10 March 2011 Asia Pacific/Australia Equity Research Diversified Metals & Mining

BHP Billiton Limited (BHP.AX / BHP AU)

Rating NEUTRAL* Price (09 Mar 11, A$) 46.00 Target price (A$) (from 52.50) 55.00 Market cap. (A$mn) 254,612.82 Yr avg. mthly trading (US$mn) 12,691 Last month's trading (US$mn) 14,273 Projected return: Capital gain (%) 19.6 Gross yield (%) 3.2 Total return (%) 22.8 52-week price range (A$) 47.36 - 36.28
* Stock ratings are relative to the relevant country benchmark. Target price is for 12 months.

INCREASE TARGET PRICE

Filling the capex pipeline

BHP recently guided to US$80bn in growth capex between now and FY15. In this note we have modelled the growth projects we expect to be approved in the next 1224 months to identify the value add. In line with BHPs long-term basin-growth strategy a number of the projects we have assessed have a modest NPV impact at initial production rates but open up long-term brownfield expansion options (that are potentially very high returning). Target prices increased to A$55/GB31.5 (from A$52.5/GB30) in line with higher valuation. We retain a NEUTRAL investment rating. The growth projects we now incorporate have added 7% or ~US$17bn to our valuation. The contributions to the net increase in valuation are: Met coal projects: US$5bn, Escondida OPG1 and OGP2 US$4bn, Jansen Potash US$1.7bn, Olympic Dam Expansion Stage 1: US$4bn. Minor forecast changes: We have added the shale gas acquisition (nil EPS accretion at initial production rates), increased capex spend in FY12 and FY13 capex to US$20bn and US$19bn respectively (from US$16bn and US$12bn). Changes to earnings changes are minor: -1% in FY11, -1% in FY12 and -0.5% in FY13. The first production from the new growth projects we have modelled is FY13 with the bulk of new production commencing in FY16 and FY17. Investment case is attractive: BHPB trades on attractive forward multiples, is investing significantly in its future production growth and is actively returning cash to shareholders. Our target price of A$55/GB31.5 share imply attractive shareholder returns. Catalysts: A series of significant capex announcements over next 1224 months. Other: A$5bn Ltd off-market buyback pricing period ends 8-April. Valuation: We set our target price of A$55/GB31.5 in line with our discounted cash flow (DCF) sum-of-parts (SOP) valuation.

Research Analysts Paul McTaggart 61 2 8205 4698 paul.mctaggart@credit-suisse.com James Gurry 61 2 8205 4779 james.gurry@credit-suisse.com Michael Shillaker 44 20 7888 1344 michael.shillaker@credit-suisse.com Liam Fitzpatrick 44 20 7883 8350 liam.fitzpatrick@credit-suisse.com Specialist sales: Julian McCormack +612 8205 4419 julian.mccormack@credit-suisse.com Specialist sales: James McGeoch +44 20 7888 0751 james.mcgeoch@credit-suisse.com

Share price performance

Price (LHS) 60 40 20 Mar-09 Jul-09 Nov-09 Mar-10 Jul-10 Nov-10 Rebased Rel (RHS) 120 100 80

The price relative chart measures performance against the Australia S&P/ASX 200 index which closed at 4767.8 on 09/03/11 On 09/03/11 the spot exchange rate was A$.99/US$1

Performance Over Absolute (%) Relative (%)

1M -1.6 1.2

3M 1.2 0.7

12M 6.0 7.1

Financial and valuation metrics Year Revenue (US$mn) EBITDA (US$mn) EBIT (US$mn) Net income (US$mn) EPS (CS adj.) (USc) Change from previous EPS (%) Consensus EPS (USc) EPS growth (%) P/E (x) Dividend (USc) Dividend yield (%) P/B (x) Net debt/equity (%)

06/10A 48,721.0 24,513.0 19,719.0 12,469.0 222.86 n.a. n.a. 16.4 20.9 86.00 1.8 5.4 6.7

06/11E 67,119.5 39,185.4 34,502.0 23,798.7 428.54 -0.72 406.10 92.3 10.9 96.00 2.1 4.1 1.5

06/12E 74,271.8 47,910.8 42,699.2 29,036.9 539.15 -0.98 477.40 25.8 8.7 107.50 2.3 3.2 net cash

06/13E 68,273.3 42,444.9 36,609.2 24,959.1 472.82 -0.50 475.10 -12.3 9.9 112.88 2.4 2.5 net cash

Source: Company data, ASX, Credit Suisse estimates, * Adj. for goodwill, notional interest and unusual items. Relative P/E against ASX/S&P200 based on pre GW in AUD. Company PE calculation is based on displayed EPS Currency

DISCLOSURE APPENDIX CONTAINS ANALYST CERTIFICATIONS AND THE STATUS OF NON-US ANALYSTS. U.S. Disclosure: Credit Suisse does and seeks to do business with companies covered in its research reports. As a result, investors should be aware that the Firm may have a conflict of interest that could affect the objectivity of this report. Investors should consider this report as only a single factor in making their investment decision.

10 March 2011

Figure 1: Financial Summary

In USDmn, unless otherwise stated

Year ending 30 Jun 2009A

50,800 22,085 3,871 18,214 543 12,826 6,488 11,183 461 10,722 -4,845 5,877

Share Price: 46.00 Financial Summary

mn mn c % x x % c % % c x x %

Profit & Loss

Sales revenue EBITDA Depr. & Amort. Goodwill amort. EBIT Associates Net interest Reported PBT Income tax Profit after tax Minorities Preferred dividends Normalized NPAT Adjustments Reported NPAT EP_NPAT

2010A
48,721 24,513 4,794 19,719 459 19,513 6,504 12,756 287 12,469 253 12,722

2011F
67,119 39,185 4,683 34,502 528 33,798 9,508 24,466 667 23,799 -176 23,623

2012F

2013F

2009A
5,877 10,722 192 24.2

2010A
12,722 12,469 223 16.4 20.8 1.3 38.6 86.0 1.9 100.0 320 14.5 9.9 6.2

2011F
23,623 23,799 429 92.3 10.8 0.1 22.4 96.0 2.1 100.0 559 8.3 6.2 11.3

2012F
29,037 29,037 539 25.8 8.6 0.3 19.9 107.5 2.3 100.0 655 7.1 5.1 13.1

2013F
24,959 24,959 473 -12.3 9.8 nm 23.9 112.9 2.4 100.0 577 8.1 5.7 11.3

74,272 68,273 c_I_REPReported NPAT 47,911 42,445 c_I_NPACredit Suisse NPAT 5,212 5,836 c_EPS* Credit Suisse EPS EPS growth 42,699 36,609 c_PE P/E 0 P/Earnings Growth 55 46 42,644 36,655 (c_DPS/Dividend payout ratio 12,793 10,997 c_DPS* DPS Yield 29,851 25,659 c_DPS/S 814 700 c_FRANFranking 29,037 24,959 c_CPS* Operating CFPS 0 0 SHARE_ P/OCF 29,037 24,959 EV/EBITEV/EBITDA c_FCF_ FCF yield

42.8 82.0 1.8 100.0 337 13.8 11.0 6.5

Balance Sheet
Cash & equivalents Inventories Receivables Other current assets Current assets Property, plant & equip. Intangibles Other non-current assets Non-current assets Total assets Payables Interest bearing debt Other liabilities Total liabilities Net assets Ordinary equity Minority interests Preferred capital Total shareholder funds 10,833 4,821 5,153 1,679 22,486 49,032 1,059 6,193 56,284 78,770 5,619 16,419 16,021 38,059 40,711 39,954 757 40,711 12,456 5,334 6,543 801 25,134 55,576 687 7,455 63,718 88,852 6,467 15,765 17,292 39,524 49,328 48,525 803 49,328 13,250 5,620 7,876 926 27,672 69,493 778 7,742 78,013 105,686 6,743 14,196 21,444 42,383 63,302 62,134 1,168 63,302 11,842 5,620 7,876 926 26,264 83,921 778 7,742 92,441 118,704 6,743 11,696 21,662 40,101 78,603 76,821 1,782 78,603 15,256 5,620 7,876 926 29,678 97,162 778 7,742 105,682 135,361 6,743 9,696 20,618 37,057 98,304 96,022 2,282 98,304

Financial Ratios
Profitability Ratios EBITDA EBITDA margin EBIT_M EBIT margin c_ROE* Return on equity c_ROA* Return on assets c_ROIC ROIC c_TAX_ Effective tax rate Balance Sheet Ratios c_NET_ Net debt (c_NET_Net debt/Equity (c_NET_Net debt/Capital I_EBIT/cInterest cover (c_C_CA Capex/Sales (c_C_CA Capex/Depn ALT(c_CWorking capital/Sales Share Items c_EPS_ Equiv. FPO (period avg.) % % % % % % 43.5 35.9 26.8 13.6 26.0 50.6 50.3 40.5 25.7 14.0 25.7 33.3 58.4 51.4 38.3 22.5 40.2 28.1 64.5 57.5 37.8 24.5 39.7 30.0 62.2 53.6 26.0 18.4 28.8 30.0

mn % % x % % %

5,586 13.7 12.1 33.5 18.4 241.2 1.4

3,309 6.7 6.3 43.0 20.0 205.2 -2.2

946 1.5 1.5 65.3 18.6 266.5 -2.0

-146 -0.2 -0.2 778.0 25.2 358.4 0.0

-5,560 -5.7 -6.0 -791.1 26.4 309.4 0.0

mn

5,598.0

5,595.0

5,553.5

5,385.6

5,278.8

Cashflow
EBIT Net interest Depr & Amort Tax paid Working capital Other Operating cashflow Capex Acquisitions & Invest Asset sale proceeds Other Investing cashflow Dividends paid Equity raised Net borrowings Other Financing cashflow Total cashflow Adjustments Net Change in Cash 18,214 -314 3,871 -5,129 726 1,495 18,863 -9,336 -122 17 -1,610 -11,051 -4,563 29 3,929 -575 -1,180 6,632 26 6,658 19,719 -421 4,794 -4,379 -1,055 -738 17,920 -9,766 -376 0 -873 -11,015 -4,618 0 -485 -204 -5,307 1,598 26 1,624 34,502 0 4,683 -5,234 -1,343 -1,552 31,056 -12,482 0 0 -5,340 -17,822 -5,063 -4,736 -1,998 -475 -12,272 963 3 966 42,699 0 5,212 -11,318 0 -1,313 35,280 -18,679 0 0 -960 -19,639 -5,519 -8,831 -2,500 -200 -17,050 -1,409 0 -1,409 36,609 0 5,836 -10,960 0 -1,035 30,450 -18,056 0 0 -1,021 -19,077 -5,758 0 -2,000 -200 -7,958 3,415 0 3,415

Share Price Performance

70.00 60.00 50.00 40.00 30.00 20.00 10.00 0.00 Feb-10

52wk range: 36.28-47.36

May-10 BHP.AX

Aug-10 XJO

Nov-10 XSR

Feb-11

Source: Reuters

Share price as of 10-Mar-11, 06:05

Source: Company data, Credit Suisse estimates

BHP Billiton Limited (BHP.AX / BHP AU)

10 March 2011

Capex pipeline
BHP Billiton is guiding to US$80bn of capex over the five years to end FY15. We have reviewed the project outlook to estimate where the US$80bn shall be spent and we can account for $68billion.
Figure 2: BHP Billiton capex guidance FY11-FY15

Source: Company releases

The largest valuation additions from the growth projects we have now added to our forecasts are in base metals and met coal. Our new BHP valuation is US$48.5/share.
Figure 3: BHP valuation
Valuation summary Petroleum Aluminium Base Metals Iron ore Manganese Metallurgical Coal Diamonds & Specialty Energy Coal Stainless Steel Materials Group and unallocated items Total Net debt (cash) BHP DCF valuation Source: Credit Suisse estimates Starting valuation NPV (US$'m) 53,567 7,445 50,728 62,716 6,332 23,033 5,584 19,915 7,860 -440 236,739 -200 236,939 10.3 1.4 9.7 12.0 1.2 4.4 1.1 3.8 1.5 -0.1 45.4 45.4 Growth project additions ~1,000 ~8,000 ~1,100 ~5,000 ~1,700 16,800 16,800 0.19 1.53 0.21 0.96 0.33 3.15 3.15 New valuation US$/share 10.4 1.4 11.2 12.2 1.2 5.4 1.4 3.8 1.5 -0.1 48.5 -0.04 48.6 54,567 7,445 58,728 63,816 6,332 28,033 7,284 19,915 7,860 -440 253,539 -200 253,739 US$/share NPV (US$'m) US$/share NPV (US$'m)

BHP Billiton Limited (BHP.AX / BHP AU)

10 March 2011

The law of diminishing returns

Before considering each growth option and what it might add to our BHP valuation we should take a check of our starting position and ponder what sort of project BHP needs to invest in to make a meaningful difference to its current valuation. Our starting base before adding any of the expected growth projects is an equity valuation of US$236bn or US$46 per share. To add 5% to our valuation BHP needs to invest in projects that we assess to have a NPV of ~US$12bn or greater (remembering this is after development capex).
Figure 4: NPV of value adding projects needed to materially increase BHP valuation
Incremental value to be added from a new project 5% 7.50% 10% 15% NPV needed from project US$mn US$/share BHP valuation US$mn 236,054 247,857 254,643 262,699 280,018 US$/share 45.1 47.4 48.7 50.2 53.5

11,803 18,589 26,645 43,964

2.3 3.6 5.1 8.4

Source: Credit Suisse estimates

Projects that generate an NPV of US$12bn require a significant capital investment and a resource body that would support such a large NPV is by definition large and rare. Lets consider a generic commodity project taking iron ore as an example:
Figure 5: Generic project returns (using greenfield iron ore Australia as an example)
Input: Total capex (US$mn) Capex per tonne installed capacity (US$/t) Installed capacity (mtpa) Life of project (years) Resource size (mt) Operating cost per unit of production (US$/t): Royalty rate (% on revenue) Long term iron ore price (US$/t FOB Australia) Company income tax rate (allows for future increases) Source: Company data, Credit Suisse estimates 7,500 150 50 30 1,500 30.0 5.7% 70.0 33.0% Payback period (years) 7 NPV at 5.0% disc rate US$mn NPV at 7.5% disc rate US$mn NPV at 10.0% disc rate US$mn NPV at 12.0% disc rate US$mn 7,779 3,887 1,519 278 Output: IRR: 11.8%

This 50mtpa iron ore project would have an NPV of only US$1.5bn at a 10% discount rate. To generate a US$12bn NPV and increase the BHP valuation by 5% the project metrics (for a 30 year life) would have to increase significantly to 150mtpa of iron ore output, have a 4.5bn tonne resource and development capex of US$22bn. Thats the problem for BHP investors any project that meaningfully moves the dial needs to be very large indeed !

BHP Billiton Limited (BHP.AX / BHP AU)

10 March 2011

BHPs imminent growth options

We are all familiar with BHPs bubble chart of growth options. With high commodity prices and surplus capital we expect BHP to be giving final approval to a number of these in the next 1224 months.
Figure 6: BHPB Billiton future growth options

Source: BHP Billiton presentation 16-Feb-2011

The projects we expect to be approved are: HPX3 Queensland Coal Port expansion (Met coal); Daunia (Met coal); Caval Ridge (Met coal); RGP6 (and scope change to RGP5) and first stages for Port Headland Outer Harbour (Iron ore Western Australia); Samarco P4P Expansion project (Iron Ore Brazil) Escondida high grade ore access and Organic Growth Project 1 (Base metals); Olympic Dam open pit pre-strip and first production (Base metals); Jansen Potash Project (Diamonds and Specialty Products).

BHP Billiton Limited (BHP.AX / BHP AU)

10 March 2011

Figure 7: Growth project summary:

Division Project BHP interest 50% Capex (US$mn) Total BHP 100% share 750 2,250 Production at 100% level 4mtpa of premium hard coking coal 5.5mtpa of premium hard coking coal Expected construction start (calendar year) 2H 2011 Prod start 2H 2012 Incremental value added to DCF ~US$1.5bn

Met coal

Daunia

Caval Ridge

50%

4,500

2,250

1H 2012. Dredging already underway. General construction from 2H 2011

2H 2013

~US$3.5bn Project facilitates Daunia, Caval Ridge and future met coal expansions. Minimal considered optimisation project.

Hay Point

50%

1,000

500

11mtpa of incremental port capacity Increase total concentrator capacity to 100mtpa from 82mtpa. Increase total concentrator capacity to 150mtpa from 100mtpa. 20mtpa ore (phase 2 40mtpa, phase 3 60mtpa) Adding 35mtpa for total WA capacity 240mtpa 30.5mtpa pellets

2013

Base metals

Escondida OGP1 57.5%

1,500

863

1H 2012

1H 2015

Escondida OGP2 57.5%

4,000

2,300

1H 2013 Pre strip to begin: 2H 2011. Ore production from: 2H 2012 2H 2011

2H 2016

~US$4bn

Olympic Dam Phase 1

100%

2,100

2,100

2H 2016

~US$4bn

Iron Ore

RGP6 Samarco

~85% 50%

3,500 1,500 4,000

2,980 750 4,000

Potash

Jansen Phase 1 100%

2H 2011 Pre final approval work Greenfield development has begun. Expect full 1H 2015 to 2mtpa. scope development from 2H 2011. Expand to 4mtpa. From 415MMcf/day to 750MMcf/day 1H 2016 1H 2011 2H 2018 1H 2014

2H 2013 (already included in base valuation) 1H 2013 US$1.1bn US$850mn US$1.7bn in total for Phase 1+2. US$1bn US$17bn

Jansen Phase 2 100% Petroleum TOTAL Fayette Shale 100% production growth

3,000 4,000

3,000 4,000

$23.6bn $19.8bn

Source: Company data, Credit Suisse estimates

We have excluded the Western Australia Iron ore Port Hedland Outer Harbour project from the analysis as project costs are unknown (they could be as large as US$150 US$200 per tonne) and we believe that only the dredging work and initial construction are the only capex items likely to be spent before FY15.

BHP Billiton Limited (BHP.AX / BHP AU)

10 March 2011

Met Coal
Figure 8: BHP Billitons met coal position

Source: BHP presentation 10-Feb-2010, Notes: (a) Bubble size depicts relative coal resource size on a 100% basis. (b) Resource Life is indicative only. (c ) The resource and reserve information in this slide was compiled from the BHP Billiton 2009 Annual Report.

Daunia Project
Project Description The Daunia mine, part of BMA, is to be a multi-seam open cut coal mine, planned for the northern Bowen basin in Queensland. The mine is expected to produce semi-hard coking coal and PCI coal with a coal handling and preparation plant at the site. The coal will be transported by rail to Hay Point Coal Terminal. Operational expenditure for the project

will be A$200mn$250mn p.a. based on the estimated project life of 21 years.

Development Stage Daunia mine received the environmental approval (EIS approval) in November 2009 and Commonwealth Approval in December 2009. The construction is expected to take 1824 months once approved (we expect approval later this calendar year). Production capacity Estimated to be 4mtpa with total production of 85mt over 21 years. On an average the production will be 60% hard coking coal and 40% PCI.

BHP Billiton Limited (BHP.AX / BHP AU)

10 March 2011

Capex An initial capital investment of US$625mn but we model $750mn to allow for development cost inflation since 2008. Key catalysts Environmental Approval (EA) from the Department of Environment and Resource Management (DERM); Construction of a new airport to replace the existing Moranbah airport facility; Commencement of Construction.

How we have modelled it: Assume approval in 1H or early 2H CY2011. 18- to 24-month development phase with first production Dec-2012 half of 1mt ramping to full production of 2mt by Dec-2013. BHP share is 50%. Total capex of $750mn, a 20% increase on the $625mn estimate from a couple of years ago and equating to $187 per tonne of annual production. Based on the estimated annual running costs of ~$250mn the cost per tonne is expected to be ~$63/t.

What will it add to our forecasts? Adds 5% to attributable met coal production and increases met coal valuation by ~$1.5bn.

Caval Ridge Project

Project Description We expect another of BMAs growth projects, The Caval Ridge mine, to be approved in 2012. Like Duania, Caval Ridge is located in northern section of the Bowen Basin. The mine is located near Moranbah and adjacent to BMAs existing Peak Downs Mine. The mine will produce high quality hard coking coal and this will be transported by rail to Hay Point and Dalrymple Bay Coal Terminals for export. Operational expenditure will be

about A$450mn$500mn per annum during the estimated mine life. The coal handling and preparation plant is to be designed to a capacity of 8mtpa, above Caval Ridge requirements, as it is intended 2.5mtpa of Peak Downs expansion tonnes will also be processed there. If the Northern Missing Link rail line is constructed Caval Ridge coal will be shipped via the Abbot Point Coal Terminal. BMA is to operate the mine directly (i.e. not use a mining contractor).
Development Stage In August 2010 the Environmental Impact Statement for Caval Ridge was approved by Government authorities. EIS approval saw BHPB launch another set of feasibility studies which are expected to be completed by late 2011. Once approved expectation is that development of the mine should take around 22 months. Production capacity Production capacity is expected to be 5.5mtpa of high quality hard coking coal (BHPs share is 50%). Development of Caval Ridge will also facilitate an increase in production at the nearby Peak Downs mine of 2.5mtpa to 8mtpa. The increased production at Peak Downs is to be processed through the coal handling and preparation plant to be constructed at the Caval Ridge site.

BHP Billiton Limited (BHP.AX / BHP AU)

10 March 2011

Expected first production The mine is currently expected to start production in 2013 but we model production from 2014 to allow for the additional feasibility studies currently underway. Mine life The mine life is currently expected to be 30+ years but will be subject to change in the feasibility study. Capex An initial capital investment of approximately US$4bn which we model at US$4.5bn to allow for cost inflation. This equates to a capex intensity of over $700/t. Capex intensity is high as the project requires a coal handling and preparation plant above Caval Ridge mine output, a rail spur from Blair Athol to the load-out facility, creek diversions, a highway overpass, new power transition lines amongst other development items. Caval Ridge is the largest development in the area. How we have modelled it: Based on the estimated annual running costs of ~$550mn the cost per tonne is expected to be ~$70/t. Production commencing from 4Q 2013 ramping up over 1218 months to full capacity of 5.5mtpa (100% level). We have allowed capex of $4.5bn over 22 months (starting 1H 2012).

Key catalysts

Completion of the proposed Northern Missing Link rail line linking Bowen Basin to the Abbot Point port.

What will it add to our base case valuation? Expected to add US$3.5bn to our BHP valuation.

Hay Point Coal Terminal Expansion

To support the expansion of the BMA business the Hay Point Coal port is to be expanded from 44mtpa to 55mtpa by constructing a third berth the HPX3 project. The key aspects of the expansion are: Dredging which commenced in 2010 and is normally conducted in a window from April to September); Construction of a new third berth; Existing trestle conveyors and surge bins to be replaced, overland conveyors will be constructed to transfer coal from the stockpile to the jetty; Construction of a new quarry to allow rock and fill to be extracted for use in reclamation works. A shiploader will be constructed on the new third berth.

Project stage: Commonwealth and State Government Environmental approvals for the project were granted in May 2010 for maximum expansion to 75mtpa (current plan is to 55mtpa). Initial works including dredging began in mid 2010.

BHP Billiton Limited (BHP.AX / BHP AU)

10 March 2011

The general development of the project is expected to commence in 1H 2011. Capex: In January 2010 BHP approved $267mn (BHP share so $534mn at 100%) for pre approval capex for Caval Ridge and HPX3. We expect the whole HPX3 project to cost US$1bn (BHP share ~$500mn). Valuation: We do not include the project itself as a valuation item but the expansion facilitates the expansion of Caval Ridge, Daunia and future met coal mines.
Figure 9: HPX3 expansion plan:

Source: BHP Billiton website.

BHP Billiton Limited (BHP.AX / BHP AU)

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10 March 2011

Base Metals Division

BHPBs growth strategy in base metals is to focus on Escondida, the largest producing copper mine in the world and which already represents over 20% of Chilean copper production. Escondida is operated by BHPB which has a 57.5% share (Rio Tinto 30%, and Japanese interests and the World Bank the balance). Most mined sulphide ore is processed through the two concentrators Los Colorados and Laguna Seca which have a combined capacity of 225kt per day (115ktpa Los Colorados, 110ktpa Laguna Seca). Other ore is processed via sulphide bio leach and oxide acid leach methods.

Escondida: Organic Growth Project 1 (OPG1)

The next phase of Escondida is OGP1 which is designed to bring forward access to high grade ore that lies in and around the current Los Colorados concentrator. It is expected to result in a small increase in ore processing capacity from the current ~82mtpa to 100mtpa. Further expansions OPG2 and OGP3 are being studied and would bring processing up to ~150mtpa and ~205mtpa. Additional Production: The concentrator to replace Los Colorados is expected to have a processing capacity of 160ktpd (above Laguna Seca 110ktpa). The most recent example of the capital cost of a concentrator is the Oyu Tolgoi concentrator to be built to a capacity of 100ktpa and later expanded to 158ktpa. The capital costs have been estimated to be ~$1.5bn ($945mn to stage 1). The previously considered expansion of Escondida (labelled Phase V) was estimated to cost $3.25bn but envisaged adding a third concentrator and new tailings dam. We now consider these will be included in OPG2 and beyond. Expected first production We expect a final decision on OGP1 by end of 2011 or beginning 2012 with production expected from 2015. Capex For OGP1 we have allowed $1.5bn starting in 2012 and complete by end 2014. Valuation Valuation increment from OPG1 is very small (a few hundred million $s) as the project merely opens up access to ore and increases the concentrator processing capacity by 17% which helps offset subsequent grade decline.

Organic Growth Projects 2 and 3

Further expansions OPG2 and OGP3 are being studied and would bring processing up to ~150mtpa and ~205mtpa. They will also require additional power resources, a desalination plant and a tailings dam. OPG2 and OPG3 are expected to cost +$4bn. Additional Production: The declining Esondida copper head grade is to be offset by increasing processing capacity to 150mtpa in OPG1 and 205mtpa in OFP2. The reserve grade is 1.02% compared to current mining head grades of 1.2-1.3% so there is a significant anticipated drop in average grades through time. Expected first production With production from OGP1 expected in 2015 we anticipate that plans for OGP2 will be finalised and approved by 2013 with production from 2017.

BHP Billiton Limited (BHP.AX / BHP AU)

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10 March 2011

Capex We include US$4bn (100% level) for OGP2 capex (BHP share 57.5%). Valuation OPG2 adds US$4bn to our NPV or 75 cents per BHP share.

Figure 10: Escondida expected growth in processing capacity from growth projects

Source: BHP Billiton presentation 27-Sept-2010

Olympic Dam Phase 1

We do not expect an imminent approval of Olympic Dam but we think the pre stripping and other preparation works would commence in 2012 or 2013. According to the Draft EIS the expansion of OD is to be a six fold increase on current production levels to be done in three stages over 11 years. The work will include the development of the large open pit mine, expansion of existing smelter, new concentrator and hydrometallurgical plants added (for leaching lower grade ore).
Figure 11: Production at Olympic Dam current and full expansion
Current capacity Additional capacity to be added Ore mined (mtpa) Copper concentrate production (ktpa) Refined copper (ktpa) Uranium oxide (ktpa) Gold bullion (kOzpa) Silver bullion (kOzpa) Source: Company data 12 600 235 4.5 100 800 60 1,800 515 14.5 700 2,100 Capacity of expanded operation 72 2,400 750 19 800 2,900 % Increase

500% 300% 219% 322% 700% 263%

Project scale huge The OD expansion is a large project indeed. Some of the required items will be: Five to six years of pre stripping work to remove 300350mt of overburden material; New copper concentrator;

BHP Billiton Limited (BHP.AX / BHP AU)

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Expand existing smelter capacity to 800ktpa of concentrate to produce ~350ktpa of refined copper; A 280 megalitre per day (ML/d) coastal desalination plant; New power sources: either an additional 270km electricity transmission line from Port Augusta, or a gas pipeline from Moomba and a new gas-fired power station at Olympic Dam, or a hybrid solution; A 105km rail line; A new airport at Olympic Dam.
Stage 1 Scale 0-20Mtpa ore Timing (year) 0-6 Description Development of pre mine infrastructure and establish new open pit mine at deliver 20mtpa of ore to new concentrator. Extract 390mt of rock and 20mtpa of ore following pre strip. Build new concentrator. Build hydrometallurgical plant for extracting additional uranium. 2 20-40Mtpa ore 6-9 Expand open pit mine, concentrator and hydro plant to support mining 40mtpa of ore. Expand current existing smelter to process up to 800ktpa of copper concentrate. Expand infrastructure to support 40mtpa of production. Expand open pit mine, concentrator and hydro plant to support mining 60mtpa of ore. Expand infrastructure to support 60mtpa of production.

Figure 12: The expected phases of Olympic Dam expansion per Draft EIS 2009

40-60Mtpa

7-11

Source: Company data

Figure 13: Olympic Dam Expansion: components and schedule per Draft EIS 2009
2010 2011 Project component Overburden removal Mining of first ore Metallurgical plant 20Mtpa 40Mtpa 60Mtpa Water Supply Pipeline Desalination plant 70 ML/day for OD plus 80 ML/d for Govt Adding 135 ML/d Adding 200 ML/d Gas power plant/pipeline X X X X X X X X Source: Company data, Credit Suisse estimates. NB: Calendar year estimates. X X X X X X X X X X X X X X X X X X X X X X X X X X X X X X X X X X X X X X X X X 2H X X X 2012 X X 2013 X X 2014 X X 2015 X X 2016 X X X X X X X X X X 2017 2018 2019 2020 1H 2H 1H 2H 1H 2H 1H 2H 1H 2H 1H 2H 1H 2H 1H 2H 1H 2H 1H 2H

Expected first production In 2009 when BHP submitted its Draft Environmental Impact Statement for consideration the development schedule included beginning the pre strip in 2H 2010. We understand the pre strip has not yet commenced and we model first commercial production of ore from the open pit to commence in 2018. We therefore model the pre strip capex from 1H 2012. Capex We expect BHP to demonstrate its commitment to this key growth project by announcing pre final approval capex expenditure (like it has for iron ore RGP6) either late in 2011 or early 2012. Our estimate is that it will costs around US$4.50 per bank cubic metre to

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move material at Olympic Dam. With around 70mt per year to move this equates to US$350mn in annual pre strip costs or US$2.1bn for the pre strip. As we expect the pre strip to commence within 12 months we include it in our capex numbers. At this stage we have not included a full scale expanded Olympic Dam but include the resource base in our valuation at US$6bn or US$85 per tonne of contained copper. Adding to valuation We include the OD expansion in our valuation at US$4bn or 75 cents per BHP share.

Iron Ore Western Australia Iron Ore beyond RGP6

RGP5 (scope being revised) and RGP6 (early capex has been approved) Rapid growth project 6 (RGP6) is expected to increase BHPBs iron ore capacity to 240mtpa during 2013 by adding 35mtpa. BHP committed US$1.93bn to RGP6 early capex items in January-2010 before final approval of the project which was initially expected in 2H CY2010 but we now expect approval before in 2011 along with the final scope revision to RGP5. RGP5 is 90% complete on its original scope to increase iron ore system capacity by 50mtpa. RGP6 involves the expansion of the inner harbour at Port Headland and rail track duplication. We already factor in RGP6 into our current valuation and forecast.
Figure 14: BHP Billiton Iron Ore Rapid Growth Projects (to 240mtpa)

Source: BHP Presentation March-2010

As the expected output and cost of the Quantum Projects is uncertain at this stage and full scale development and production ramp up is not expected until beyond FY15 we have not yet included it in our forecasts.

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Figure 15: WA Iron ore expansion projects at 100% level (US$mn)

Iron Ore Project RGP4 Additional Total cost at capacity 100% level (mt) (US$mn) 26mt 2,150 Capex per tonne of install capacity (US$/t) 83 BHPB share 86.2% Total capacity 155mtpa Comment

RGP5

50mt

5,650

113

85%

205mtpa

RGP6 Additional expenditure Outer Harbour

35mt 110mt

3,500 635 US$16.5bn to US$22bn

100 115* 150-200 (CS estimate)

90% 90% 85%

240mtpa 240mtpa 350mtpa

Complete Production due 2H CY2011. Double track Newman rail line, two new shipping berths. Project is 90% complete as of 31-Dec-2010 but scope of development sequence under review. Pre approval capex US$1.93bn. Announced Nov-2010 for ongoing development of port, rail and Jimblebar mine infrastructure. Estimate, expect it to be done in 50mtpa stages in line with ship loader builders

Source: Company data, Credit Suisse estimates, *Combined capex per tonne of RGP5, RGP6 and the additional iron ore growth project costs announced in Nov-2010 for a total of 85mtpa of capacity.

Further expansion in Western Australia: Beyond rapid growth to quantum The ultimate aim for BHPB WA operations is to reach capacity of 350mtpa via two stages: Quantum 1 and Quantum 2. This would see BHPB develop the Port Headland Outer Harbour Port. The Outer Harbour development requires significant dredging and other deep water infrastructure. It is likely to be significantly more expensive than any of the previous RGP steps. We expect the Quantum Projects to be approved and developed in 4050mtpa stages at a cost in the range of US$150/tUS$200/t or US$16.5bn to US$22bn in total. Valuation impact? We already include RGP6 in our base case valuation. We have not added the Outer Harbour to our valuation at this stage as only the development work is expected to have commenced by FY15 and further project details are expected to be announced in next 12 18 months. We expect the first stage of the Outer Harbour to be ~US$9bn capex project.

Samarco Brazil iron ore JV, P4P Expansion

One of the projects that BHP was openly speaking of at the latest half year results was the P4P expansion project at the 50/50 BHP/Vale Samarco Iron Ore Pellets JV. We understand the project is in the last stages of feasibility and governmental approval and final go ahead for the project could be given before end of 2011. The project is expected to boost production capacity to 30.5mt from current 22.25mtpa by adding: A third concentrator at Gemano; A third pipeline parallel to the two pipelines already operating; A fourth pelletizing plant at Ponta Ubu.

We include the P4P project at a cost of US$120 per tonne costing US$1bn at the 100% level (50% BHP share). This capex estimate equates to the size of its bubble (the $500mn-$2bn) in the growth projects bubble map. The project adds US$1.5bn or 30 cents per share to our BHP valuation.

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Diamonds and Specialty Products Jansen Potash Project

Project description The Jansen Project is a greenfield project in the province of Saskatchewan, Canada involving development of an underground potash mining site and processing plant. This is BHPBs first potash mining venture and is expected to take 10 years to ramp up to full production. In February 2011 BHPB announced that Jansen project had advanced to Feasibility Study stage and depending on the timing of EIS approval (submitted Dec-2010) we would expect a decision to proceed with the project in late 2011. BHP acquired Athabasca Potash in January 2010 for US$320mn. This gave BHPB an additional 6900km2 of potential exploration ground in the Saskatchewan potash basin and also the Burr potash development project that adjoins BHPs Jansen Project. The Burr project includes a 2mt per year mine that is expected to start production 2013 with a ramp of 5.5 years. The 2008 capital cost estimate for the Burr project was C$2bn. In June 2010 BHP, as the new owners of the Burr, withdrew the project from the Environmental Impact Assessment process in June-2010. We expect Burr to be developed later as part of a larger Jansen project. Development Stage Now in feasibility study stage with EIS submission to the Saskatchewan Ministry of Environment in December 2010. BHP has already committed over $240mn to early development capex for the project including drilling and site preparation for ground freezing required prior to sinking the production and service shafts. We expect final approval and development construction to commence in 2H CY2011. Current development work is underway at Jansen including (as of November-2010): Power substation nearing completion; Drilling of freeze holds for the production shaft and the service shaft (expected to be complete by Q2 or Q3 CY2011. We understand refrigeration units are on site for the cooling of the brine with the plant expected to have been commissioned in February-2010.

Production capacity At 100% production, expected capacity is 8mt of agricultural grade potash (BHP has estimated this to equate to 9% of world production in 2020). We expect initial build to a modest rate of around 2mtpa and ramp up over time, say 10 years, to 8mtpa. Expected first production Current expectation is for the Jansen mine is expected to start production in January 2015 (at a capacity of 2mtpa) and ramp up to full production (8mtpa) by February 2026. Mine life The project is expected to have a 70-year mine life.

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Capex BHP has already committed US$240mn for development during the first stages of the project. We expect the project will require significant capital investment of US$4bn over short term (to initial production of 2mtpa) and up to US$17bn over 25 years. Key catalysts Environmental and Ministerial Approval for the project expected later this year. Ground freezing work expected late 2011. Commencement of Construction later in 2011 or 2012.

What will it add to our base case valuation? We value the project at US$1.7bn or 30 cents per BHP share. This is based on the initial build to 2mtpa, a later expansion to 4mtpa, potash price of US$500 per tonne, operating costs of US$120 per tonne and standard royalty rates for potash mines in Saskatchewan.

Figure 16: Jansen

Project Proposed Implementation Schedule: production in 2015

Source: BHP Billiton website

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Figure 17: BHP Billiton: Detailed financials

Market data Ticker Share prices (local) (A$/GB) Share price $US equivalent Plc / Ltd Premium/(discount) Market cap (US$'mn) Market cap (%) Market cap (local) (GB / A$) (million) Shares on issue (mn) Shares (%) Net debt (cash) (US$mn) Enterprise value (EV) ($US'mn) FX rate (AUD:USD) & (GBP:USD) Group $US 43.61 227,768 100% 5,223 100% -200 227,968 Ltd BHP.AX 46.00 46.44 0.21 155,950 68% 154,482 3,358 64% Plc BLT.L 23.83 38.51 0.17 71,818 32% 44,442 1,865 36% Valuation summary NPV (US$'m) Petroleum 54,567 Aluminium / alumina 7,445 Base Metals 58,728 Iron ore 63,816 Manganese 6,332 Metallurgical Coal 28,033 Diamonds & Spec (Potash) 7,284 Energy Coal 19,915 Stainless Steel Materials 7,860 Group and unallocated item -440 Total 253,539 Net debt (cash) -200 BHP DCF valuation 253,739 Price / NPV 90% FY11F 0.97 1.55 1.09 353 4.06 240 254 163 149 234 237 103 399 1,334 0.99 83 FY11F 161 84,760 4,135 1,228 1,194 171,309 4,867 165 135,849 169,360 135,849 146,196 6,701 766 34,943 66,619 FY11F 10,604 4,184 14,106 1,179 3,741 20,822 2,859 7,393 5,010 430 70,329 -3,738 66,590 27,405 39,185 -4,683 34,502 -528 33,974 -9,508 -667 23,799 -176 23,623 429 96 FY11F 6,955 222 8,113 507 997 13,436 934 2,777 1,039 -478 34,502 20% 1% 23% 1% 3% 38% 3% 8% 3% 100% FY12F 0.95 1.54 1.19 390 4.83 256 294 188 159 215 204 123 375 1,363 1.15 85 FY12F 189 88,805 5,060 1,243 1,310 206,045 5,800 175 151,500 187,294 151,500 165,294 6,300 770 38,200 68,000 FY12F 11,378 4,203 16,112 1,186 3,580 24,601 3,518 7,304 5,531 500 77,913 -4,141 73,772 25,861 47,911 -5,212 42,699 -55 42,644 -12,793 -814 29,037 29,037 542 108 FY12F 7,619 857 11,261 709 1,175 15,766 874 2,903 2,036 -500 42,699 18% 2% 26% 2% 3% 36% 2% 7% 5% 100% FY13F 0.91 1.54 1.15 410 4.03 201 231 148 125 178 169 128 294 1,338 1.55 83 FY13F 189 92,777 5,375 1,289 1,273 211,337 5,800 170 167,700 206,353 167,700 184,353 6,700 780 40,175 68,500 FY13F 11,349 4,447 13,720 1,305 3,164 21,424 3,135 6,533 6,000 500 71,578 -3,805 67,773 25,328 42,445 -5,836 36,609 48 36,657 -10,997 -700 24,960 24,960 476 113 FY13F 7,533 1,119 8,855 844 945 12,137 996 2,263 2,417 -500 36,609 20% 3% 24% 2% 3% 33% 3% 6% 7% 100% FY14F 0.86 1.57 1.15 411 3.75 177 203 130 109 169 162 115 271 1,313 1.65 80 FY14F 195 95,384 5,425 1,303 1,235 211,337 5,800 170 181,000 224,471 181,000 196,471 7,100 780 43,300 70,000 FY14F 11,942 4,505 12,662 1,305 3,026 20,448 3,091 6,669 5,762 500 69,910 -3,716 66,194 25,119 41,075 -6,471 34,604 147 34,751 -10,078 -673 24,000 24,000 457 123 FY14F 7,733 1,219 8,028 881 892 11,197 836 2,165 2,152 -500 34,604 21% 3% 25% 2% 3% 35% 3% 6% 7% 100% US$/share 10.4 1.4 11.2 12.2 1.2 5.4 1.4 3.8 1.5 -0.1 48.5 -0.04 48.6 90% FY15F 0.84 1.57 1.15 415 3.65 145 166 106 90 168 161 100 216 1,305 1.66 81 FY15F 210 96,220 5,475 1,310 1,281 211,337 5,800 170 191,000 237,059 191,000 207,059 7,100 780 46,425 70,000 FY15F 12,364 4,560 12,712 1,305 2,932 17,684 2,707 7,002 5,004 500 66,770 -3,549 63,221 25,469 37,752 -7,164 30,588 54 30,642 -8,886 -593 21,163 21,163 403 130 FY15F 7,868 1,250 8,091 881 806 7,961 459 2,251 1,520 -500 30,588 24% 4% 28% 3% 3% 39% 3% 7% 8% 100% A$/share GB/share 10.3 6.5 1.4 0.9 11.1 7.0 12.1 7.6 1.2 0.8 5.3 3.3 1.4 0.9 3.8 2.4 1.5 0.9 -0.1 -0.1 48.1 30.0 0.0 0.0 48.1 30.1 0.96x 0.79x 1H09 0.78 1.74 1.04 401 2.61 60 72 72 60 305 295 125 774 835 0.67 88 1H09 68 32,192 2,237 619 617 79,631 1,970 77 59,179 73,276 54,207 63,332 3,242 384 19,360 35,272 1H09 4,212 2,518 3,286 457 1,101 6,020 1,916 4,913 4,363 994 29,780 -4,352 25,428 16,251 9,177 -1,953 7,224 -332 6,892 -3,888 -387 2,617 2,617 47 41 1H09 2,675 289 -111 79 -752 4,143 1,245 3,123 1,072 -4,539 7,224 23% 2% -1% 1% -6% 35% 11% 27% 9% 100% 2H09 0.71 1.49 0.65 198 1.83 90 107 107 90 215 205 97 252 918 0.60 51 2H09 69 34,136 2,159 614 590 83,584 2,037 96 55,236 67,550 51,890 60,858 1,233 129 17,056 32,934 2H09 2,999 1,633 3,819 439 1,254 4,028 620 3,174 2,161 304 20,431 -1,746 18,685 5,777 12,908 -1,918 10,990 -211 10,779 -2,600 -74 8,105 -4,845 3,260 146 41 2H09 1,410 -97 1,403 66 -102 2,086 104 1,588 388 4,144 10,990 21% -1% 20% 1% -1% 30% 2% 23% 6% 100% % 22% 3% 23% 25% 2% 11% 3% 8% 3% 0% 100%

1.01

1.62

Key assumptions Exchange rate (AUD / USD) Exchange rate (USD / GBP) Aluminium (US$/lb) Alumina (US$/t) Copper (US$/lb) Iron Ore fines (Usc/dmtu) Iron Ore lump (Usc/dmtu) Iron ore, lump (US$/t) Iron ore, fines (US$/t) Coking coal (US$/t) Coking coal semi (US$/t) Thermal coal (US$/t) Manganese (US$/t) Gold (US$/oz) Zinc (US$/lb) Oil, WTI Production schedule (attributable) Total Petroleum products, Mmboe Crude oil & condensate, MMbbls Alumina ('000 tonnes) Aluminium ('000 tonnes) Copper ('000 tonnes) Zinc ('000 tonnes) Uranium oxide concentrate (tonnes) Nickel ('000 tonnes) Iron Ore (Mt) (global) (attributable) Iron Ore (Mt) (global) (100%) Iron Ore (Mt) (WA) (attributable) Iron Ore (Mt) (WA) (100%) Manganese ore ('000 tonnes) Manganese alloy ('000 tonnes) Metallurgical (coking) Coal (Mt) Energy Coal (Mt) P&L ($US'mn) Petroleum Aluminium Base Metals Diamonds and Specialty Products Stainless Steel Materials Iron Ore Manganese Metallurgical Coal Energy Coal Group and inter segment adjustment BHP Billiton Group revenue Third party revenue Net BHP Billiton revenue Total operating expenses EBITDA - Underlying Depreciation & amortisation Underlying EBIT Net interest + other Profit before tax Company income taxation OEI Underlying NPAT Net significant items (post tax) Reported NPAT EPS - basic underlying (US cents) Dividends Per Share - (US cents) Business unit EBIT Petroleum Aluminium Base Metals Diamonds and Specialty Products Stainless Steel Materials Iron Ore Manganese Metallurgical Coal Energy Coal Other and adjustments Total BHP Billiton Group Petroleum contribution Aluminium contribution Base Metals contribution Diamonds and Specialty Products contrib Stainless Steel Materials contribution Iron Ore contribution Manganese contribution Metallurgical Coal contribution Energy Coal contribution Total BHP Billiton Group contribution

FY08 0.89 1.99 1.21 311 3.55 59 80 80 59 150 108 73 413 825 1.18 97 FY08 130 57,444 4,554 1,298 1,376 144,490 4,144 168 112,260 139,041 112,260 122,113 6,575 775 35,193 80,868 FY08 9,547 5,746 14,774 969 5,088 9,455 2,912 3,941 6,560 481 59,473 -7,555 51,918 24,024 27,894 -3,612 24,282 -662 23,620 -7,680 -572 15,368 22 15,390 275 70 FY08 5,489 1,465 7,989 189 1,275 4,631 1,644 937 1,057 -394 24,282 22% 6% 32% 1% 5% 19% 7% 4% 4% 100%

FY09 0.75 1.62 0.84 299 2.22 75 89 89 75 260 250 111 513 876 0.63 70 FY09 137 66,328 4,396 1,233 1,207 163,215 4,007 173 114,415 141,456 114,415 124,820 4,475 513 36,416 68,206 FY09 7,211 4,151 7,105 896 2,355 10,048 2,536 8,087 6,524 1,298 50,211 -6,098 44,113 22,028 22,085 -3,871 18,214 -543 17,671 -6,488 -461 10,722 -4,845 5,877 193 82 FY09 4,085 192 1,292 145 -854 6,229 1,349 4,711 1,460 -395 18,214 22% 1% 7% 1% -5% 33% 7% 25% 8% 100%

FY10 0.88 1.58 0.92 309 3.03 103 120 89 75 153 134 77 314 1,076 0.94 75 FY10 159 84,343 3,841 1,241 1,075 198,279 2,279 176 124,962 156,150 124,962 133,962 6,124 583 37,381 66,131 FY10 8,782 4,353 10,409 1,272 3,617 11,139 2,150 6,059 4,265 752 52,798 -4,605 48,193 23,680 24,513 -4,794 19,719 -459 19,260 -6,504 -287 12,469 253 12,722 224 86 FY10 4,573 406 4,632 485 668 6,001 712 2,053 730 -541 19,719 23% 2% 23% 2% 3% 30% 4% 10% 4% 100%

1H10 0.87 1.64 0.87 289 2.84 60 72 72 60 125 115 70 257 1,000 0.90 72 1H10 81 42,154 1,858 626 555 106,260 1,478 87 62,555 78,133 57,043 67,109 2,693 194 18,297 33,519 1H10 4,177 2,004 5,471 566 1,655 4,478 888 2,715 2,142 480 24,576 -2,381 22,195 11,357 10,838 -2,336 8,502 -232 8,270 -2,497 -71 5,702 433 6,135 102 42 1H10 2,326 154 2,462 170 200 2,091 190 772 332 -195 8,502 27% 2% 28% 2% 2% 24% 2% 9% 4% 100%

2H10 0.89 1.53 0.97 330 3.23 146 167 107 90 180 153 84 370 1,153 0.98 78 2H10 78 42,189 1,983 615 520 92,019 801 89 62,407 78,017 56,825 66,853 3,431 389 19,084 32,612 2H10 4,605 2,349 4,938 706 1,962 6,661 1,262 3,344 2,123 272 28,222 -2,224 25,998 7,718 18,280 -7,063 11,217 -227 10,990 -4,007 -216 6,767 -180 6,587 121 44 2H10 2,247 252 2,170 315 468 3,910 522 1,281 398 -346 11,217 19% 2% 19% 3% 4% 34% 5% 11% 3% 100%

1H11 0.95 1.57 1.01 337 3.61 222 226 145 137 235 207 97 397 1,294 0.99 81 1H11 80 42,739 2,025 628 594 77,142 1,967 82 65,649 82,243 59,567 70,079 3,951 391 18,086 33,619 1H11 4,905 2,343 7,067 675 1,905 9,382 1,196 3,952 2,561 180 34,166 -1,816 32,350 15,046 17,304 -2,475 14,829 -371 14,458 -3,458 -300 10,700 -176 10,524 192 46 1H11 2,854 17 3,580 221 357 5,811 430 1,453 334 -228 14,829 19% 0% 24% 1% 2% 39% 3% 10% 2% 100%

2H11F 0.98 1.54 1.18 370 4.50 258 282 181 160 233 266 109 400 1,375 1.00 85 2H11F 80 42,021 2,110 600 600 94,167 2,900 83 70,200 87,118 64,700 76,118 2,750 375 16,857 33,000 2H11F 5,699 1,841 7,039 504 1,836 11,440 1,663 3,441 2,449 250 36,163 -1,922 34,240 12,359 21,881 -2,208 19,673 -157 19,516 -6,050 -367 13,099 13,099 237 50 2H11F 4,101 205 4,533 286 640 7,625 504 1,324 705 -250 19,673 21% 1% 23% 1% 3% 38% 3% 7% 4% 100%

Source: Company data, Credit Suisse estimates

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Figure 18: BHP Billiton: Detailed financials (continued)

Cashflows ($US'mn) Operating cashflows Capex - sustaining Free cash flow (sustaining) FCF per share Capex - exploration Capex - growth projects Free cash flow (all capex) FCF per share Other investing cashflows Dividend payments Other financing cashflows Net increase in cash Cash at end of the year Total capex spend Balance Sheet ($US'm) Cash Receivables Inventories Plant & equipment Deferred tax assets Intangibles Other assets Assets Payables Provisions Tax liabilities Borrowings Other liabilities Liabilities Net Assets Valuation metrics (31-DecYE) Underlying earnings (US$bn) Average shares on issue (basic, millions) EPS USc / shr (underlying) EPS Gth Y-o-Y PER, Ltd PER, Plc DPS, ordinary (USD) DPS, ordinary (AUD spot) Payout ratio, ordinary Dividend Yield, Ltd stock, ordinary EV / EBITDA, fixed FCF / share, USD, sustaining capex FCF / share, USD, all capex FCF yield, sustaining capex, Ltd Price / cash earnings, Ltd Price / Book, Ltd stock ROE (%) Gearing Net Debt (net cash) Net Debt / (Net Debt + Equity) (%) Net Debt / Equity (%) Interest cover (x) (EBITDA) Margins EBITDA margin EBIT margin NPAT margin Tax rate Carbon Emissions CO2 Emissions Scope 1 (mt) CO2 Emissions Scope 2 (mt) CO2 Scope 1+2 (mt) Impact of $30 carbon tax ($mn) Impact of $30 carbon tax on EBIT FY08 18,159 -1,832 16,327 2.92 -1,350 -6,097 8,883 1.59 -1,135 -3,135 -2,861 1,754 4,173 -9,279 FY08 4,237 9,801 2,054 47,332 3,044 625 8,796 75,889 6,774 1,596 2,022 9,234 17,220 36,846 39,043 FY08 15,368 5,590 275 20% 16.9x 14.0x 70.0 69.3 25% 1.5% 8.2x 3.13 1.70 7.2% 13.7x 6.6x 39% FY08 8,458 18% 22% 42 FY08 54% 47% 30% 33% FY08 FY09 18,863 -2,028 16,835 3.03 -1,243 -7,308 8,287 1.49 -1,715 -4,563 4,621 6,632 10,831 -10,579 FY09 10,833 5,153 4,821 49,032 3,512 661 4,758 78,770 5,619 1,887 1,931 15,325 13,297 38,059 40,711 FY09 10,722 5,565 193 -30% 24.1x 20.0x 82.0 81.2 43% 1.8% 10.3x 3.22 1.59 7.4% 26.5x 6.4x 14% FY09 5,586 12% 14% 41 FY09 50% 41% 24% 37% FY09 FY10 17,920 -1,703 16,217 2.91 -1,333 -8,063 6,824 1.23 -1,249 -4,618 640 1,598 12,455 -11,099 FY10 12,456 6,543 5,334 55,576 4,053 687 4,203 88,852 6,467 1,899 1,685 13,573 15,900 39,524 49,328 FY10 12,469 5,565 224 16% 20.7x 17.2x 86.0 85.2 38% 1.9% 9.3x 3.10 1.31 7.1% 14.8x 5.3x 26% FY10 3,309 6% 7% 53 FY10 51% 41% 26% 34% FY10 9.0 5.5 14.5 435 -2% FY11F 30,871 -2,043 28,829 5.22 -904 -10,439 17,491 3.16 -5,340 -5,063 -6,313 778 13,236 -13,386 FY11F 13,250 7,876 5,620 69,493 4,177 778 4,491 105,686 6,743 1,972 5,455 12,225 15,988 42,383 63,302 FY11F 23,799 5,527 431 92% 10.8x 8.9x 96.0 95.1 22% 2.1% 5.8x 5.52 3.35 12.7% 9.1x 4.0x 37% FY11F 806 1% 1% 74 FY11F 59% 52% 36% 28% FY11F FY12F 35,280 -2,622 32,659 6.10 -960 -16,058 15,647 2.92 -960 -5,514 -10,463 -1,287 11,950 -19,639 FY12F 11,964 7,876 5,620 83,921 4,177 778 4,491 118,827 6,743 1,972 5,673 9,725 15,988 40,101 78,726 FY12F 29,037 5,356 542 26% 8.6x 7.1x 107.5 106.5 20% 2.3% 4.8x 6.25 3.00 14.3% 7.3x 3.1x 37% FY12F -408 -1% -1% 873 FY12F 65% 58% 39% 30% FY12F FY13F 30,452 -2,864 27,587 5.26 -1,021 -15,192 11,380 2.17 -1,021 -5,752 -1,186 3,423 15,372 -19,077 FY13F 15,386 7,876 5,620 97,162 4,177 778 4,491 135,491 6,743 1,972 4,629 7,725 15,988 37,057 98,434 FY13F 24,960 5,248 476 -12% 9.8x 8.1x 112.9 111.8 24% 2.4% 5.4x 5.28 2.18 12.1% 7.9x 2.5x 25% FY13F -5,830 -6% -6% -882 FY13F 63% 54% 37% 30% FY13F FY14F 30,908 -3,090 27,819 5.30 -1,089 -14,222 12,513 2.38 -1,089 -6,040 -1,519 3,868 19,241 -18,400 FY14F 19,255 7,876 5,620 109,092 4,177 778 4,491 151,288 6,743 1,972 4,393 5,325 15,988 34,421 116,867 FY14F 24,000 5,248 457 -4% 10.2x 8.4x 122.9 121.7 27% 2.6% 5.6x 5.33 2.40 12.2% 8.0x 2.1x 21% FY14F -12,099 -12% -10% -280 FY14F 62% 52% 36% 29% FY14F FY15F 28,440 -3,228 25,212 4.80 -1,084 -11,990 12,143 2.31 -1,084 -6,790 877 5,148 24,388 -16,302 FY15F 24,402 7,876 5,620 118,229 4,177 778 4,491 165,574 6,743 1,972 3,913 5,325 15,988 33,941 131,633 FY15F 21,163 5,248 403 -12% 11.5x 9.6x 130.0 128.8 32% 2.8% 6.0x 4.83 2.32 11.1% 8.6x 1.9x 16% FY15F -17,246 -15% -13% -697 FY15F 60% 48% 33% 29% FY15F 1H09 13,094 -1,024 12,070 2.17 -620 -4,124 7,328 -1,157 -2,281 -756 3,134 7,216 -5,768 1H09 7,195 5,020 4,883 46,739 3,416 652 5,384 73,289 5,533 1,286 2,055 9,207 15,559 33,640 39,649 1H09 2,617 5,565 47 -56% 0.0x 0.0x 41.0 40.6 87% 0.0% 0.0x 0.0% 56.5x 6.4x 13% 1H09 4,168 10% 11% 28 1H09 36% 28% 10% 56% 1H09 2H09 5,769 -1,004 4,765 0.86 -623 -3,184 959 -558 -2,282 5,379 3,498 10,874 -4,811 2H09 10,833 5,153 4,821 49,032 3,512 661 4,758 78,770 5,619 1,887 1,931 15,325 13,297 38,059 40,711 2H09 8,105 5,565 146 -13% 24.1x 20.0x 41.0 40.6 28% 1.8% 10.3x 3.22 1.59 7.4% 49.9x 6.4x 16% 2H09 5,586 12% 14% 61 2H09 69% 59% 43% 24% 2H09 1H10 5,716 -772 4,944 0.89 -439 -3,974 532 -484 -2,282 -247 -2,481 8,380 -5,185 1H10 8,382 6,196 5,056 52,206 3,822 670 5,221 81,553 5,515 1,669 588 14,935 14,245 36,952 44,601 1H10 5,702 5,564 102 118% 18.7x 15.5x 42.0 41.6 41% 1.8% 9.6x 1.86 0.29 4.3% 30.5x 5.8x 28% 1H10 7,915 15% 18% 47 1H10 49% 38% 26% 30% 1H10 2H10 12,204 -931 11,273 2.02 -894 -4,089 6,292 -765 -2,336 888 4,079 12,457 -5,914 2H10 12,456 6,543 5,334 55,576 4,053 687 4,203 88,852 6,467 1,899 1,685 13,573 15,900 39,524 49,328 2H10 6,767 5,589 121 -17% 20.8x 17.2x 44.0 43.6 36% 1.9% 7.8x 3.10 1.31 7.1% 28.7x 5.3x 27% 2H10 3,309 6% 7% 81 2H10 70% 43% 26% 36% 2H10 1H11 12,193 -853 11,340 2.04 -452 -4,303 6,587 -138 -2,506 -259 3,684 16,142 -5,608 1H11 16,156 7,876 5,620 59,174 4,177 778 4,491 98,272 6,743 1,972 2,451 14,125 15,988 41,279 56,993 1H11 10,700 5,563 192 88% 14.8x 12.3x 46.0 45.6 24% 1.9% 6.4x 4.33 2.47 9.9% 19.9x 4.5x 37% 1H11 -200 0% 0% 47 1H11 53% 46% 33% 24% 1H11 2H11F 18,678 -1,190 17,489 3.17 -452 -6,136 10,904 -5,202 -2,557 -6,051 -2,906 13,236 -7,778 2H11F 13,250 7,876 5,620 69,493 4,177 778 4,491 105,686 6,743 1,972 5,455 12,225 15,988 42,383 63,302 2H11F 13,099 5,524 237 96% 10.8x 9.0x 50.0 49.5 21% 2.1% 5.8x 5.52 3.35 12.7% 16.8x 4.0x 41% 2H11F 806 1% 1% 139 2H11F 64% 57% 38% 31% 2H11F

Source: Company data, Credit Suisse estimates

Companies Mentioned (Price as of 08 Mar 11) BHP Billiton (BLT.L, 2443.00 p, NEUTRAL, TP 3150 p, OVERWEIGHT) BHP Billiton Limited (BHP.AX, A$46.00, NEUTRAL, TP A$55) Rio Tinto (RIO.AX, A$82.38, OUTPERFORM, TP A$110.00) Rio Tinto (RIO.L, 4210.00 p, OUTPERFORM, TP 6000.00 p, OVERWEIGHT) Vale (VALE, $33.23, OUTPERFORM, TP $47.00)

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Disclosure Appendix
Important Global Disclosures I, Paul McTaggart, certify that (1) the views expressed in this report accurately reflect my personal views about all of the subject companies and securities and (2) no part of my compensation was, is or will be directly or indirectly related to the specific recommendations or views expressed in this report. See the Companies Mentioned section for full company names.
3-Year Price, Target Price and Rating Change History Chart for BLT.L
BLT.L Date 01-Dec-08 15-Jan-09 22-Jan-09 23-Jan-09 23-Mar-09 28-May-09 06-Jul-09 31-Jul-09 11-Nov-09 04-Feb-10 19-Apr-10 22-Jun-10 19-Jul-10 20-Oct-10 07-Jan-11 BHP.AX Date 29-Apr-08 01-Dec-08 15-Jan-09 22-Jan-09 23-Mar-09 28-May-09 09-Jun-09 06-Jul-09 31-Jul-09 11-Nov-09 04-Feb-10 20-Apr-10 23-Jun-10 20-Jul-10 21-Oct-10 11-Jan-11 Closing Price (p) 1082 1137 1162 1507 1431 1,287.5 1563 1,816.5 1,853.5 2162 1988 1,816.5 2,192.5 2,492.5 Closing Price (A$) 29.9 28.9 29.14 33.32 34.02 36.5 32.62 37.85 39.1 40.99 42.8 39.14 38.3 41.22 44.61 Target Price Initiation/ (p) Rating Assumption 1500 O X 1420 N 1350 X 1300 U 1600 N 1750 2150 2450 O 2600 2300 N 2500 3000 Target Price Initiation/ (A$) Rating Assumption X 38 O X 33.5 N 32 28 U 36 38 N 42 45 50 O 52 45 N 47.5 52.5
3000 2752 2450 2252 2150 1750 1500 1252 p 1420 1350 1300 O N 1600 U N O N 2600 2300 2500

1752

1-Dec-08 23-Jan-09 752

3-Year Price, Target Price and Rating Change History Chart for BHP.AX
51 46 41 36 31 26 A$ 29-Apr-08 21 1-Dec-08 38 34 32 O 38 36 U N 28 42 45 O N N 50 52 48 45 53

The analyst(s) responsible for preparing this research report received compensation that is based upon various factors including Credit Suisse's total revenues, a portion of which are generated by Credit Suisse's investment banking activities. Analysts stock ratings are defined as follows: Outperform (O): The stocks total return is expected to outperform the relevant benchmark* by at least 10-15% (or more, depending on perceived risk) over the next 12 months. Neutral (N): The stocks total return is expected to be in line with the relevant benchmark* (range of 10-15%) over the next 12 months. Underperform (U): The stocks total return is expected to underperform the relevant benchmark* by 10-15% or more over the next 12 months. *Relevant benchmark by region: As of 29th May 2009, Australia, New Zealand, U.S. and Canadian ratings are based on (1) a stocks absolute total return potential to its current share price and (2) the relative attractiveness of a stocks total return potential within an analysts coverage universe**, with Outperforms representing the most attractive, Neutrals the less attractive, and Underperforms the least attractive investment opportunities. Some U.S. and Canadian ratings may fall outside the absolute total return ranges defined above, depending on market conditions and industry factors. For Latin American, Japanese, and non-Japan Asia stocks, ratings are based on a stocks total return relative to the average total return of the relevant country or regional benchmark; for European stocks, ratings are based on a stocks total return relative to the analyst's coverage universe**. For Australian and New Zealand stocks a 22% and a 12% threshold replace the 10-15% level in the Outperform and Underperform stock

10 -M ar 10 08 -M ay -08 10 -Ju l-0 8 10 -S ep -08 10 -N ov -0 10 8 -Ja n-0 9 10 -M ar09 10 -M ay -09 10 -Ju l-0 9 10 -S ep -09 10 -N ov -09 10 -Ja n-1 0 10 -M ar10 10 -M ay -10 10 - Ju l-1 0 10 -S ep -10 10 -N ov -1 10 0 -Ja n11

10 -M ar 10 08 -M ay -08 10 -Ju l-0 8 10 -S ep -08 10 -N ov -0 10 8 -Ja n-0 9 10 -M ar09 10 -M ay -09 10 -Ju l -0 9 10 -S ep -09 10 -N ov -09 10 -Ja n-1 0 10 -M ar10 10 -M ay -10 10 -Ju l-1 0 10 -S ep -10 10 -N ov -1 10 0 -Ja n-1 1

Closing Price

Target Price

Initiation/Assumption

Rating

O=Outperform; N=Neutral; U=Underperform; R=Restricted; NR=Not Rated; NC=Not Covered

Closing Price

Target Price

Initiation/Assumption

Rating

O=Outperform; N=Neutral; U=Underperform; R=Restricted; NR=Not Rated; NC=Not Covered

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rating definitions, respectively, subject to analysts perceived risk. The 22% and 12% thresholds replace the +10-15% and -10-15% levels in the Neutral stock rating definition, respectively, subject to analysts perceived risk. **An analyst's coverage universe consists of all companies covered by the analyst within the relevant sector. Restricted (R): In certain circumstances, Credit Suisse policy and/or applicable law and regulations preclude certain types of communications, including an investment recommendation, during the course of Credit Suisse's engagement in an investment banking transaction and in certain other circumstances. Volatility Indicator [V]: A stock is defined as volatile if the stock price has moved up or down by 20% or more in a month in at least 8 of the past 24 months or the analyst expects significant volatility going forward. Analysts coverage universe weightings are distinct from analysts stock ratings and are based on the expected performance of an analysts coverage universe* versus the relevant broad market benchmark**: Overweight: Industry expected to outperform the relevant broad market benchmark over the next 12 months. Market Weight: Industry expected to perform in-line with the relevant broad market benchmark over the next 12 months. Underweight: Industry expected to underperform the relevant broad market benchmark over the next 12 months. *An analysts coverage universe consists of all companies covered by the analyst within the relevant sector. **The broad market benchmark is based on the expected return of the local market index (e.g., the S&P 500 in the U.S.) over the next 12 months. Credit Suisses distribution of stock ratings (and banking clients) is: Global Ratings Distribution Outperform/Buy* 46% (63% banking clients) Neutral/Hold* 41% (59% banking clients) Underperform/Sell* 11% (52% banking clients) Restricted 2%

*For purposes of the NYSE and NASD ratings distribution disclosure requirements, our stock ratings of Outperform, Neutral, and Underperform most closely correspond to Buy, Hold, and Sell, respectively; however, the meanings are not the same, as our stock ratings are determined on a relative basis. (Please refer to definitions above.) An investor's decision to buy or sell a security should be based on investment objectives, current holdings, and other individual factors.

Credit Suisses policy is to update research reports as it deems appropriate, based on developments with the subject company, the sector or the market that may have a material impact on the research views or opinions stated herein. Credit Suisse's policy is only to publish investment research that is impartial, independent, clear, fair and not misleading. For more detail please refer to Credit Suisse's Policies for Managing Conflicts of Interest in connection with Investment Research: http://www.csfb.com/research-and-analytics/disclaimer/managing_conflicts_disclaimer.html Credit Suisse does not provide any tax advice. Any statement herein regarding any US federal tax is not intended or written to be used, and cannot be used, by any taxpayer for the purposes of avoiding any penalties. See the Companies Mentioned section for full company names. Price Target: (12 months) for (BLT.L) Method: We set our target price of A$55/GB31.5 in line with our discounted cash flow (DCF) sum-of-parts (SOP) valuation. Weighted average cost of capital (WACC) of 9%. We model (principally) in USD and over life-of-mine for BHP's long life operations. Valuation includes our assessment of the Australian Government's proposed new mining taxes. Risks: Risks to our BHP price targets of A$55/GB31.5 include commodity price risk (from changing world and especially Chinese growth expectations), mining operational risk and regulatory risk (taxes and royalty rates, and possible future carbon taxes). Price Target: (12 months) for (BHP.AX) Method: We set our target price of A$55/(GB31.5) in line with our discounted cash flow (DCF) sum-of-parts (SOP) valuation. Weighted average cost of capital (WACC) of 9%. We model (principally) in USD and over life-of-mine for BHP's long life operations. Valuation includes our assessment of the Australian Government's proposed new mining taxes. Our 12 month target price is set by rolling forward our US$46/share valuation at cost of capital, translating at forward FX rates (0.95 AUD) and taking into account the on-going share buy-back program. Risks: Risks to our BHP price targets of A$55/GB31.5 include commodity price risk (from changing world and especially Chinese growth expectations), mining operational risk and regulatory risk (taxes and royalty rates, and possible future carbon taxes). Please refer to the firm's disclosure website at www.credit-suisse.com/researchdisclosures for the definitions of abbreviations typically used in the target price method and risk sections. See the Companies Mentioned section for full company names. The subject company (BLT.L, BHP.AX) currently is, or was during the 12-month period preceding the date of distribution of this report, a client of Credit Suisse. Credit Suisse provided investment banking services to the subject company (BLT.L, BHP.AX) within the past 12 months. Credit Suisse provided non-investment banking services, which may include Sales and Trading services, to the subject company (BLT.L, BHP.AX) within the past 12 months. Credit Suisse expects to receive or intends to seek investment banking related compensation from the subject company (BLT.L, BHP.AX) within the next 3 months. Credit Suisse has received compensation for products and services other than investment banking services from the subject company (BLT.L, BHP.AX) within the past 12 months.

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Important Regional Disclosures Singapore recipients should contact a Singapore financial adviser for any matters arising from this research report. The analyst(s) involved in the preparation of this report have not visited the material operations of the subject company (BLT.L, BHP.AX) within the past 12 months. Restrictions on certain Canadian securities are indicated by the following abbreviations: NVS--Non-Voting shares; RVS--Restricted Voting Shares; SVS--Subordinate Voting Shares. Individuals receiving this report from a Canadian investment dealer that is not affiliated with Credit Suisse should be advised that this report may not contain regulatory disclosures the non-affiliated Canadian investment dealer would be required to make if this were its own report. For Credit Suisse Securities (Canada), Inc.'s policies and procedures regarding the dissemination of equity research, please visit http://www.csfb.com/legal_terms/canada_research_policy.shtml. Credit Suisse Securities (Europe) Limited acts as broker to RIO.AX, RIO.L. The following disclosed European company/ies have estimates that comply with IFRS: BLT.L, RIO.AX, RIO.L. As of the date of this report, Credit Suisse acts as a market maker or liquidity provider in the equities securities that are the subject of this report.

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