RESOURCING THE FUTURE

WHO WE ARE
About Us
BHP Billiton is the world’ largest diversified natural resources company, with a network of 100,000 emploees and contractors in over 25 countries, and is involved in over 100 operations. Our organization is an Australian based company created through the dual listed companies merger of BHP Limited and Billiton Plc in 2001. We pursue a strategy of developing a diversified portfolio of quality ‘tier one assets’ including Steelmaking products, Nonferrous products, Energy products.

10,000 employees and contractors

profits of $13 billion
(June 2010)

world’s largest mining company measured by revenue world's third-largest company measured by market capitalization – value of $165 billion
(June 2010)

WHY CHINA & POTASH
Mining industry potential
China is rich in natural mineral resources and are widely deposited throughout all provinces. In fact due to the industry and the construction sector, China’s natural resources account for 48.6% of China’s GDP. However the lack of adequate, advanced technologies, hinder the development of the mining industry and as a result, most of China's mineral potential remains unexploited.

An abundance of non-metallic mineral deposits
China is one of the few countries in the world that contains a wide range of non-metallic mineral deposits. China has vast quantities of over 5000 non-metallic mineral reserves, one of which is Potash.

China has a great demand for natural resources
After joining the WTO, China became the world’s largest producer of manufactured goods. China requires massive amounts of minerals and natural resources for continued industrial growth. China is one of the world’s largest consumers of Potash. Potash is a globally traded commodity, primarily used in the manufacture of fertilizers for use in agriculture. The global demand for potash continues to rise due to the steady rise in the global demand for food production. The primary markets for potash consumption are China, the United States, Brazil and India. China imports most of the potash it consumes. Demands for potash are expected to remain high due to expanding economies in developing countries.

Potash is a key resource
Fertilizers - China is the most populous country in the world, resulting in a huge demand for food production, arable land, and fertilizer. However, Chinese demand for potash exceeds supply. With the necessary advancements in mining technology, we believe we can extract China's potash deposits and use them effectively in China. Potash is a green fertilizer - Potash is a naturally abundant mineral and is straightforward to extract and refine. The green aspect of potash adds to the appeal and the competitive edge it has over other fertilizers and minerals. Industrial uses - Although more than 90% of Potash produced is used in agriculture it is also used in some industrial processes such as glass and soap manufacturing and pharmaceuticals. China is the second largest consumer, accounting for about 25% of industrial potash use. Thus, extracting China's potash for domestic usage can contribute to China’s industrialization process.

ENTERING CHINA

Global potash production and reserves by country

Mode Of Entry
• • • • • • • Strategic alliance between BHP Billiton and Salt lake Potash Corp. BHP Billiton acquires 15% equity holdings in Salt Lake Potash Corp. Instant leverage for BHP through pooling, exchanging and integrating business resources for mutual gain. First mover advantage gained by exploiting speed to market and achieve transformative synergies. BHP will provide leading technology in exploration to provide more cost-efficient and sustainable potash in China. Salt Lake Potash Corp gains the opportunity to expand globally with the reputation of the alliance. Early entry into China should guarantee a great strategic alliance. The supply of Chinese potash is then expected to rise accordingly as exploration of potential exploitation sites accelerate over time.

Key facts of Salt Lake Potash Corp
Located in the northwest of China, where the land is rich in non-metallic resources. Trading on the Shen Zhen stock exchange. With potassium chloride reserves of 240m tonnes, the mine can last 60 years. According to the 2011 international price of potash – at $400/tonne, the value of Salt Lake Potash Corp is approxi mately $90bn.
Total Capital
$1600m

Largest Shareholder (30%)
$480m

2nd Largest Shareholder (8.1%)
$130m

Jan 2012: Approaching OHYH regarding to the acquisition and start an 8 week due diligence and negotiation

April 2012: Contract of acquisition agreed and alliance starts

May 2012 - May 2013: BHP utilizes its extensive expertise and technologies to increase efficiency and productivity in compliance with the Chinese government

May 2013 - 2015: Explore new potash mines in China

2015 onwards: Transformative international acquisitions of potential competitors, e.g. PotashCorp.

WHY INVEST IN US
Our offer to you
For this proposed project, the 15% acquisition of Salt Lake Potash Corp requires an initial investment of $1,200m. During the first and second year of the acquisition, Salt Lake Potash Corp will be expected to make a sales turnover of $1,800m (each year). As BHP’s leading technology in potash exploration will increase the production and quality of the product, the sales will increase and the costs will reduce over time. Sales increase to $2,200m in year 3 and 4, and $2,600m from year 5 till year 10. Meanwhile, the estimated costs decrease. The gross profit rises to $330m from year 5 up until year 10. The Net Present Value of the 10-year project is estimated to be approximately $1370m .

KEY FACTS AND FIGURES:
- Initial investment: 15% share acquisition, cost approximately $1,200m - Increasing production, increasing sales, reducing costs - Yearly Return: From 14.36% up to 21.55% - 10 Years project NPV: $1369.797m - Payback period: 4 years 2 weeks - IRR: 23%

Sustainability Analysis
-Large Chinese domestic potash demand market -Strategic Alliance: Increasing efficiency in production and exploitation, reducing costs -Less reliance on imports in long run, greater stability in food prices and production

ECONOMIC

-Concern of stakeholders, respect and promote human rights -Organizational Health, Safety, Environment and Community (HSEC) standards. -BHP Billiton Sustainable Communities’ charity, and the ‘Matched Giving Program’ -Creating employment opportunities with fair wage

SOCIAL

-Committed to Carbon Disclosure Project

ENVIRONMENTAL

-Reductions in energy consumption of 6% and GHG emissions of 300m tonnes in 2010 -Land rehabilitation -R&D effort to extend resource life and to recover, recycle and reuse minerals.