptions for a number of steel products, however it is too early to predict what the final result will be. The initial impact saw steel prices rising by almost 60% for flat products on the back of inventory rebuilding and reduced imports. Strong steel prices in the United States had a flow-on effect to other regions with general steel prices rising during the second half of 2001-2002.
 
Global pig iron production the financial year followed the trends in crude steel production and reached around 579 million tonnes during 2001–2002, a figure above the level produced in 2000. This high production drove strong demand for iron ores and coking coals. Strong domestic demand for coke in China to meet strengthening pig iron production of 156 million tonnes saw Chinese merchant coke redirected to meet internal demand. This resulted in lower exports in early calendar year 2002, tightening of the market and an increase in price of almost US$20 to over US$80 per tonne. Strong pig iron production and the restart of some facilities in the United States has further tightened demand for merchant coke and assisted in maintaining a strong coking coal market.
 
High pig iron production in nearly all key Asian economies during 2001-2002, coupled with further substitution of domestic for imported ores in China, resulted in seaborne iron ore shipments of approximately 454 million tonnes. However, pellet demand fell sharply during early part of the year as steelmakers shifted to cheaper raw materials to reduce production costs. Lump demand was also weaker during the year driven by the switch to cheaper materials. In contrast, the fines market was very strong, driven by higher imports from China on the back of strong pig iron production. The

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outlook for fines supply remains tight as Chinese demand is forecast to increase further in 2002-2003. Recent price re-adjustments for lump ore will likely result in a modest demand increase in the near term.
 
In coking coal, mine closures in Canada and the United States, coupled with strong demand saw the market remain tight. In 2002 this led to price increases for premium coking coal to a range of US$48.00 – US$50.00 per tonne across all markets (FOB). Prices for semi-soft and PCI coals decreased to a range of US$32.00 – US$33.00 per tonne (FOB), with the lower prices largely reflecting pressure from Chinese supply and a weaker thermal coal market. With little new coking coal capacity coming on stream in the short-term and coking coal demand expected to remain steady in the short to near term, the outlook is for a continuation of strong market conditions.
 
The strengthening steel market in the second half of 2002 saw scrap and metallics prices pick up from low levels seen earlier. Both North American and Asian prices for HBI have risen. Chinese steel growth also resulted in higher HBI and scrap imports, with China now representing our main market for Boodarie Iron. The 2002-2003 market outlook is for continued growth in Chinese demand for scrap and metallics, including HBI. Pricing will be dependent on the extent to which competing Japanese merchant pig iron is available. Continued global economic and steel growth should see an increase in scrap and HBI demand.
 
The stronger steel industry also resulted in an increase in demand for ferroalloys. Production problems late in the year saw HCFeMn experience a sustained price recovery with corresponding effects for manganese ore. The alloy market is linked to steel production and dependent on the continued production upturn in the global steel industry.
 
Stainless Steel Materials
 
Our Stainless Steel Materials group is the western world’s fourth-largest nickel producer and the second-largest producer of ferrochrome. The map below sets forth the geographic locations of Stainless Steel Materials’ key assets.
 
LOGO
 
Nickel
 
Cerro Matoso
 
We own 99.82% of the shares in Cerro Matoso S.A., a company incorporated under the laws of Colombia. Current and former employees hold the remaining interest in Cerro Matoso.
 
Through Cerro Matoso, we own an integrated open-pit mine and ferronickel smelter. The mine is located in northern Colombia, 400 kilometers south of the Caribbean port of Cartagena. We access the site from a national highway. The orebody is geologically similar to other lateritic nickel deposits but has the advantage of a relatively high nickel grade and a concentrated mining area, which lends itself to simple and efficient open pit mining. The smelter at the mine produces ferronickel granules with an average chemical composition of approximately 40% nickel and the balance iron. Low levels of carbon, phosphorous and sulphur make it a preferred product for stainless steel producers.
 
Cerro Matoso commenced production at the mine in 1982 when Royal Dutch Shell was the 47% owner of the mine and the Colombian government held the remaining interest. In 1996, the Colombian government elected to sell its interest in the mine to us in return for amendments to the mining rights relating to the mine. In 1999, we increased our interest in Cerro Matoso to 99.82%.
 
Cerro Matoso operates under Colombian government mining concessions expiring in 2012 and an Aporte Minero, which is a contractual mining right granted from the Colombian government. The Aporte Minero extends Cerro Matoso’s mining rights through to 2026 and provides Cerro Matoso with an option to extend the mining rights to 2041. Upon expiry of the mining concessions, Cerro Matoso’s mining assets revert to the Colombian government and the Aporte Minero

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provides Cerro Matoso an exclusive lease of these assets and entitlement to all production until 2026 or 2041 if Cerro Matoso exercises its option.
 
Our processing operations require a plant feed meeting rigorous chemical specifications for efficient production of ferronickel. We separately mix, grade, crush and stockpile ore from multiple mine faces to achieve the required blend. After blending, we feed the ore into a rotary drier and then transfer the ore to a rotary kiln or calciner for pre-reduction before smelting it in an electric furnace. Following smelting, we refine the molten ferronickel in a ladle refining system and cast it into ferronickel granules for sale. We transport ferronickel product to the Port of Cartagena through a local contractor. The state of Colombia provides gas and electricity to the site.
 
In January 2001, Cerro Matoso commissioned a second production line at the mine at a cost of US$298 million. The development was a duplication of the existing ferronickel plant. We are planning to increase total nickel production at the mine from approximately 28,000 tonnes per year to 55,000 tonnes per year following the expected ramp up in production through mid-2003. Our currently planned project life is through to 2021.
 
QNI
 
Through QNI Pty Ltd, we own and operate the Yabulu nickel and cobalt refinery located 25 kilometers northwest of Townsville, Queensland, Australia.
 
We access the Yabulu refinery from a public highway and the Queensland Rail railway network. At the railway’s connection in the Port of Townsville, we own and operate an ore receival berth and unloading, storage and rail transfer system. We transport production from Yabulu by road to the Port of Townsville and other Australian ports for overseas shipment. We purchase approximately 3.5 million wet tonnes per year of nickel and cobalt bearing laterite ore from third party mining enterprises in New Caledonia, Indonesia and the Philippines under short and medium term supply agreements. The ore price is linked to the nickel and cobalt metal content and the then-current metal prices. We process lateritic nickel ore using the reduction roast ammonia-ammonium carbonate leaching process in combination with a solvent extraction process that was developed and patented at the refinery. Our cobalt purification plant produces a high purity cobalt oxide hydroxide product. Since the mid-1990’s, the plant and port ore handling facility has undergone substantial refurbishment, which has resulted in improved performance, reliability and efficiency.
 
The Yabulu refinery is a major laterite nickel refinery with an annual production capacity of approximately 29,000 tonnes of nickel and 2,000 tonnes of cobalt. The actual production for 2001–2002 was 28,451 tonnes of nickel and 1,696 tonnes of cobalt.
 
We sell the nickel products, with varying metal content in the range 78% to 99.9% nickel. We sell the cobalt in oxide-hydroxide form.
 
We source power and steam used in production principally from an on-site, coal-fired power station with coal supplied under long-term contract with MIM Holdings from the Collinsville mine near Mackay, Queensland. We obtain additional electrical power under a long-term electricity supply agreement with Ergon Energy.
 
We are currently conducting a feasibility study for the expansion of the refinery in conjunction with the Ravensthorpe Project described below. We submitted an Environment Impact Assessment report to the Queensland Government Environmental Protection Agency in December 2001. The expansion would more than double the capacity of the existing solvent extraction and cobalt processing facilities.
 
Exploration and Development
 
Through QNI, we own the Ravensthorpe nickel project in Western Australia on which we hold mining tenements expiring in 2019, with an option to extend to 2040. The Ravensthorpe project comprises a proposed laterite nickel mine

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and acid leaching plant and an associated expansion at Yabulu to refine intermediate product produced. We are undertaking a feasibility study for Ravensthorpe. We estimate that the project, which we expect would have a combined cost, including the Yabulu refinery extension, of more than US$500 million, would take approximately two years to construct, would provide approximately 40,000 tonnes per annum of nickel in a concentrated intermediate product for refining at an expanded Yabulu refinery. If implemented, we anticipate that the project would result in a reduction in Yabulu’s unit costs.
 
We are continuing other worldwide exploration in both laterite and sulphide nickel regimes. At the San Felipe project in Cuba, we hold a 75% managing interest in an International Economic Association Contract, with the Cuban government entity Geominera SA holding the remaining 25% interest. A concept study is being prepared following geological and initial metallurgical testwork, with pressure leaching indicating good recoveries. We hold a 75% managing interest in the Gag Island Project in Indonesia with Aneka Tambang holding the remaining 25% interest. In February 2002, we suspended the Gag Island Project Contract of Work for 12 months following the withdrawal of Falconbridge from involvement in the project due to failure to resolve a forestry issue with the Indonesian Government. In Canada, our joint venture with Virginia Gold Mines Inc. has commenced drilling in the Lac Gayot project in Quebec. The initial drill results confirmed the presence of potentially significant nickel mineralization, which we will further investigate during the next field season.
 
Chrome
 
Samancor, in which we have a 60% interest and Anglo American has the remaining 40% interest, has grown through acquisitions and progressive expansion. In the 1990’s, Samancor established a number of joint ventures with its customers to strengthen its marketing activities. Samancor holds a 12% interest in the Middelburg, South Africa based Columbus Stainless Steel (Pty) Limited. Acerinox SA, Highveld Steel and Vanadium Corporation Ltd and Industrial Development Corporation of South Africa Ltd hold the remaining interest in the company. Samancor’s original interest in the Columbus asset was reduced from 33.3% to 12% in January 2002, when certain of the assets of the joint venture were sold to the newly formed company in which Acerinox SA obtained the majority share (64%). The alloy plants contain a total of 14 submerged arc electric furnaces, one DC plasma furnace and two pelletising plants.
 
Samancor operates eight chrome ore mines, comprising two open pit and six underground operations, as well as three fully integrated chrome alloy plants located in the Mpumalanga and Northwest Provinces of South Africa. The mines and alloy plants are all linked to South Africa’s rail and road networks, including access to South Africa’s shipping ports of Durban and Richard’s Bay. Samancor also has a 50% share in a joint venture with Xtrata Ltd, comprising two electric furnaces operated by Xtrata Ltd at its WonderKop Site, North West Province. Power is supplied to the Samancor operations from the South African national grid under contract with Eskom, the local power utility.
 
Samancor’s chromite operations are organized under two mining centers: Eastern Chrome Mines based at Steelpoort and Western Chrome Mines at Mooinooi.
 
Eastern Chrome has four mines operating currently: Steelpoort, which was commissioned in 1929 and has a nominal capacity of 280,000 saleable tonnes per year; Lannex, which was commissioned in 1956 and has a nominal capacity of 400,000 saleable tonnes per year; Lannex Open Cast, which was commissioned in 2002 and has a nominal capacity of 120,000 saleable tonnes per year; and Tweefontein, which was commissioned in 1932 and has a nominal capacity of 600,000 saleable tonnes per year. Reserves are expected to be depleted from the Eastern Chrome mines in 2015.
 
Western Chrome has four mines operating currently: Millsell, which was commissioned in 1957 and has a nominal capacity of 428,000 saleable tonnes per year; Elansdrift, which was commissioned in 1937 and has a nominal capacity of 428,000 saleable tonnes per year; Moinooi, which was commissioned in 1976 and has a capacity of 700,000 saleable tonnes per year; and Buffelsfontein East, which has a nominal capacity of 240,000 saleable tonnes per year. Reserves are expected to be depleted from the Western Chrome mines in 2013.

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Mining methods vary across the group in line with the nature of the orebodies mined. Underground operations utilize both scraper and load-haul-dump mining techniques. Surface mining employs loaders and truck haulage. Ore processing comprises beneficiation using screening and gravity separation equipment producing varying specification concentrates. Samancor sells some of the ores and concentrates, but it converts the majority of the concentrates into ferrochrome using submerged and direct-current arc furnace technologies.
 
Samancor produces three grades of ferrochrome called charge chrome, medium-carbon ferrochrome and low-carbon ferrochrome. Each of these products is used in different areas of the stainless steel and specialty steel smelting process.
 
Samancor’s production has remained constrained by market demand for its ferrochrome products. This constraint has been partially overcome by the strategic alliances that Samancor has established with its major customers, including through its production joint ventures.
 
Samancor has perpetual ownership over its extensive mineral lease holdings. However, under proposed South African legislation, Samancor may be required to divest undeveloped lease holdings and to convert its existing mineral leases into “New Order Leases” as prescribed by the recently published mining charter. Refer “Business Description – Carbon Steel Materials – Regulatory and Fiscal Terms – South African Mining Charter”.

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Reserves and Production
 
The table below details our stainless steel materials ore reserves in metric tonnes, and are presented in 100% terms as estimated at June 30, 2002.
 
Deposit(1)(3)(4)(5)(6)
  
Proved Ore Reserve

  
Probable Ore Reserve

  
Total Ore Reserves

    
BHP Billiton Group Interest (%)

  
Tonnes (millions)

  
Grade

  
Tonnes (millions)

  
Grade

  
Tonnes (millions)

  
Grade

    
                
% Ni
       
% Ni
       
% Ni
      
Nickel
                                           
Colombia
    
Cerro Matoso(2)
  
34.3
  
2.01
  
12.6
  
1.7
  
46.9
  
1.93
    
99.8
Chrome
                                           
South Africa operating mines
       
% Cr2O3