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~~Our purpose is to create long-term shareholder value through the discovery, acquisition, development and marketing of natural resources.~~

~~Our strategy is to own and operate large, long-life, low-cost, expandable, upstream assets diversified by commodity, geography and market.~~

This strategy means more predictable business performance over time which, in turn, underpins the creation of value for our shareholders, customers, employees and, importantly, the communities in which we operate.

We are among the world’s top producers of major commodities including, iron ore, metallurgical coal, conventional and non-conventional oil and gas, copper, energy coal, aluminium, manganese, uranium, nickel and silver.

The Group is headquartered in Melbourne, Australia, and consists of the BHP Billiton Limited Group and the BHP Billiton Plc Group as a combined enterprise, following the completion of the Dual Listed Company (DLC) merger in June 2001.

BHP Billiton Limited and BHP Billiton Plc have each retained their separate corporate identities and maintained their separate stock exchange listings, but they are operated and managed as a single unified economic entity, with their boards and senior executive management comprising the same people.

BHP Billiton Limited has a primary listing on the Australian Securities Exchange (ASX) in Australia. BHP Billiton Plc has a premium listing on the London Stock Exchange (LSE) in the United Kingdom and a secondary listing on the Johannesburg Stock Exchange (JSE) in South Africa. In addition, BHP Billiton Limited American Depositary Receipts (ADRs) and BHP Billiton Plc ADRs trade on the New York Stock Exchange (NYSE) in the United States.

As at 30 June 2012, we had a market capitalisation of approximately US$160.6 billion. For FY2012, we reported net operating cash flow of US$24.4 billion, revenue of US$72.2 billion and profit attributable to shareholders of US$15.4 billion. We have approximately 125,000 employees and contractors working in more than 100 locations worldwide.

~~Base Metals (including Uranium)~~

~~Diamonds and Specialty Products~~

~~Metallurgical Coal~~

~~The past year was characterised by continued high levels of volatility and uncertainty in the world’s economy.~~

The debt issues of the Eurozone remain a global concern. European governments continue to take action to address these challenges, but until they are resolved, we expect the political and financial conditions of the region to remain volatile. While there are some signs of improvement in the United States economy, a recovery will only continue provided there are no large external shocks. Furthermore, China and other emerging economies have also seen subdued growth as they face cyclical and structural pressures.

In the midst of these challenges in the global economic environment, I am pleased to report that BHP Billiton performed well this past financial year. BHP Billiton’s Underlying EBIT margin remained at a robust 39 per cent, despite weakness in commodity markets and industry-wide cost pressures. These results were underpinned by the execution of our diversified strategy.

Your Board is confident that our commitment to invest in high-return growth opportunities will continue to create returns for shareholders. Our largely brownfield projects in execution will continue to drive momentum in our major businesses and create value for our shareholders in the near term. Moreover, the continued urbanisation and industrialisation of developing economies should support both demand for our products and the long-term growth of our strong pipeline of development projects across diverse commodities and geographies.

Recognising these opportunities, we will continue to prioritise investment where a sustainable competitive advantage exists, including geopolitical and fiscal stability. Our project approvals process will ensure that we allocate capital in a disciplined fashion, while the quality and diversity of our asset portfolio will continue to drive strong returns.

Investing in high-return projects, while maintaining a strong balance sheet, underpins our ability to pay a dividend that grows over time. This financial year our progressive dividend increased to 112 US cents per share. Over the last 10 years, we have returned approximately US$54 billion to shareholders through dividends and share buy-backs. That represents around 30 per cent of the Group’s current market capitalisation. Moreover, our unbroken dividend generates a yield that is well in excess of our peer group.

BHP Billiton also remains committed to making a positive contribution to our communities through capital investment, supporting local industry and creating jobs. Expanding on that commitment, this year we once again contributed one per cent of our pre-tax profit to community programs by voluntarily investing US$214 million. This included a US$65 million contribution to BHP Billiton Sustainable Communities, our UK-based charity, and a US$149 million investment in health (8 per cent), education and training (18 per cent), community infrastructure (25 per cent) and other initiatives (49 per cent). This was in addition to the US$11.9 billion in taxes and royalties paid to governments in the jurisdictions where we operate.

Tragically, this year three of our colleagues lost their lives at work. No fatality is acceptable and on behalf of the Board, I offer our condolences to their families, friends and colleagues. This is a stark reminder that we must remain vigilant about safety and continue to live our values. Supporting our communities is part of~~Our BHP Billiton Charter~~ ~~value of Sustainability, which also includes putting the health and safety of our people first and being environmentally responsible. These are set out in~~~~Our Charter~~~~, which is the foundation for everything we do at BHP Billiton.~~

Lastly, it is important to note that as part of our Board succession, in June 2012 Mr Pat Davies was appointed to the Board as a Non-executive Director. Pat’s appointment is a welcome addition to an already strong Board, providing corporate experience in the natural resources sector across a number of commodities and markets.

In summary, while we continue to live with the uncertainty of the global economic environment, we expect the demand from emerging economies, our disciplined approach to capital management and our value-focused strategy to maintain our momentum in delivering strong results long term for our shareholders. On behalf of the Board and everyone involved in the Company, I would like to thank you for your ongoing support of BHP Billiton, as we continue to deliver on our commitments to you, our shareholders.

I am pleased to report that BHP Billiton delivered a solid set of results in FY2012 against a backdrop of challenging industry and macro-economic conditions. Our commitment to investing through the cycle allowed us to reach new production records at 10 of our operations and was key to our financial results.

We continue to focus on safety with a commitment to establish best practice in this area. In this regard, our total recordable injury frequency rate declined by six per cent in FY2012. However, despite this rate now being at its lowest level on record, the tragic loss of three colleagues over the past year is a stark reminder of the inherent risks in our industry and the need to relentlessly pursue the elimination of all fatal risks. Any fatality has a devastating effect on family, friends and colleagues, and the impact of this is felt in every corner of this Company. We truly believe that BHP Billiton can be a business that operates free of work-related fatalities, and it is for this reason that fatality prevention remains our number one priority.

From a global perspective, FY2012 was characterised by uncertainty and volatility surrounding the European debt crisis which, in turn, affected global economic growth and the key markets for our products. The resulting weaker commodity prices coupled with stronger producer currencies and capital and operational cost pressures presented challenges for the global mining industry.

In response to the prevailing market conditions, over the past year we have implemented prudent measures that will safely and substantially reduce operational costs and non-essential expenditure across our entire business. FY2013 will see the benefits of these significant cost reduction measures, along with substantial volume growth, flow through to our financial results.

Despite the volatility in global economic conditions and commodity prices we have experienced in the past financial year, we see significant opportunity for our Company in the near term. While we achieved pleasing production results and production records at 10 of our operations, three of our key assets operated below capacity in FY2012 due to temporary, one-off issues. This was largely due to industrial action in our Queensland Coal business, shut-ins at our non-operated joint venture fields in the Gulf of Mexico and a temporary decrease in grades at our Escondida copper operation. With these businesses expected to return to full capacity, we are confident we will continue to produce industry leading returns for our shareholders now and into the future.

The diversification of the BHP Billiton portfolio continues to be our defining attribute. The quality of our people, our asset base and our unchanged strategy of owning and operating large, long-life, low-cost, expandable, upstream assets diversified by commodity, geography and market, together with our ability and commitment to investing through the cycle and delivering projects on budget and to schedule, is what sets us apart from our peers.

In line with this strategy, over the next two years we will continue to invest in and grow our business. With 20 major projects currently in execution, these well advanced, low-risk, brownfield projects will deliver substantial volume growth and underpin our industry-leading returns in the future. As a result of our disciplined investment strategy and our commitment to maintaining our strong balance sheet, we are largely committed for FY2013 and do not plan to approve any additional major projects in this period.

We remain confident in the long-term outlook and future demand for our products, which will continue to be driven by the urbanisation and industrialisation in the developing world. As current capital commitments reduce, we will allocate future capital to projects that maximise shareholder value and balance both short-term and long-term returns. We are in a fortunate position, with growth options unparalleled in the global resources industry, and together with our proven strategy, we will continue to deliver sustainable and superior long-term returns for our shareholders.

Finally, I would like to take this opportunity to thank our host communities, who continue to support our activities, and our shareholders, customers, suppliers and the many others who help contribute to our success. I would especially like to thank our more than 125,000 employees and contractors around the world. It is their commitment to giving their very best efforts to us each and every day that is the cornerstone of the success of this Company.

BHP Billiton is a Dual Listed Company comprising BHP Billiton Limited and BHP Billiton Plc. The two entities continue to exist as separate companies but operate as a combined Group known as BHP Billiton.

The headquarters of BHP Billiton Limited and the global headquarters of the combined BHP Billiton Group are located in Melbourne, Australia. BHP Billiton Plc is located in London, United Kingdom. Both companies have identical Boards of Directors and are run by a unified management team. Throughout this publication, the Boards are referred to collectively as the Board. Shareholders in each company have equivalent economic and voting rights in the BHP Billiton Group as a whole.

Throughout this Annual Report, the terms BHP Billiton, the Company and the Group refer to the combined group, including both BHP Billiton Limited and subsidiary companies and BHP Billiton Plc and subsidiary companies.

In the past year, we have seen continued growth in the global economy despite significant drops in commodity prices and volatility in currency and financial markets.

At last year’s Annual General Meetings I said, ‘Events this year (FY2014) have been a reminder of how uncertain and volatile politics and economics can be’. This year, those trends have accelerated. While this level of uncertainty in the global economy can be unsettling, for over 130 years your Company has demonstrated the ability to successfully overcome difficult challenges.

Against this backdrop, in FY2015 we set production records across many of our operations. This, combined with a focus on productivity, offset some of the downturn in commodity prices. While our financial performance was impacted by market conditions, continued improvements in operational performance, productivity and higher production produced an Attributable profit of US$1.9 billion and Net operating cash flows of US$19.3 billion. We increased our full-year dividend by two per cent to 124 US cents per share. This is in addition to the pro rata, in-specie distribution of South32 shares to eligible shareholders during the year.

Your Company is in a strong financial position. We have lower debt, a strong balance sheet and solid cash flows. While we are taking an even more focused approach to capital allocation, we continue to invest in those projects that we expect to provide superior long-term returns. The focus on simplification and productivity saw the demerger of South32 in May 2015. This transaction significantly simplified our portfolio, enabling us to focus on generating more value from our large-scale, high-quality assets while allowing shareholders continued ownership of South32’s operations.

Tragically five of our colleagues died at work in FY2015. On behalf of the Board, I extend my deepest sympathy to their families and friends. Your Directors and your management team are committed to a safe workplace.

BHP Billiton is a global company that values our host communities. Our tax payments are just one part of the contribution we make to the communities in which we operate. We paid more than US$7.3 billion to governments worldwide in 2015. BHP Billiton is one of Australia’s largest taxpayers. In addition, we invested more than US$225 million in local communities across the world on projects that include improving access to education and healthcare.

Climate change remains a strategic consideration for your Board. We understand the importance of reducing the Company’s greenhouse gas emissions and ensuring the resilience of our business. Policy measures are also needed to effect reductions in emissions. We are contributing to practical and effective policy development and supporting the efforts of nations to reach a global agreement in Paris in December 2015.

It is with profound sadness that the Board pays tribute to Sir John Buchanan after his passing in July 2015. Sir John served as a Non-executive Director of BHP Billiton from 2003 up until the time of his death and was the Senior Independent Director of BHP Billiton Plc. Sir John provided wise counsel to his fellow Directors and to management and we will miss him greatly – both personally and for his invaluable contribution as a Director.

I would also like to thank Keith Rumble and Carlos Cordeiro for their valuable contribution over the years. Keith Rumble retired from the Board in May this year, while Carlos Cordeiro will retire after the Annual General Meetings later this year. In line with our planned approach to Board succession, we appointed Anita Frew to the Board as a Non-executive Director with effect from 15 September 2015. Anita’s depth of experience in strategic and risk management, marketing and governance across a broad range of sectors will enable her to make a significant contribution to the Board. We also announced that Shriti Vadera will assume the role of Senior Independent Director of BHP Billiton Plc.

The results you will read about in this Report are due to the efforts of all our employees and contractors, led by Andrew Mackenzie. Through their efforts, your Company contributes to stronger economies and improved living standards around the world. Your Board is confident in the outlook for BHP Billiton and we thank you for your continued support of the Company.

BHP Billiton delivered a solid set of results in FY2015, based on strong operating performance and improved productivity against a backdrop of a volatile global economy and lower commodity prices.

Our FY2015 safety performance was disappointing. While we improved total recordable injury frequency performance by two per cent to 4.1 injuries per million hours worked, five colleagues died at work. It is with deep sadness that I extend my condolences to their families, friends and workmates. Safety is unquestionably my first priority, as it is for everyone at BHP Billiton. I am working with all the leaders of BHP Billiton and we have implemented a Company-wide program of engagement to make our workplaces safer than ever before.

In FY2015, the focus on best-in-class performance across our operations delivered productivity gains of US$4.1 billion, two years ahead of target. Iron Ore and Metallurgical Coal achieved annual production records, with increases of 14 per cent and 13 per cent respectively, Petroleum production increased by four per cent and Copper production was flat following the unplanned mill outage at Olympic Dam. This resulted in an overall Group production increase of nine per cent on a copper equivalent basis.

Improved operational productivity has generated strong cash flow to fund the progressive dividend, maintain a solid ‘A’ credit rating and allow us to continue to invest in growth. Further operational productivity will stretch the capacity of existing operations to safely increase volumes at very low cost, and increased capital productivity will reduce the cost of investments. In FY2015, we reduced capital and exploration expenditure to US$11 billion and expect this to decline to US$8.5 billion in FY2016. We have unique, high-return growth opportunities within the portfolio, and our cash flows and disciplined capital management structure will allow us to progress these when the time is right.

In May 2015, we completed the demerger of South32 to create a more focused portfolio for BHP Billiton. This simpler portfolio of assets, with more similar characteristics, allows a sharper focus on the Businesses that generate the majority of our earnings, and increases the potential for further productivity gains and shareholder value. Post-demerger, BHP Billiton’s strategy remains unchanged and Our Charter values of Sustainability, Integrity, Respect, Performance, Simplicity and Accountability will continue to define and guide us.

Local partnerships continue to be an integral part of our business. In FY2015, we contributed US$225 million to programs that will have a positive impact on the quality of life for people in our host communities. This year, we developed a new BHP Billiton Social Investment Framework to build a stronger linkage between our business and the communities that support and host us. The framework has identified three areas of sustainable development that will form the basis of future investments: governance, environment, and human capability and social inclusion.

Climate change considerations remain central to planning and execution. We are taking action to reduce emissions, build the resilience of our operations and supply chains, and work with others to support effective policy development. We are exploring opportunities to invest in low-emission technologies such as carbon capture and storage and battery storage.

We are proud to have publicly committed our support for the recognition of Australia’s Aboriginal and Torres Strait Islander Peoples in the nation’s constitution. We have strong relationships with Indigenous peoples in

Australia and around the world. Our support for recognition in Australia’s foundation governance document is consistent with the values underpinning the relationships we seek to have with Indigenous Australians.

Last month marked the 130th anniversary of the establishment of the Broken Hill Proprietary Company. The longevity of BHP Billiton is a tribute to the enduring innovation, passion and commitment that has supported our rise from a single operation on a remote sheep station in western New South Wales, Australia to a Company operating across the globe.

We will build upon this inheritance by making sure we continue to have the very best people working with the best assets in the best commodities. We remain confident that focus on best-in-class performance, unrivalled asset quality, diversification and investment in high-return projects, will create long-term value through the cycle and deliver superior returns to our shareholders.

In everything we do, we are motivated by the knowledge that the commodities we produce are central to global economic growth and development. Every employee of BHP Billiton is proud of the role the Company plays in supporting the supply of the resources necessary to improve living standards and social progress.

I would like to extend my sincere thanks to our suppliers, customers, host communities and shareholders. I would especially like to thank the employees and contractors whose contributions help BHP Billiton reach its potential, and whose commitment to step up and deliver their best makes me very proud to be part of this great Company.

We are BHP Billiton, a leading global resources company. We are among the world’s top producers of major commodities, including iron ore, metallurgical coal, copper and uranium, and have substantial interests in conventional and unconventional oil and gas and energy coal.

Our strategy is to own and operate large, long-life, low-cost, expandable, upstream assets diversified by commodity, geography and market. Our diversified portfolio of high-quality assets gives us resilience and flexibility to enhance value throughout the commodity cycle.

We extract and process minerals, oil and gas from our production operations located primarily in Australia and the Americas. We sell our products globally with sales and marketing taking place principally through Singapore and Houston, United States. As at 30 June 2015, our workforce consisted of approximately 80,000 employees and contractors.

During FY2015, we demerged a selection of BHP Billiton’s alumina, aluminium, coal, manganese, nickel, silver, lead and zinc assets into a new company, South32.

The safety and health of our people and of the broader communities in which we operate are central to the success of our organisation. Regardless of where our people are located, the area of the organisation in which they work or the type of work they undertake, we strive to create an environment that is free from fatality, injury or occupational illness.

The long-term nature of our operations allows us to build collaborative community relationships. Our size and scope mean we can make a meaningful contribution to communities in which we operate. We aim to maximise the economic and social benefits of our operations to contribute to global economic development, while minimising our environmental footprint, for example through innovation, productivity and technology.

We have strong governance processes in place, high standards of ethical and responsible behaviour, and we are an active contributor to societal development. We care as much about how results are achieved as we do about the results themselves.

BHP Billiton operates under a Dual Listed Company (DLC) structure, with two parent companies BHP Billiton Limited and BHP Billiton Plc operated as a single economic entity, run by a unified Board and management team. Our headquarters are located in Melbourne, Australia.

BHP Billiton Limited has a primary listing on the Australian Securities Exchange (ASX) in Australia. BHP Billiton Plc has a premium listing on the UK Listing Authority’s Official List and its ordinary shares are admitted to trading on the London Stock Exchange (LSE) in the United Kingdom and a secondary listing on the Johannesburg Stock Exchange (JSE) in South Africa. In addition, BHP Billiton Limited American Depositary Receipts (ADRs) and BHP Billiton Plc ADRs trade on the New York Stock Exchange (NYSE) in the United States.

Our Operating Model describes the way the Company is organised and sets out the relationship between the Businesses, Group Functions and Marketing. The Operating Model defines how we work, how we are organised and how we measure performance.

Businesses: Our assets, operations and interests are separated into four business units. These Businesses are: Petroleum and Potash; Copper; Iron Ore; and Coal. The Operating Model has been designed to ensure that decision-making remains as close to the Businesses as possible.

Group Functions: Group Functions support the Businesses and operate under a defined set of accountabilities authorised by the Group Management Committee (GMC). Our Group Functions are primarily located in Melbourne, London and Singapore.

Marketing: Marketing is responsible for securing sales of our product; realising the full value of our products; managing the supply chain from resources to markets; supporting strategic decision-making through market insights; minimising operating costs and optimising working capital.

The core principles of the Operating Model include mandatory performance requirements, common organisational design, common systems and processes, and common planning and reporting.

The Operating Model is designed to deliver a simple and scalable organisation to achieve a sustainable improvement in productivity by providing performance transparency, eliminating duplication of effort and enabling the more rapid identification and deployment of best practice.

Across the globe, communities are experiencing transformational change – economically, socially, technologically and environmentally. As these accelerate and interconnect, they create opportunities for innovation and improvement. We aim to be at the forefront of these shifts and provide the resources needed to turn change into positive development.

We supply the mineral and energy commodities that are crucial for all stages of economic growth. Emerging economies require construction materials like steel as their populations expand and new cities and heavy industry develop. As economies grow and people become wealthier, a consumer economy emerges and steel intensity slows while demand increases for materials that are used in consumer goods, such as copper. Increased income leads to a demand for agricultural commodities, including potash. The products in our portfolio are the raw materials that fuel change and support an improvement in living standards for people in many parts of the world.

While short-term demand for commodities has moderated, our global energy needs are expected to increase by around 30 per cent in the next 20 years. Around two thirds of new demand will originate from Asia, with the majority from China and India. Sub-Saharan Africa is expected to see the fastest growth, albeit from a lower base.

By 2030, around 50 per cent of newly installed electricity capacity in China and India is expected to be renewable energy. However, even with the strong growth in renewables, the energy supply mix in these two Asian giants is expected to continue to be dominated by oil, coal and gas.

Independent bodies such as the International Energy Agency believe that over the next few decades, fossil fuels will remain central to the energy mix as their affordability and the scale of existing infrastructure often make them hard to practically replace, although their exact percentage varies across a range of scenarios.

We think and plan in decades and generations, and we have long recognised that sustainable growth requires an effective response to climate change. Responding to climate change is a priority Board governance and strategic issue for our Company. BHP Billiton accepts the IPCC’s assessment of climate change science, which has found that warming of the climate is unequivocal, the human influence is clear and physical impacts are unavoidable. We believe that the world must pursue the twin objectives of limiting climate change to the lower end of the IPCC emission scenarios in line with current international agreements, while providing access to reliable and affordable energy to support economic development and improved living standards.

Our strategic approach to climate change is underpinned by engagement with policy makers and other stakeholders, including investors, companies and non-government organisations. Industry has a key role to play in climate change policy development by working with governments and other stakeholders to inform the development of an effective, long-term policy framework that delivers a measured transition to a low carbon economy. BHP Billiton believes that any such policy framework should include a complementary set of measures, including a price on carbon, support for low-emissions technologies and measures to build resilience.

This Strategic Report meets the requirements of the Strategic Reporting required by the UK Companies Act 2006 and the Operating and Financial Review required by the Australian Corporations Act 2001.

This Strategic Report provides insight into BHP Billiton’s strategy, operating and business model and objectives. It describes the principal risks the Company faces and how these risks might affect our future prospects. It also gives our perspective on our recent operational and financial performance.

We intend this disclosure to assist shareholders and other stakeholders to understand and interpret the Consolidated Financial Statements prepared in accordance with International Financial Reporting Standards (IFRS) included in this Annual Report. The basis of preparation of the Consolidated Financial Statements is set out in note 41 ‘Basis of preparation and measurement’ to the Financial Statements. To obtain full details of the financial and operational performance of BHP Billiton this Strategic Report should be read in conjunction with the Consolidated Financial Statements and accompanying notes.

Section 1 of this Annual Report 2015 constitutes our Strategic Report 2015. References to sections beyond section 1 are references to sections in this Annual Report 2015. Shareholders may obtain a hard copy of the Annual Report free of charge by contacting our Share Registrars, whose details are set out in our Corporate Directory at the end of this Annual Report.

All references to websites in this Annual Report are, unless expressly stated otherwise, intended to be inactive textual references for information only and any information contained in or accessible through any such website does not form a part of this Annual Report.

This Annual Report contains forward looking statements, including statements regarding trends in commodity prices and currency exchange rates; demand for commodities; production forecasts; plans, strategies and objectives of management; closure or divestment of certain operations or facilities (including associated costs); anticipated production or construction commencement dates; capital costs and scheduling; operating costs; anticipated productive lives of projects, mines and facilities; provisions and contingent liabilities; and tax and regulatory developments.

Forward looking statements can be identified by the use of terminology such as ‘intend’, ‘aim’, ‘project’, ‘anticipate’, ‘estimate’, ‘plan’, ‘believe’, ‘expect’, ‘may’, ‘should’, ‘will’, ‘continue’ or similar words. These statements discuss future expectations concerning the results of operations or financial conditions, or provide other forward looking information.

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, and which may cause actual results to differ materially from those expressed in the statements contained in this Annual Report. Readers are cautioned not to put undue reliance on forward looking statements.

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 products produced, which may vary significantly from current levels. These variations, if materially adverse, may affect the timing or the feasibility of the development of a particular project, the expansion of certain facilities or mines, or the continuation of existing operations.

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 the countries where we are exploring or developing projects, facilities or mines, including increases in taxes, changes in environmental and other regulations and political uncertainty; labour unrest; and other factors identified in the risk factors set out in section 1.7.2 of this Annual Report.

Except as required by applicable regulations or by law, the Group does not undertake to publicly update or review any forward looking statements, whether as a result of new information or future events.

In August 2014, we announced our intention to create a new company through the demerger of a selection of assets that included BHP Billiton’s interest in its integrated Aluminium business, Energy Coal South Africa, Illawarra metallurgical coal, the Manganese business, the Cerro Matoso nickel operation and the Cannington silver-lead-zinc mine. After receiving shareholder approval for the demerger on 6 May 2015 (with approximately 98 per cent of votes cast being in favour), the new company, South32, was listed on the ASX as an independent company on 18 May 2015 and the formal separation of South32 from BHP Billiton was completed on 25 May 2015. Eligible BHP Billiton Limited and Plc shareholders received shares in South32 in the demerger through a pro rata, in-specie distribution, as well as retaining their existing shares in the Group.

For IFRS accounting purposes, the demerger was deemed completed as of 8 May 2015 (the date of loss of control) and the demerged assets are treated as Discontinued operations in BHP Billiton’s Financial Statements. Unless otherwise stated, throughout this Annual Report financial information for FY2015 relating to the demerged assets is reported for the period from 1 July 2014 to 8 May 2015 as Discontinued operations, while FY2015 production information relating to the demerged assets is reported for the period from 1 July 2014 to 30 April 2015 to more closely align with BHP Billiton’s month-end reporting systems. Continuing operations refers to the assets that formed part of the BHP Billiton Group as at 30 June 2015.

Comparative information for the years ended 30 June 2014 and 30 June 2013 has been restated for the effects of the application of IFRS 5/AASB 5 ‘Non-current Assets Held for Sale and Discontinued Operations’ following the demerger of South32. The Consolidated Statement of Comprehensive Income, the Consolidated Balance Sheet and the Consolidated Statement of Changes in Equity for these periods are not required to be restated.

For more information on the South32 demerger and reporting of Continuing and Discontinued operations, refer to sections 1.6.4 and 2.1.7 of this Annual Report and note 29 ‘Discontinued operations’ to the Financial Statements.

We are among the world’s top producers of major commodities, including iron ore, metallurgical coal, copper and uranium, and have substantial interests in conventional and unconventional oil and gas and energy coal.

Our corporate purpose is to create long-term shareholder value through the discovery, acquisition, development and marketing of natural resources.

Our strategy is to own and operate large, long-life, low-cost, expandable, upstream assets diversified by commodity, geography and market.

Our unique position in the resources industry is due to our proven and consistent strategy. In line with our strategy, we pursue growth opportunities consistent with our core skills of:

evaluating, developing and extracting resources in our Businesses;

distributing and selling our products, and managing financial risk associated with our revenue through Marketing;

defining and governing world-class functional standards, which are implemented Group-wide through our Group Functions.

We operate in a dynamic, globally competitive environment. Our strategy has delivered strong Company performance over time which, in turn, underpins the creation of long-term sustainable value for our shareholders, customers, employees and the communities in which we operate. We aim to deliver long-term sustainable value rather than focusing on short-term returns.

In pursuing our strategy through all stages of the economic and commodity cycles, we are guided byOur BHP Billiton Charter values of Sustainability, Integrity, Respect, Performance, Simplicity and Accountability.

Our overriding commitment is to ensuring the safety of our people, and respecting our environment and the communities in which we work. This commitment informs everything we do and influences every aspect of our work.

Operational capability is fundamental to our strategy. It is reflected inOur Charter, in particular our values of Performance – achieving superior business results by stretching our capabilities, and Simplicity – focusing our efforts on the things that matter most.

our people start each day with a sense of purpose and end the day with a sense of accomplishment;

our communities, customers and suppliers value their relationships with us;

our asset portfolio is world-class and sustainably developed;

our operational discipline and financial strength enables our future growth; and

our shareholders receive a superior return on their investment.

Discovery through brownfield and greenfield exploration.

Evaluating our portfolio.

Divestment and acquisition.

Our portfolio of existing assets in large resource basins provides us with potential growth opportunities. This has allowed us to reduce our greenfield exploration expenditure and rationalise our brownfield exploration program. We continue to focus our greenfield exploration on copper in Chile, Peru and the southwestern United States, and conventional oil and gas, predominantly offshore in the Gulf of Mexico, Western Australia and Trinidad and Tobago. We evaluate the results of our brownfield and greenfield exploration to identify future growth projects consistent with our strategy to own and operate large, long-life, low-cost, expandable, upstream assets. We also continually evaluate our portfolio and consider divestment and acquisition opportunities.

Evaluating and developing projects.

The evaluation and development of large-scale resource projects generates significant value for BHP Billiton. We have a number of high-quality growth projects currently under development. We also have a large number of growth opportunities in our project pipeline in varying stages of evaluation.

In our development process, these projects progress through feasibility to execution only after internal and external approvals. Our rigorous internal review process requires projects to pass through various tollgates for internal approvals at each stage, including Board approval for major projects.

Potential expansion projects must compete for capital within BHP Billiton and approved only if they meet our strict criteria for investment.

Open-pit and underground mining.

Extracting conventional and unconventional oil and gas.

Processing and refining.

Across our global operations, the diversification of our portfolio of assets by commodity, geography and market continues to be one of our differentiating features. Our goal is to safely operate all our assets at capacity through mining, extracting, processing and transporting commodities.

We continue to set production records at a number of assets. Through the development and use of standard operating practices and technology, we are driving efficiencies through improved capital intensity, labour productivity and increased utilisation of plant and machinery.

Our extraction and processing activities are mindful of our ongoing sustainability obligations, including rehabilitation at the end of the asset life.

Developing the Group-wide view of the markets and future pricing.

Supporting the Businesses to maximise the value of upstream resources.

Managing the supply chain to customers.

Achieving market clearing prices for the Group’s products.

Selling the Group’s products and purchasing all major raw materials.

Managing price risk.

Due to its proximity to our customers in Asia, the primary hub for our marketing activities is Singapore, while our marketing of oil and gas is headquartered in Houston, United States. In addition, we have marketers located close to our customers in nine cities around the world.

Marketing’s responsibilities require an active presence in the various commodities markets, the global freight market and the crude and gas pipeline transportation market, through which we manage the supply chain for our products and develop strong integrated relationships between our Businesses and our customers.

Our market insight is strengthened by the multi-commodity nature of our organisation, our proximity to our customers and the flow of information in our centralised marketing structure.

A description of our risk factors, including those that impact our business model, and our approach to risk management are presented in section 1.7 of this Annual Report.

The global economy grew at a modest rate in FY2015 with a mild improvement in developed economies offsetting a moderation in emerging markets.

In China, a slowdown in the property sector and fixed asset investment led to lower economic growth following policy tightening in CY2014. Consumer spending remained resilient reflecting the continued rebalancing of the economy. A number of interest rate reductions, cuts in bank reserve requirements, boosts to infrastructure spending and administrative measures supporting the property market are likely to buttress growth over the remainder of CY2015. In line with our expectations, the economy is growing more slowly as it matures over the medium term and the government’s reform program promotes domestic consumption over investment. We expect the authorities will continue to press ahead with reform in a cautious but sustained manner as they seek to improve the efficiency of capital allocation in the economy, while maintaining support for employment.

The US economy continued to improve despite weakness in the March 2015 quarter caused by severe weather in the northeast and a stronger US dollar. Ongoing strength in the labour market, rising disposable incomes, higher equity markets and improved housing prices supported consumer demand. After a period in which businesses failed to respond to improved economic conditions and higher levels of profitability, corporate investment has begun to show signs of recovery. The Federal Reserve is expected to begin increasing interest rates in the first half of CY2016.

The European Central Bank began a program of quantitative easing in March 2015, which appears to be driving a modest pick-up in economic growth. Activity has improved across the Eurozone, with the exception of Greece, reflecting a broad-based lift in domestic demand. We expect this improvement in growth to continue in FY2016.

Japan’s economy saw growth improve in annualised terms as the year progressed, supported by the Bank of Japan’s quantitative easing and a weaker yen. Growth should be supported by stronger business investment into FY2016. A longer-term, sustainable recovery is contingent on the scale and speed of structural reform.

The physical impacts of climate change and various regulations that seek to address climate change may affect our operations, productivity and the markets in which we sell our products. Physical effects may include changes in rainfall patterns, water shortages, rising sea levels, increased storm intensities and higher temperatures. In

addition national governments have already introduced or are contemplating the introduction of, regulatory responses to greenhouse gas emissions from the combustion of fossil fuels to address the impacts of climate change. There has also been a number of divestment campaigns that have focused on fossil fuels ‘stranded assets’. We continue to welcome the opportunity to engage with our shareholders on our business strategy to ensure the benefits and resilience of our portfolio, including in a carbon constrained world, are understood.

A number of external factors and trends may continue to have a material impact on our financial and operational results, as described in section 1.15.1 of this Annual Report. These factors include commodity prices, exchange rates and operating costs.

The chart below presents the price movements in our core Business commodities over the past 10 years. Over this period we have benefited from generally strong commodity prices, which have trended downwards in FY2015 and this trend has continued post 30 June 2015.

A summary of the pricing trends for our most significant commodities for FY2015 is presented in section 1.15.1 of this Annual Report.

At BHP Billiton we have a long-standing and robust corporate planning process that underpins the development and delivery of our strategy.

Our planning process involves a review of our strategy against a constantly changing external environment and the risks and opportunities this presents, to optimise our returns to our shareholders.

Board and GMC ownership and regular review of strategy and strategic priorities.

Regular engagement between the GMC, Businesses, Group Functions and Marketing.

Application of a consistent and integrated planning process where Business, Group Functions and Marketing plans are aggregated to form the overall corporate plan.

Cycle begins with long-term strategic plans followed by short-term plans to deliver strategic imperatives.

Ensure our portfolio and plans are resilient under both long-term scenarios and short-term shock events.

A Board Strategy Forum is held regularly where the Board and the GMC actively discuss and debate the Company’s strategy. Businesses prepare long-term plans and discuss these plans at strategic reviews with the GMC.

A BHP Billiton 20-year Plan is prepared based on input from the Businesses’ long-term plans and is optimised for an annual capital allocation limit that maximises total shareholder returns, while ensuring financial risks are appropriately mitigated. Within this capital ceiling, major growth options are optimally sequenced over the20-year Plan through our capital allocation process.

The capital allocation process includes analysis of net present value (NPV), internal rates of return (IRR), return on capital (ROC) and margin analysis to inform decision-making. This process is further described in section 1.6.3 of this Annual Report. All available growth options are assessed and prioritised to generate a high-value and capital-efficient portfolio, which provides flexibility to return excess cash to shareholders. The increased competition for capital has improved our capital productivity.

We believe that the rigour of our corporate planning process, combined with the flexibility it provides the Company to quickly respond to an inherently dynamic external environment, is essential to maximise total shareholder returns.

The starting point of our planning process is the construction of a central case, built through an in-depth, bottom up analysis using rigorous processes, benchmarked with external views, and thoroughly reviewed and endorsed periodically by the GMC and the Board. Our current central case assumes the US economy continues to recover and strengthen, progressive development of China and India, integration of emerging economies into a multi-polar economic environment, and action on climate change centred on national policies with short-term prioritisation to adaptation and a long-term shift toward mitigation.

Our scenarios do not constitute preferred outcomes for BHP Billiton. The Company’s approach to critical global challenges, such as the importance of addressing climate change, continues to be based onOur Charter values, including our value of Sustainability. Our position on climate change is discussed further in sections 1.6.1 and 1.14 of this Annual Report.

The scenarios are designed to be divergent, but also plausible and internally consistent, spanning unique potential future business environments. An outline of the key characteristics of each of our scenarios is set out below:

Robust global economic growth sustains strong impetus to develop and implement cleaner, more energy efficient solutions that support growth. Unified societal action to address climate change leads to high cooperation and commitment to limit emissions. Technology plays a pivotal role with breakthroughs in new, next generation clean energy technologies. Higher-cost options are often deployed to meet lower CO2 stabilisation targets. There is an orderly transition to a two degrees Celsius world.

Strong global growth led by China and the United States underpinned by liberalised trade. Coordination in environment, technology and trade policy reduces water and food constraints. Technology dynamism with significant investment in research and development underpinned by high economic growth, and a coordinated response to addressing climate change.

High, sustainable economic growth is unlocked by productivity gains in advanced economies. Reform success in India achieves high transformative growth. Parts of the global resource base are not as accessible as once thought. Rapidly growing production rates of some commodities deplete basins and reserve replacement is costly. More difficult to access capital in resource rich economies given greater uncertainty in regulatory regime and higher capital costs. Technology development is focused on highly differentiated products including uptake and transfer of information and communications technology (ICT), robotics and bio-technology. There is less technology transfer from the major economies to emerging economies.

A future state enmeshed in economic stagnation and protectionism. Nationalism drives economic policy rather than reform. Security of supply rather than lowest cost sourcing drives resources investment policy. Global cooperation is limited and research and development dwindles with low private sector capacity and government support. Food and water supply does not meet global requirements provoking instability in some economies. Climate change commitments are abandoned in favour of adaptation.

Tracking of signposts (trends) and triggers (events) across scenarios is integral to our planning process. These signposts and triggers provide an indication of which scenarios are becoming more or less dominant through time. They allow early awareness for the move towards a scenario, offering us a powerful decision-making tool that would enable us to act early. For example, the nature and pace of growth in global foreign direct investment, including patent, trademark and design application trends by industry are indicator variables that measure the pace of uptake of global and inter-regional technology transfer, a signpost that reflects the nature and extent of liberalised trade. An example of a potential trigger event is a ratified accord on climate change during the 2015 United Nations Framework Convention on Climate Change Conference of the Parties, and binding agreements on longer-term carbon emissions targets were enacted across key economies.

Our analysis highlights that our uniquely diversified, high-quality portfolio of assets is robust across each of our scenarios. For example, in a carbon constrained world, we believe there is a likelihood of upside for uranium and our high-quality hard coking coal (with lower smelting emissions) and iron ore lump product (for direct blast furnace feed). In addition, we expect that copper would be resilient and offer continued opportunity for growth,

while our gas exposure may yet provide opportunities during a transition to a lower-carbon economy. In general, we anticipate that these commodities are robust and could help mitigate potential negative impacts in other commodities.

Our GMC maintains a strong focus on the following strategic priorities in order to execute the Company’s strategy. A number of these priorities are monitored by the GMC using the key performance indicators as presented in section 1.10 of this Annual Report.

The health, safety and wellbeing of our people are central to the success of our organisation. Regardless of where our people are located or the type of work they undertake, we strive to create a working environment that is free from occupational illness or injury. Identifying and managing fatal and material risk is a critical component of our management approach. By understanding and managing our risks, we provide greater protection for our people, communities and assets.

Despite our goal to achieve zero work-related fatalities, tragically we lost five of our colleagues in FY2015. Four fatalities occurred during on-site work activities and one fatality occurred in an off-site transportation accident. Independent investigations were undertaken for each incident, with remedial action taken and findings from the investigations shared across the Group. In FY2014, we had no work-related fatalities at our operated assets, a goal that we will continue to work towards.

As part of our constant focus to eliminate fatal and other serious incidents, a Company-level safety intervention was initiated in FY2015. The safety intervention was launched across our business through a variety of methods, including workshops, team talks and surveys. Feedback was presented at our senior leaders’ meeting in July 2015, identifying the key controls, programs, systems, processes and tools currently in place that require improvement and Company-wide adoption through focused leadership.

We strive to be a valued partner in the communities in which we operate and, through all our interactions, seek to foster meaningful, long-term relationships that respect local cultures and create lasting benefits. We are also proud of our broader contribution to society. Our commodities support economic development and ultimately lead to urbanisation and improved standards of living. Through employment, taxes and royalties, we support local, regional and national economies. Where possible, we purchase local goods and services and develop infrastructure that benefits entire communities.

We voluntarily invest one per cent of our pre-tax profit, calculated on the average of the previous three years’ pre-tax profit, in community programs. Since 2001, BHP Billiton has committed more than US$2 billion in programs that aim to have a long-lasting, positive impact on quality of life around the world. During FY2015, our voluntary community investment totalled US$225 million, comprising US$142 million in cash, in-kind support and administrative costs and a US$83 million contribution to the BHP Billiton Foundation.

We have an integrated approach to addressing climate change that has three key areas: mitigation, adaptation and low-emissions technology (LET). As well as taking action to reduce emissions, adapt to the physical impacts of climate change, develop and deploy LETs and engage in the policy debate, we continue to identify and assess the impacts of climate change on our portfolio. We have a robust corporate planning process that includes testing the resilience of our portfolio and investment decisions against a range of future scenarios.

We accept the Intergovernmental Panel on Climate Change’s (IPCC) assessment of climate change science which has found that warming of the climate is unequivocal, the human influence is clear and physical impacts are unavoidable.

The world must pursue the twin objectives of:

~~We prepare our consolidated financial statements~~

–

providing access to reliable and affordable energy to support economic development and improved living standards.

Under all current plausible scenarios, fossil fuels will continue to be a significant part of the energy mix for decades.

Therefore, there needs to be an acceleration of effort to drive energy efficiency, develop and deploy low-emissions technology and adapt to the impacts of climate change.

There should be a price on carbon, implemented in a way that addresses competitiveness concerns and achieves lowest cost emissions reductions.

continue to take action to reduce our emissions;

build resilience of our operations, investments, communities and ecosystems to climate change impacts;

seek to enhance the global response by engaging with governments, recognising their role as policy makers;

work in partnership with resource sector peers to improve sectoral performance and increase the industry’s influence in policy development to deliver effective long-term regulatory responses;

contribute to reducing emissions from the use of fossil fuels through material investments in low-emission technology.

Further information on our sustainability commitments, standards and performance can be found in section 1.14 of this Annual Report.

Additional information is also available in the Sustainability Report 2015, which can be found online atwww.bhpbilliton.com.

During the past year, we have continued to focus on sustainable improvement in productivity across the Company. Our people have worked smarter to identify and implement more productive ways of working. Our portfolio, common systems, structures and culture have also resulted in greater volume growth from our existing plant and equipment at lower unit costs.

Our Operating Model remains the foundation for our sustainable productivity gains. It guides how our people work together, defines how we are organised and allows us to measure operational and financial performance across our business. It also helps remove duplication, build capability and more rapidly identify and deploy best practices.

To achieve functional excellence across the Company, we are developing our people and encouraging our teams to learn from each other. Our focus is on creating an inclusive environment where every employee feels they can contribute to improving our performance.

Increasing transparency and access to robust data across the organisation has improved our ability to deliver sustained improvements. By using 1SAP as our single Company-wide resource planning system, our teams have access to best-in-class business processes, standard metrics and reports.

Our focus on productivity has improved operating performance at each of our Businesses. Our long-term commitment to improve productivity across our Company continues to create significant value for shareholders and other stakeholders.

Approach: Escondida benchmarked its truck performance and maintenance activities, both internally and externally, and reviewed how it conducted truck maintenance and shift activities to identify improvement opportunities.

A range of initiatives were implemented to improve haul truck production time. Less frequent and larger blasts were used to reduce interruptions to production. Trucks were only taken out of production for preventative maintenance determined by equipment condition, rather than by time in service. The mine also implemented new crib huts and shift relief, called hot seating, to keep the trucks moving.

Outcomes: Escondida has set a new internal BHP Billiton benchmark for sustainable ultra-class haul truck performance. In FY2015, truck utilisation of available time increased to 83 per cent from 75 per cent in the previous year. This allowed the operation to move 438 million tonnes of material, an increase of six per cent compared to FY2014.

Productivity results: During FY2015, Escondida decreased its mine production unit cost by 10 per cent through its productivity initiatives.

Our priorities for capital management remain unchanged. The quality of our assets and adherence to our strategy has differentiated our performance and maximised shareholder returns by allocating capital in a disciplined manner.

Our diversified and high-margin portfolio delivers a higher return on capital with lower volatility, when compared with many peers. Over the last 10 years, we have returned US$67 billion to shareholders in the form of dividends and buy-backs.

Many of the areas to which we direct our cash flow are interconnected. In order to make capital allocation decisions, we test each decision against a range of short-term and long-term criteria across several scenarios. We aim to optimise for net present value (NPV), return on capital (ROC), internal rate of return (IRR) and margin, while remaining mindful of portfolio construction and cash flow at risk. No single metric can dominate the process given the potential to create imbalances and all alternatives actively compete.

Our portfolio remains a key point of difference. However, because it is opportunity-rich, capital discipline is more important. By reducing annual expenditure, we have created even more competition for capital and we have sharpened our focus on our core commodities and our high-margin major basins.

Given our portfolio of long-life orebodies, we also consider the value of future options as we must preserve their value at low cost.

BHP Billiton remains committed to a progressive dividend policy. The aim of this policy is to steadily increase or at least maintain the dividend per share in US dollars at each half-yearly payment.

On 25 August 2015, the Board determined a final dividend for the year of 62 US cents per share. Together with the interim dividend of 62 US cents per share paid to shareholders on 31 March 2015, this brought the total dividend determined for the year to 124 US cents per share, a two per cent increase over the previous year’s full-year dividend of 121 US cents per share.

Our solid ‘A’ credit rating provides flexibility and access to debt capital markets. Despite the reduction in commodity prices broadly over FY2015, the Group maintained a strong balance sheet and reduced net debt by five per cent to US$24.4 billion. Improved operating and capital productivity supported by our flexible investment program generated free cash flow of US$6.3 billion.

During FY2015, the Group issued a three tranche Euro denominated bond under its Euro Medium Term Note Programme, comprising EUR600 million Floating Rate Notes due 2020 paying interest at three-month Euribor plus 35 basis points, EUR650 million 0.75 per cent bonds due 2022 and EUR750 million 1.50 per cent bonds due 2030. The Group also priced a five-year A$1.0 billion note issue under its Australian Medium Term Note Program, paying interest at 3.00 per cent due 2020.

In August 2014, the Group redeemed all outstanding Petrohawk Energy Corporation 7.25 per cent Senior Notes due August 2018 and 6.25 per cent Senior Notes due June 2019 at the applicable call prices. The aggregate principal value of the notes redeemed was approximately US$1.8 billion.

The Group has a US$6.0 billion commercial paper program backed by a US$6.0 billion revolving credit facility. The facility expires in May 2020 and has a one-year extension option. As at 30 June 2015, the Group had US$nil outstanding in the US commercial paper market and the Group’s cash and cash equivalents on hand were US$6.8 billion.

By reducing annual capital and exploration expenditure and increasing competition for capital within the Group, we have prioritised higher quality growth at a higher average rate of return on incremental investment. We continue to invest selectively in those projects that are capital efficient and have high return growth.

The Escondida Oxide Leach Area Project (OLAP) was completed in November 2014. The Project involved the creation of a new dynamic leaching pad and mineral handling system that included several overland conveyors. The new pad is expected to maintain oxide leaching capacity at current levels. OLAP was approved in February 2012 with budgeted expenditure of US$721 million (US$414 million BHP Billiton share) and a US$212 million increase in the budget of OLAP to US$933 million (US$536 million BHP Billiton share) was approved in March 2014. Expected final cost is US$899 million (US$517 million BHP Billiton share).

In March 2011, we approved the third expansion of the Hay Point Coal Terminal. The expansion of the terminal will deliver an additional 11 Mt of annual port capacity (100 per cent basis). The project investment has a budget of US$1.5 billion (BHP Billiton share). In January 2015, first coal was loaded through the expanded terminal and the project was 97.6 per cent complete as at 30 June 2015.

The Escondida Organic Growth Project 1 (OGP1) is a new concentrator with a 152 kilotonnes per day (ktpd) plant. We expect this project to provide additional processing capacity and allow access to high-grade ore. OGP1 was approved in February 2012 with budgeted expenditure of US$3.8 billion (US$2.2 billion BHP Billiton share). A US$361 million increase in the budget of OGP1 to US$4.2 billion (US$ 2.4 billion BHP Billiton share) was approved in October 2014 following challenges associated with contractor’s progress. The Project was completed in May 2015 and is currently in the commissioning and ramp-up phase.

At the end of FY2015, BHP Billiton had four major projects under development with a combined budget of US$7.0 billion.

Information in this section has been presented on a Continuing operations basis to exclude the contribution from assets that were demerged with South32, unless otherwise noted. Details of the contribution of the South32 assets to the Group’s results are disclosed in note 29 ‘Discontinued operations’ to the Financial Statements.

Capital and exploration expenditure is disclosed for each Business in the table below.

Capital expenditure encompasses expenditure on major projects, as set out in section 2.4 of this Annual Report, and capital expenditure on sustaining and other items.

BHP Billiton’s share of capital and exploration expenditure declined by 24 per cent during FY2015 to US$11.0 billion. Our rate of investment is expected to decline to US$8.5 billion in FY2016 and US$7.0 billion in FY2017.

We continue to concentrate our efforts on the assets and operations where we enjoy economies of scale and a competitive advantage. Our focus remains on our four major Businesses of Iron Ore, Petroleum, Copper, and Coal, with Potash as a potential fifth. This diversified portfolio of low-cost assets, unrivalled in scale and quality, provides resilience and flexibility to enhance value for shareholders.

BHP Billiton’s integrated Aluminium business;

Energy Coal South Africa;

Illawarra metallurgical coal;

Our Board and Group Management Committee (GMC) monitor a range of financial and operational performance indicators, reported on a monthly basis, to measure performance over time. We also monitor a comprehensive set of health, safety, environment and community (HSEC) contribution indicators.

BHP Billiton’s Manganese business;

~~1.5~~ Our strategic priorities remain unchanged. Consistent with our established strategy, our portfolio provides broad exposure to steelmaking raw materials, copper, energy and, potentially, agricultural markets and will remain diversified by commodity, geography and market.

For IFRS accounting purposes, the demerger was deemed completed as of 8 May 2015 (the date of loss of control) and the demerged assets are treated as Discontinued operations in BHP Billiton’s Financial Statements. Unless otherwise stated, throughout this Annual Report, financial information for FY2015 relating to the demerged assets is reported for the period from 1 July 2014 to 8 May 2015 as Discontinued operations, while FY2015 production information relating to the demerged assets is reported for the period from 1 July 2014 to 30 April 2015 to more closely align with BHP Billiton’s month-end reporting systems. Where noted, Continuing operations refers to the assets that formed part of the BHP Billiton Group as at 30 June 2015.

For information relating to a description of the demerged assets and production associated with these assets, refer to sections 2.1.7 and 2.2.2 of this Annual Report and note 29 ‘Discontinued operations’ to the Financial Statements.

We believe the identification and management of risk are central to achieving our corporate purpose of creating long-term shareholder value.

Risk has the potential to impact our health and safety, environment, community, reputation, regulatory, market and financial performance and thereby the achievement of our corporate purpose.

By understanding and managing risk, we provide greater certainty and confidence for our shareholders, employees, customers, suppliers, and for the communities in which we operate. Successful risk management can be a source of competitive advantage.

Our risks are viewed and managed on a Group-wide basis. The natural diversification in our portfolio of commodities, geographies, currencies, assets and liabilities is a key element in our risk management approach.

Risk management is embedded in our critical business activities, functions and processes. Materiality and our tolerance for risk are key considerations in our decision-making.

Risk issues are identified, analysed and assessed in a consistent manner. Performance requirements exist for the identification, assessment, control and monitoring of material risk issues that could threaten our corporate purpose and business plans. These include that:

The potential for impacts on the achievement of our corporate purpose and business plans is identified through risk assessments using approved materiality and tolerability criteria. The severity of any risk event is assessed according to a matrix that describes the degree of harm, injury or loss from the most severe impact associated with that risk event, assuming reasonable effectiveness of controls.

A risk assessment (risk identification, risk analysis, including likelihood and impact assessment and risk evaluation) is conducted for material risk issues.

Risk controls are designed, implemented, operated and assessed to produce a residual risk that is tolerable. Performance standards are established for critical controls over material risks with supporting verification processes.

We have established processes that apply when entering or commencing new activities in high-risk countries. Risk assessments and a supporting risk management plan are required to ensure that potential reputation, legal, business conduct and corruption-related exposures are managed and legislative compliance is maintained, including relevant anti-corruption legislation and the application of any relevant sanctions or trade embargos.

Our risk management governance approach is described in sections 3.14.1 and 3.15 of this Annual Report.

We believe that because of the international scope of our operations and the industries in which we are engaged, there are numerous factors that may have an adverse effect on our results and operations. The following describes the material risks that could affect BHP Billiton.

We believe that, because of the international scope of our operations and the industries in which we are engaged, there are numerous factors which may have an effect on our results and operations. The following describes the material risks that could affect the BHP Billiton Group.

Fluctuations in commodity prices and impacts of ongoing global economic volatility may negatively affect our results, including cash flows and asset values

The prices we obtain for our oil, gas and minerals ~~and other commodities~~ are determined by, or linked to, prices in world markets, which have historically been subject to substantial volatility. Our usual policy is to sell our products at the prevailing market prices. The diversity provided by our broad portfolio of commodities does not fully insulate the effects of price changes. Fluctuations in commodity prices can occur due to sustained price shifts reflecting underlying global economic and geopolitical factors, industry demand and supply balances, product substitution and national tariffs. The ongoing global economic volatility following the global financial and European sovereign debt crises has negatively affected commodity market prices and demand. Sales into European countries generated US$8.4 billion (FY2011: US$9.4 billion), or 11.6 per cent (FY2011: 13.1 per cent), of our revenue in the year ended 30 June 2012. The ongoing uncertainty and impact on global economic growth, particularly in the developed economies, may adversely affect future demand and prices for commodities. The impact of potential longer-term sustained price shifts and shorter-term price volatility creates the risk that our financial and operating results and asset values will be materially and adversely affected by unforeseen declines in the prevailing prices of our products.

~~Our financial results 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 rates 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, Chilean peso, Brazilian real and US dollar are the most important currencies influencing our operating costs. The appreciation in recent years of currencies in which the majority of our operating costs are incurred, (in particular the Australian dollar, if sustained relative to US dollar denominated commodity prices), has and may continue to adversely impact our profit margins. Given the dominant role of the US currency in our affairs, the US dollar is the currency in which we present financial performance. It is also the natural currency for borrowing and holding surplus cash. We do not generally believe that active currency hedging provides long-term benefits to our shareholders. From time to time, we consider currency protection measures appropriate in specific commercial circumstances, subject to strict limits established by our Board. Therefore, in any particular year, our financial results may be negatively affected by currency exchange rate fluctuations.

The Chinese market has become a significant source of global demand for commodities. In CY2011, China represented 61 per cent of global seaborne iron ore demand, 39 per cent of copper demand, 40 per cent of nickel demand, 43 per cent of aluminium demand, 48 per cent of energy coal demand and 10 per cent of oil demand. China’s demand for these commodities has been driving global materials demand and price increases over the past decade. Sales into China generated US$21.6 billion (FY2011: US$20.3 billion), or 29.9 per cent (FY2011: 28.2 per cent), of our revenue in the year ended 30 June 2012. A slowing in China’s economic growth could result in lower prices and demand for our products and negatively impact our results.

In response to its increased demand for commodities, China is increasingly seeking strategic self-sufficiency in key commodities, including investments in existing businesses or new developments in other countries. These investments may adversely impact future commodity demand and supply balances and prices.

~~Actions by governments or political events in the countries in which we operate could have a negative impact on our business~~

We have operations in many countries around the globe, which have varying degrees of political and commercial stability. We operate in emerging markets, which may involve additional risks that could have an adverse impact upon the profitability of an operation. These risks could include terrorism, civil unrest, nationalisation, renegotiation or nullification of existing contracts, leases, permits or other agreements, restrictions on repatriation of earnings or capital and changes in laws and policy, as well as other unforeseeable risks. Risks relating to bribery and corruption, including possible delays or disruption resulting from a refusal to make so-called facilitation payments, may be prevalent in some of the countries in which we operate. If any of our major projects are affected by one or more of these risks, it could have a negative effect on the operations in those countries, as well as the Group’s overall operating results and financial condition.

Our operations are based on material long-term investments that anticipate long-term fiscal stability. Following the global financial and European sovereign debt crises, some governments face increased debt and funding obligations and have sought additional sources of revenue and economic rent by increasing rates of taxation, royalties or resource rent taxes such as the Minerals Resource Rent Tax (MRRT) and Petroleum Resource Rent Tax (PRRT) extension in Australia. These may continue to levels that are globally uncompetitive to the resource industry. Such taxes may negatively impact the financial results of existing businesses and reduce the anticipated future returns and overall level of prospective investment in those countries.

The Australian Government through the Business Tax Working Group is considering measures to reform tax law to provide relief for certain industry sectors. The basis of any law change is a revenue neutral outcome and as such, it is possible the mining and petroleum industries may be negatively impacted by disproportionately funding any measures that may eventually become law. The Business Tax Working Group will make its recommendations to the Australian government by the end of CY2012, with any potential law change happening thereafter.

~~Our business could be adversely affected by new government regulations, such as controls on imports, exports and~~ prices. The diversity provided by our relatively broad portfolio of commodities does not fully insulate the effects of price changes. Fluctuations in commodity prices can occur due to price shifts reflecting underlying global economic and geopolitical factors, industry demand, increased supply due to the development of new productive resources, technological change, product substitution and national tariffs. We are particularly exposed to price movements in iron ore, coal, copper, and oil and gas. For example, a US$1 per tonne decline in the average iron ore price and US$1 per barrel decline in the average oil price would have an estimated impact on FY2015 profit after taxation of US$144 million and US$54 million, respectively.

For further information relating to commodity price impacts, refer to section 1.15.1 of this Annual Report.

Volatility in global economic growth, particularly in the developing economies, has the potential to adversely impact future demand and prices for commodities. The impact of potential long-term sustained price shifts and short-term price volatility, including the effects of unwinding the sustained monetary stimulus in the United States, creates the risk that our financial and operating results, including cash flows and asset values, will be materially and adversely affected by unforeseen declines in the prevailing prices of our products.

Our financial results may be negatively affected by currency exchange rate fluctuations

The Chinese market has been driving global materials demand and pricing over the past decade. Sales into China generated US$16.3 billion (FY2014: US$21.8 billion) or 36.6 per cent (FY2014: 38.5 per cent) of our revenue in FY2015. The FY2015 sales into China by Business included 66 per cent Iron Ore, 23 per cent Copper, nine per cent Coal, one per cent Nickel West (reported in Group and Unallocated) and one per cent Petroleum. A continued slowing in China’s economic growth and demand could result in lower prices for our products and negatively impact our results, including cash flows.

Actions by governments or political events in the countries in which we operate could have a negative impact on our business

We have operations or interests (e.g. through our non-operated assets) in various countries around the globe, which have varying degrees of political, judicial and commercial stability. We operate or have interests in certain emerging markets, which may involve additional risks that could have an adverse impact on the profitability of an operation. These risks could include terrorism, civil unrest, judicial activism, regulatory investigation, nationalisation, protectionism, renegotiation or nullification of existing contracts, leases, permits or other agreements, imposts, controls or prohibitions on the production or use of certain products, restrictions on repatriation of earnings or capital and changes in laws and policy, as well as other unforeseeable risks. Risks relating to bribery and corruption, including possible delays or disruption resulting from a refusal to makeso-called facilitation payments, may be prevalent in some of the countries in which we operate. If any of our major operations are affected by one or more of these risks, it could have a negative effect on our operations in those countries, as well as the Group’s overall operating results and financial condition.

Our operations are based on material long-term investments that are dependent on long-term fiscal stability and could be adversely impacted by changes in fiscal legislation. The natural resources industry continues to be regarded as a source of tax revenue and can also be impacted by broader fiscal measures applying to businesses generally.

Our business could be adversely affected by new government regulations and international standards, such as controls on imports, exports, prices and greenhouse gas emissions. Increasing requirements relating to regulatory, environmental and social or community approvals can potentially result in significant delays in construction and may adversely affect the economics of new mining and oil and gas projects, the expansion of existing operations and results of our operations. Infrastructure, such as rail, ports, power and water, is critical to our business operations. We have operations or potential development projects in countries where government-provided infrastructure or regulatory regimes for access to infrastructure, including our own privately operated infrastructure, may be inadequate or uncertain or subject to legislative change. The impact of climate change may increase competition for, and the regulation of, limited resources, such as power and water. These factors may adversely impact the efficient operations and expansion of our business.

We operate in countries where ownership of land is uncertain and where disputes may arise in relation to ownership. For example, in Australia, the Native Title Act 1993 provides for the establishment and recognition of native title under certain circumstances.

These regulations are complex, difficult to predict and outside our control and could negatively affect our Company, future results and our financial condition.

Failure to discover or acquire new resources, maintain reserves or develop new operations could negatively affect our future results and financial condition

The demand for our products and production from our operations results in existing reserves being depleted over time. As our revenues and profits are derived from our oil and gas and minerals operations, our future results and financial condition are directly related to the success of our exploration and acquisition efforts, and our ability to generate reserves to meet our future production requirements at a competitive cost. Exploration activity occurs adjacent to established operations and in new regions, in developed and less-developed countries. These activities may increase land tenure, infrastructure and related political risks. A failure in our ability to discover or acquire new resources, maintain reserves or develop new operations in sufficient quantities to maintain or grow the current level of our reserves could negatively affect our results, financial condition and prospects.

Future deterioration in commodities pricing may make some existing reserves uneconomic. Our actual drilling activities and future drilling budget will depend on our mineral inventory size and quality, drilling results, commodity prices, drilling and production costs, availability of drilling services and equipment, lease expirations, transportation pipelines, railroads and other infrastructure constraints, regulatory approvals and other factors.

There are numerous uncertainties inherent in estimating mineral and oil and gas reserves. Geological assumptions about our mineralisation that are valid at the time of estimation may change significantly when new information becomes available. Estimates of reserves that will be recovered or the cost at which we anticipate such reserves will be recovered are based on uncertain assumptions. The uncertain global financial outlook may affect economic assumptions related to reserve recovery and may require reserve restatements. Reserve restatements could negatively affect our results and prospects.

Potential changes to our portfolio of assets through acquisitions and divestments may have a material adverse effect on our future results and financial condition

We regularly review the composition of our asset portfolio and from time to time may add assets to the portfolio or divest assets from the portfolio. There are a number of risks associated with such acquisitions or divestments. These include adverse market reaction to such changes or the timing or terms on which such changes are made, the imposition of adverse regulatory conditions and obligations, commercial objectives not being achieved as expected, unforeseen liabilities arising from such changes to the portfolio, sales revenues and operational performance not meeting our expectations, anticipated synergies or cost savings being delayed or not being achieved, inability to retain key staff and transaction-related costs being more than anticipated. These factors could negatively affect our reputation, future results and financial condition.

Increased costs and schedule delays may adversely affect our development projects

Although we devote significant time and resources to our project planning, approval and review process, many of our development projects are highly complex and rely on factors that are outside our control, which may cause us to underestimate the cost or time required to complete a project. For instance, incidents during development projects may cause setbacks or cost overruns, required licences, permits or authorisations to build a project may

be unobtainable at anticipated costs, or may be obtained only after significant delay and market conditions may change, thereby making a project less profitable than initially projected.

In addition, we may fail to manage projects as effectively as we anticipate and unforeseen challenges may emerge.

Any of these may result in increased capital costs and schedule delays at our development projects and impact anticipated financial returns.

If our liquidity and cash flow deteriorate significantly it could adversely affect our ability to fund our major capital programs

We seek to maintain a solid ‘A’ credit rating as part of our strategy. However, fluctuations in commodity prices and the ongoing global economic volatility may adversely impact our future cash flows and ability to access capital from financial markets at acceptable pricing. If our key financial ratios and credit rating are not maintained, our liquidity and cash reserves, interest rate costs on borrowed debt, future access to financial capital markets and the ability to fund current and future major capital programs could be adversely affected.

We may not fully recover our investments in mining, oil and gas assets, which may require financial write-downs

One or more of our assets may be impacted by changed market or industry structures, commodity prices, technical operating difficulties, inability to recover our mineral, oil or gas reserves and increased operating cost levels. These may cause us to fail to recover all or a portion of our investment in mining and oil and gas assets and may require financial write-downs, including goodwill adversely impacting our financial results.

The commercial counterparties we transact with may not meet their obligations, which may negatively impact our results

We contract with a large number of commercial and financial counterparties, including end-customers, suppliers and financial institutions. Global economic volatility continues to strain global financial markets, with tighter liquidity in China and uncertain business conditions generally. We maintain a ‘one book’ approach with commercial counterparties to ensure all credit exposures are quantified. Our existing counterparty credit controls may not prevent a material loss due to credit exposure to a major customer segment or financial counterparty. In addition, customers, suppliers, contractors or joint venture partners may fail to perform against existing contracts and obligations. Non-supply of key inputs, such as tyres, mining and mobile equipment, diesel and other key consumables, may unfavourably impact costs and production at our operations. These factors could negatively affect our financial condition and results of operations.

Cost pressures and reduced productivity could negatively impact our operating margins and expansion plans

Cost pressures may continue to occur across the resources industry. As the prices for our products are determined by the global commodity markets in which we operate, we do not generally have the ability to offset these cost pressures through corresponding price increases, which can adversely affect our operating margins. Notwithstanding our efforts to reduce costs and a number of key cost inputs being commodity price-linked, the inability to reduce costs and a timing lag may adversely impact our operating margins for an extended period.

A number of our operations, such as copper, are energy or water intensive and, as a result, the Group’s costs and earnings could be adversely affected by rising costs or by supply interruptions. These could include the

unavailability of energy, fuel or water due to a variety of reasons, including fluctuations in climate, inadequate infrastructure capacity, interruptions in supply due to equipment failure or other causes and the inability to extend supply contracts on economic terms.

Many of our Australian employees have conditions of employment, including wages, governed by the operation of the Australian Fair Work Act 2009. Conditions of employment are often contained within collective agreements that are required to be renegotiated on expiry (typically every three to four years). In some instances, under the operation of the Fair Work Act it can be expected that unions will pursue increases to conditions of employment, including wages, and/or claims for greater union involvement in business decision-making.

In circumstances where a collective agreement is being renegotiated, industrial action is permitted under the Fair Work Act. Industrial action and any subsequent settlement to mitigate associated commercial damage can adversely affect productivity, customer perceptions as a reliable supplier and contribute to increases in costs.

The industrial relations environment in Chile remains challenging and it is possible that we will see further disruptions. Changes to labour legislation are being considered by the Chilean Congress, and if passed would result in the right to have a single negotiating body across different operations owned by a single company, which may also result in higher risk of operational stoppages.

These factors could lead to increased operating costs at existing operations and could negatively impact our operating margins and expansion plans.

Unexpected natural and operational catastrophes may adversely impact our operations

We operate extractive, processing and logistical operations in many geographic locations, both onshore and offshore. Our key port facilities are located at Coloso and Antofagasta in Chile, and Port Hedland and Hay Point in Australia. We have five underground mines, including three underground coal mines. Our operational processes may be subject to operational accidents, such as port and shipping incidents, underground mine and processing plant fire and explosion, open-cut pit wall failures, loss of power supply, railroad incidents, loss of well control, environmental pollution and mechanical critical equipment failures. Our operations may also be subject to unexpected natural catastrophes such as earthquakes, flood, hurricanes and tsunamis. Our northwest Western Australia iron ore, Queensland coal and Gulf of Mexico oil and gas operations are located in areas subject to cyclones or hurricanes. Our Chilean copper operations are located in a known earthquake and tsunami zone. Based on our risk management and concerns about the value of external insurance in the natural resource sector, our risk financing (insurance) approach is to minimise or not to purchase external insurance for certain risks, including property damage, business interruption, construction-related risk, marine cargo and primary liability risks. Existing business continuity plans may not provide protection for all of the costs that arise from such events. The impact of these events could lead to disruptions in production, increased costs and loss of facilities. Where external insurance is purchased, third party claims arising from these events may exceed the limit of liability of the insurance policies we have in place.

Some of our assets are operated and managed by joint venture partners or by other companies. Management of our non-operated assets may not comply with our management and operating standards, controls and procedures, including our health, safety, environment and community (HSEC) standards. Failure to adopt equivalent standards, controls and procedures at these assets could lead to higher costs and reduced production and adversely impact our results and reputation.

Breaches in our information technology security processes may adversely impact our business activities

We maintain information technology (IT) systems, consisting of infrastructure, business applications and communications networks to support our business activities. These systems may be subject to security breaches

(e.g. cyber-crime) that can result in misappropriation of funds, increased health and safety risks to staff, disruption to our operations, environmental damage, poor product quality, loss of intellectual property, disclosure of commercially sensitive information and reputational damage.

Safety, health, environmental and community impacts, incidents or accidents and related regulations may adversely affect our people, operations and reputation or licence to operate

Potential safety events that may have a material adverse impact on our operations include fire, explosion or rock fall incidents in underground mining operations, personnel conveyance equipment failures in underground operations, aircraft incidents, incidents involving light vehicles and mining mobile equipment, ground control failures, well blowouts, explosions or gas leaks, and accidents involving inadequate isolation and working from heights or lifting operations.

Health risks faced include fatigue, musculoskeletal illnesses and occupational exposure to noise, silica, diesel exhaust particulate, nickel and sulphuric acid mist. Longer-term health impacts may arise due to unanticipated workplace exposures or historical exposures of our workforce to hazardous substances. These effects may create future financial compensation obligations.

Given we operate globally, we may be affected by potential pandemic influenza outbreaks, such as A(H1N1) and avian flu, in any of the regions in which we operate.

Environmental incidents have the potential to lead to material adverse impacts on our operations. These include uncontrolled tailings containment breaches, subsidence from mining activities, escape of polluting substances and uncontrolled releases of hydrocarbons.

Our operations by their nature have the potential to adversely impact biodiversity, water resources and related ecosystem services. Changes in scientific understanding of these impacts, regulatory requirements or stakeholder expectations may prevent or delay project approvals and result in increased costs for mitigation, offsets or compensatory actions.

We provide for operational closure and site rehabilitation. Our operating and closed facilities are required to have closure plans. Changes in regulatory or community expectations may result in the relevant plans not being adequate. This may increase financial provisioning and costs at the affected operations.

Local communities may become dissatisfied with the impact of our operations or oppose our new development projects, including through litigation, potentially affecting costs and production, and in extreme cases viability. Community related risks may include community protests or civil unrest, and may cause delays to proposed developments. Our operations or activities also risk inadvertent breaches of human rights or other international laws or conventions.

The nature of the industries in which we operate means many of our activities are highly regulated by health, safety and environmental (HSE) laws. As regulatory standards and expectations are constantly developing, we may be exposed to increased litigation, compliance costs and unforeseen environmental rehabilitation expenses.

Legislation requiring manufacturers, importers and downstream users of chemical substances, including metals and minerals, to establish that the substances can be used without negatively affecting health or the environment may impact our operations and markets. Potential compliance costs, litigation expenses, regulatory delays, rehabilitation expenses and operational costs arising from such legislation could negatively affect our financial results.

Our Onshore US operations involve hydraulic fracturing, an essential and common practice in the oil and gas industry to stimulate production of natural gas and oil from dense subsurface rock formations. Hydraulic fracturing involves using water, sand and a small amount of chemicals to fracture the hydrocarbon-bearing rock formation, to allow flow of hydrocarbons into the wellbore. We routinely apply hydraulic fracturing techniques in our drilling and completion programs.

Attention given to the hydraulic fracturing process could lead to greater opposition to oil and gas production activities using hydraulic fracturing techniques. Increased regulation could impose more stringent permitting, public disclosure and well construction requirements on hydraulic fracturing operations. In the United States, the hydraulic fracturing process is typically regulated by relevant US state regulatory bodies. Some states are considering changes to regulations in relation to permitting, public disclosure, and/or well construction requirements on hydraulic fracturing and related operations, including the possibility of outright bans on the process. Arkansas, Louisiana and Texas (the states in which we currently operate) have adopted various laws and regulations, or issued regulatory guidance, concerning hydraulic fracturing.

Several US federal agencies are also reviewing or advancing regulatory proposals concerning hydraulic fracturing and related operations. The US Environmental Protection Agency (EPA) commenced a study of the potential impacts of hydraulic fracturing activities on drinking water resources. The agency issued a non-determinative Progress Report in December 2012 and is expected to issue a final draft assessment report for peer review and comment in CY2015. As part of the studies’ efforts, the EPA released a preliminary analysis on 30 March 2015. The EPA is expected to issue a final report for peer review in CY2016. The EPA’s Office of Inspector General continues to research the EPA’s and states’ ability to manage potential threats to water resources from hydraulic fracturing, with a possible longer-term study to follow. The US Bureau of Land Management (BLM) issued a final rule on 20 March 2015 that would impose new requirements on hydraulic fracturing operations conducted on federal lands, including the disclosure of chemicals used, wellbore integrity, water use and disposal of flow back water. The BLM regulation took effect on 24 June 2015. Activity at the federal level, including the ongoing EPA study, BLM rules and other analysis by federal and state agencies to assess the impacts of hydraulic fracturing, could spur additional legislative or regulatory actions.

While we have not experienced a material delay or substantially higher operating costs in our Onshore US operations as a result of current regulatory requirements, we cannot predict whether additional federal, state or local laws or regulations will be enacted and what such actions would require or prohibit. Additional legislation or regulation could subject our operations to delays and increased costs, or prohibit certain activities, which could adversely affect the financial performance of our Onshore US operations.

Due to the nature of our operations, HSEC incidents or accidents and related regulations may adversely affect our reputation or licence to operate.

Climate change may impact the value of our Company, and our operations and markets

The physical impacts of climate change and various regulations that seek to address climate change may negatively affect our operations, productivity and the markets in which we sell our products. Fossil fuel-related emissions are a significant source of greenhouse gases contributing to climate change. We produce fossil fuels such as coal, oil and gas for sale to customers, and we use fossil fuels in our mining and processing operations either directly or through the purchase of fossil fuel-based electricity.

A number of national governments have already introduced, or are contemplating the introduction of, regulatory responses to greenhouse gas emissions from the combustion of fossil fuels to address the impacts of climate change. This includes countries where we have operations such as Australia, the United States and Chile, as well as customer markets such as China, India and Europe. In addition, the international community aims to complete a new global climate agreement at the 21st Conference of the Parties (COP21) in Paris in December 2015. The absence of regulatory certainty, global policy inconsistencies and the challenges presented by managing our portfolio across a variety of regulatory frameworks has the potential to adversely impact our operations and supply chain. From a medium to long-term perspective, we are likely to see some adverse changes in the cost position of our greenhouse gas-intensive assets and energy-intensive assets as a result of regulatory impacts in the countries where we operate. These proposed regulatory mechanisms may impact our operations directly or indirectly through our suppliers and customers. Assessments of the potential impact of future climate change regulation are uncertain given the wide scope of potential regulatory change in the many countries in which we operate. For example, the Australian Government repealed a carbon tax in 2014 and carbon pricing is being discussed as part of a broader tax reform package in Chile.

There is a potential gap between the current valuation of fossil fuel reserves on the balance sheets of companies and in global equities markets and the reduced value that could result if a significant proportion of reserves were rendered incapable of extraction in an economically viable fashion due to technology, regulatory or market responses to climate change. In such a scenario, stranded reserve assets held on our balance sheet may need to be impaired or written off and our inability to make productive use of such assets may also negatively impact our financial condition and results.

The growth of alternative energy supply options, such as renewables and nuclear, could also present a change to the energy mix that may impact on fossil fuel markets.

The physical effects of climate change on our operations may include changes in rainfall patterns, water shortages, rising sea levels, increased storm intensities and higher temperatures. These effects may adversely impact the financial performance of our operations.

A breach of our governance processes may lead to regulatory penalties and loss of reputation

We operate in a global environment that encompasses multiple jurisdictions and complex regulatory frameworks. Our governance and compliance processes, which include the review of internal controls over financial reporting and specific internal controls in relation to trade and financial sanctions, and offers of things of value to government officials and representatives of state-owned enterprises, may not prevent future potential breaches of law, accounting or governance practice. OurCode of Business Conduct, together with our mandatory policies, such as the anti-corruption, trade and financial sanctions and competition policies, may not prevent instances of fraudulent behaviour and dishonesty nor guarantee compliance with legal or regulatory requirements. This may lead to regulatory fines, disgorgement of profits, litigation, loss of operating licences and/or reputational damage.

The scope of our operations and the number of industries in which we operate and engage mean that a range of factors may impact our results. Material risks that could negatively affect our results and performance are described in section 1.7.2 of this Annual Report. Our approach to managing these risks is outlined below.


Principal risk area		Risk management approach
and political events that impact long-term fiscal stability.		describes external factors and trends affecting our results and note 23 ‘Financial risk management’ to the Financial Statements outlines the Group’s financial risk management strategy, including market, commodity, and currency risk. The Financial Risk Management Committee oversees these risks as described in sections 3.15 and 3.16. We also engage with governments and other key stakeholders to ensure the potential adverse impacts of proposed fiscal, tax, resource investment, infrastructure access and regulatory changes are understood and where possible mitigated.

Business risks
Risks include the inherent uncertainty of identifying and proving reserves, adding and divesting assets and managing our capital development projects.		Our Technology Geoscience and Engineering function provides governance and technical leadership for Ore Reserves reporting as described in section 2.3.2. Our governance over reporting of Petroleum reserves is described in section 2.3.1.

		We have established investment approval processes that apply to all major capital projects and asset divestment and acquisitions. The Investment Committee oversees these as described in sections 3.15 and 3.16. Our Project Management function additionally seeks to ensure that projects are safe, predictable and competitive, and it has established a continuous improvement practice.

Financial risks
Continued volatility in global financial markets may adversely impact future cash flows, our ability to adequately access and source capital from financial markets and our credit rating. Volatility may impact planned expenditures, as well as the ability to recover investments in mining and oil and gas ~~projects,~~projects. In addition, the ~~expansion of existing operations~~commercial counterparties (customers, suppliers and ~~results of our operations.~~ We have oil and gas operations located in the Gulf of Mexico region of the United States. In October 2010, the United States Government lifted the deepwater drilling moratorium in the Gulf of Mexico initially put in place in May 2010 in response to the oil spill from BP’s Macondo well. Although the moratorium was lifted, and BHP Billiton was among the first to return to drilling in the Gulf of Mexico, the industry now faces more stringent permitting requirements. Delays or additional costsfinancial institutions) we transact with may, ~~occur in receiving future permits for deepwater drilling activities in the Gulf of Mexico.~~ Infrastructure, such as rail, ports, power and water, is critical to our business operations. We have operations or potential development projects in countries where government provided infrastructure or regulatory regimes for access to infrastructure, including our own privately operated infrastructure, may be inadequate or uncertain. These may adversely impact the efficient operations and expansion of our businesses. On 30 June 2010, the Australian Competition Tribunal granted declaration of BHP Billiton’s Goldsworthy rail line, but rejected the application for declaration of our Newman rail line under Part IIIA of the Trade Practices Act. Following the Tribunal’s decision, access seekers may now negotiate for access to the Goldsworthy railway. These negotiations, and the availability and terms of access, are governed by the Part IIIA statutory framework, and either the access seeker or BHP Billiton can refer disputed matters to the Australian Competition and Consumer Commission for arbitration. The outcome of this process will govern whether access will be provided and on what terms. We operate in several countries where ownership of land is uncertain and where disputes may arise in relation to ownership. In Australia, the Native Title Act (1993) provides for the establishment and recognition of native title under certain circumstances. In South Africa, the Extension of Security of Tenure Act (1997) and the Restitution of Land Rights Act (1994) provide for various landholding rights. Such legislation could negatively affect new or existing projects. ~~Our Cerro Matoso Operation in Colombia operates under mining concessions that are~~ due to expire on 30 September 2012 and we have applied, in accordance with the law and its contracts, for an extension of these mining concessions. If this extension is not granted, Cerro Matoso has an underlying agreement with the Colombian Government that grants it rights to continue mining and producing through to 2029 under a lease arrangement, with a further extension of 15 years possible. While our operating rights are maintained, there is no established precedent in Colombia for bringing a reversion of title under contract and therefore the situation remains uncertain. ~~These regulations are complex, difficult to predict and outside of our control and could negatively affect our business and results.~~ ~~Business risks~~ *~~Failure to discover new reserves, maintain or enhance existing reserves or develop new operations could negatively affect our future results and financial condition~~* The demand for our products and production from our operations results in existing reserves being depleted over time. As our revenues and profits are derived from our oil and gas and minerals operations, our results and financial condition are directly related to the success of our exploration and acquisition efforts, and our ability to replace existing reserves. Exploration activity occurs adjacent to established operations and in new regions, in developed and less developed countries. These activities may increase land tenure, infrastructure and related political risks. A failure in our ability to discover new reserves, enhance existing reserves or develop new operations in sufficient quantities to maintain or grow the current level of our reserves could negatively affect our results, financial condition and prospects. Future deterioration in commodities pricing may make drilling some acreage and existing reserves uneconomic. Our actual drilling activities and future drilling budget will depend on drilling results, commodity prices, drilling and production costs, availability of drilling services and equipment, lease expirations, gathering system pipeline transportation and other infrastructure constraints, regulatory approvals and other factors. There are numerous uncertainties inherent in estimating ore and oil and gas reserves, and geological, technical and economic assumptions that are valid at the time of estimation may change significantly when new information becomes available. The uncertain global financial outlook may affect economic assumptions related to reserve recovery and require reserve restatements. Reserve restatements could negatively affect our results and prospects. *~~We may not be able to successfully complete acquisitions or integrate our acquired businesses~~* We have grown our business in part through acquisitions. We expect that some of our future growth will stem from acquisitions. There are numerous risks encountered in business combinations. These include adverse ~~regulatory~~market conditions, and obligations, commercial objectives not achieved due to minority interests, unforeseen liabilities arising from the acquired businesses, retention of key staff, sales revenues and operational performance not meeting our expectations, anticipated synergies and cost savings being delayed or not being achieved, uncertainty in sales proceeds from planned divestments, and planned acquisition projects being cancelled, delayed or costing more than anticipated. These factors could negatively affect our future results and financial condition. *~~We may not be able to attract and retain the necessary people~~* Our existing operations and especially our pipeline of development projects in regions of numerous large projects, such as Western Australia, Queensland and the United States, if activated, require many highly skilled staff with relevant industry and technical experience. In the competitive labour markets that exist in these regions, the inability of the Group to attract and retain such people may adversely impact our ability to complete projects under development on time and budget or successfully respond to new development opportunities. The lack of short- and long-term suitable accommodation in regional centres and townships adjacent to development projects and community reactions to development and potential workforce fly in, fly out arrangements may impact costs and the ability to optimise construction and operating workforces. Skills shortages in engineering, technical service, construction and maintenance may adversely impact the cost and schedule of current development projects, the cost and efficiency of existing operations and our ability to execute on development opportunities. *~~Increased costs and schedule delays may adversely affect our development projects~~* Although we devote significant time and resources to our project planning, approval and review process, and have established a number of project hubs to provide continuity to capital programs, we may underestimate the cost or time required to complete a project. In addition, we may fail to ~~manage projects as effectively as we anticipate and unforeseen challenges may emerge.~~ ~~Any of these may result in increased capital costs and schedule delays at our development projects, adversely affecting our development projects and impacting anticipated financial returns.~~ ~~Financial risks~~ *~~If our liquidity and cash flow deteriorate significantly it could adversely affect our ability to fund our major capital programs~~* meet their contractual obligations.		We seek to maintain a solid ‘A’ credit rating, as part of our strategy; however, fluctuations in commodity prices and the ongoing global economic volatility, and European sovereign debt crises, may continue to adversely impact our future cash flows and ability to access capital from financial markets at acceptable pricing. Despitesupported by our portfolio risk management ~~strategies and monitoring~~strategy. As part of this strategy, the diversification of our portfolio reduces overall cash flow ~~volatility, if our~~volatility. Commodity prices and currency exchange rates are not hedged, and wherever possible we take the prevailing market price. We use Cash Flow at Risk analysis to monitor volatilities and key financial ~~ratios~~ratios. Credit limits and ~~credit rating were not maintained, our liquidity~~review processes are required to be established for all customers and ~~cash reserves, interest rate costs on borrowed debt, future access~~financial counterparties. The Financial Risk Management Committee oversees these as described in sections 3.15 and 3.16. Note 23 ‘Financial risk management’ to ~~financial capital markets and~~ the ~~ability to fund current and future major capital programmes could be adversely affected.~~ *~~We may not recover our investments in mining and oil and gas projects~~* Our strategy is to maintain an asset portfolio diversified by commodity, geography and market. Despite the benefits arising from this diversification, one or more of our assets may be impacted by changed market or industry structures, commodity prices, technical operating difficulties, inability to recover our mineral, oil or gas reserves and increased operating cost levels. These may cause us to fail to recover all or a portion of our investment in mining and oil and gas projects and may require financial write-downs adversely impactingFinancial Statements outlines our financial ~~results.~~ risk management strategy.

*~~The commercial counterparties we transact with may not meet their obligations which may negatively impact our results~~* We contract with a large number of commercial and financial counterparties, including customers, suppliers and financial institutions. The ongoing global economic volatility and European sovereign debt crises have placed strains on global financial markets, reduced liquidity and adversely affected business conditions generally. We maintain a ‘one book’ approach with commercial counterparties to ensure that all credit exposures are quantified. Our existing counterparty credit controls may not prevent a material loss due to credit exposure to a major customer or financial counterparty. In addition, customers, suppliers, contractors or joint venture partners may fail to perform against existing contracts and obligations. Non-supply of key inputs, such as tyres, mining and mobile equipment and other key consumables, may unfavourably impact costs and production at our operations. These factors could negatively affect our financial condition and results of operations. Operational risks
Operating cost pressures and reduced productivity ~~and labour shortages~~ could negatively impact ~~our~~ operating margins and expansion ~~plans~~ ~~Increasing cost pressures and shortages in skilled personnel, contractors, materials and supplies that are required as critical inputs to~~plans. Non-operated assets may not comply with our existing operations and planned developments have occurred and may continue to occur across the resources industry. As the prices for our products are determined by the global commodity markets in which we operate, we do not generally have the ability to offset these operating cost increases through corresponding price increases, which can adversely affect our operating margins. Notwithstanding our efforts to reduce costs and a number of key cost inputs being commodity price-linked, the inability to reduce costs and a timing lag may adversely impact our operating margins for an extended period. Our Australian-based operations may continue to be affected by the Australian Fair Work Act 2009 as labour agreements expire and businesses are required to negotiate labour agreements with unions. In some instances labour unions are pursuing claims in the bargaining process about union access and involvement in some areas of operational decision-making. These claims may adversely affect workplace flexibility, productivity and costs. Industrial action in pursuit of claims associated with the bargaining process has occurred in some businesses, in particular our BHP Billiton Mitsubishi Alliance coal operation in Queensland, Australia, and is likely to continue to occur as unions press for new claims as part of the negotiation process. A number of our operations, such as aluminium and copper, are energy or water intensive and, as a result, the Group’s costs and earnings could be adversely affected by rising costs or by supply interruptions. These could include the unavailability of energy, fuel or water due to a variety of reasons, including fluctuations in climate, significant increases in costs, inadequate infrastructure capacity, interruptions in supply due to equipment failure or other causes and the inability to extend supply contracts on economical terms. ~~These factors could lead to increased operating costs at existing operations and could negatively impact our operating margins and expansion plans.~~ *standards. Unexpected natural and operational catastrophes may adversely impact our ~~operations~~* We operate extractive, processing and logistical operations in many geographic locations both onshore and offshore. Our operational processes may be subject to operational accidents such as port and shipping incidents, underground mine and processing plant fire and explosion, open-cut pit wall failures, loss of power supply, railroad incidents, loss of well control, environmental pollution and mechanical critical equipment failures. Our key port facilities are located at Port Hedland and Hay Point in Australia. We have 13 underground mines, including seven underground coal mines. Our operations may also be subject to unexpected natural catastrophes such as earthquakes, flood, hurricanes and tsunamis. Our Western Australia Iron Ore, Queensland coal and Gulf of Mexico oil and gas operations are located in areas subject to cyclones or hurricanes. Our Chilean copper operations are located in a known earthquake and tsunami zone. Based on our claims, insurance premiums and loss experience, our risk management approach is not to purchase insurance for property damage, business interruption and construction related risk exposures. Existing business continuity plans may not provide protection for all of the costs that arise from such events. The impact of these events could lead to disruptions in production, increased costs and loss of facilities more than offsetting premiums saved, which would adversely affect our financial results and prospects. Third party claims arising from these events may exceed the limit of liability insurance policies we have in place. *~~Our non-controlled assets may not comply with our standards~~* Some of our assets are controlled and managed by joint venture partners or by other companies. Management of our non-controlled assets may not comply with our management and operating standards, controls and procedures (including our HSEC standards). Failure to adopt equivalent standards, controls and procedures at these assets could lead to higher costs and reduced production and adversely impact our results and reputation. *operations. Breaches in ~~our information technology~~IT security processes may adversely impact the conduct of our business ~~activities~~* activities.		We seek to ensure that adequate operating margins are maintained through our strategy to own and operate large, long-life, low-cost and expandable upstream assets.


Principal risk area		Risk management approach
		The Group’s concentrated effort to reduce operating costs and drive productivity improvements has realised tangible results, with a reduction in controllable costs. The capability to sustain productivity improvements is being further enhanced through continued refinements to our Operating Model. The Operating Model is designed to deliver a simple and scalable organisation, providing a competitive advantage through defining work, organisation and performance measurements. Defined global business processes, including 1SAP, provide a standardised way of working across the organisation. Common processes generate useful data and improve operating discipline. Global sourcing arrangements have been established to ensure continuity of supply and competitive costs for key supply inputs. We seek to influence the application of our standards to non-operated assets. Through the application of our risk management processes, we identify catastrophic operational risks and implement the critical controls and performance requirements to maintain ~~global information technology (IT)~~control effectiveness. Business continuity plans are required to be established to mitigate consequences. Consistent with our portfolio risk management approach, we continue to be largely self-insured for losses arising from property damage, business interruption and construction. From an industrial relations perspective, detailed planning is undertaken to support the renegotiation of employment agreements and is supported by training and access to expertise in negotiation and agreement making. IT security controls to protect IT infrastructure, business applications and communication networks and ~~applications~~respond to ~~support our business activities. Our extensive IT infrastructure and network may experience service outages that may adversely impact the conduct of our business activities. IT~~ security ~~processes protecting these systems~~incidents are in place and subject to regular monitoring and ~~assessment, and are included as part~~assessment. To maintain adequate levels of protection, we also continue to monitor the ~~review~~development of ~~internal control over financial reporting. These security processes may not prevent future malicious action or fraud by individuals, groups or organisations resulting~~threats in the ~~corruption of operating systems, theft of commercially sensitive data, including commercial price outlooks, mergers~~external environment and ~~acquisitions and divestment transactions, misappropriation of funds and disruptions~~assess potential responses to ~~our business operations.~~those threats.

Sustainability risks
HSEC ~~impacts,~~ incidents or accidents ~~and related regulations~~ may adversely affect our people or neighbouring communities, operations and reputation or licence to ~~operate~~operate. The potential physical impacts and related responses to climate change may impact the value of our Company, and operations and		Our approach to sustainability risks is reflected inOur Charter and described in section 1.14, including a Company-level safety intervention that was initiated in FY2015. A comprehensive set of Group Level Documents (GLDs) set out Group-wide HSEC-

~~We are a major producer of carbon-related products such as energy and metallurgical coal, oil, gas, and liquefied natural gas. Our oil and gas operations are both onshore and offshore.~~

Principal risk area

~~The nature of the industries in which~~Risk management approach

markets. Given we operate means that many of 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 rehabilitation expenses.

Potential safety events that may have a material adverse impact on our operations include fire, explosion or rock fall incidents in underground mining operations, personnel conveyance equipment failures in underground operations, aircraft incidents, incidents involving light vehicles and mining mobile equipment, ground control failures, well blowouts, explosions or gas leaks, isolation, working from heights or lifting operations.

Environmental incidents that have the potential to create a material impact include uncontrolled tailings breaches, subsidence from mining activities, escape of polluting substances, and uncontrolled releases of hydrocarbons.

Our operations by their nature have the potential to impact biodiversity, water resources and related ecosystem services. Changes in scientific understanding of these impacts, regulatory requirements or stakeholder expectations may prevent or delay project approvals and result in increased costs for mitigation, offsets or compensatory actions.

We provide for operational closure and site rehabilitation. Our operating and closed facilities are required to have closure plans. Changes in regulatory or community expectations may result in the relevant plans not being adequate. This may impact financial provisioning and costs at the affected operations.

We contribute to the communities in which we operate by providing skilled employment opportunities, salaries and wages, taxes and royalties and community development programs, including a commitment to one per cent of pre-tax profits invested in community programs. Notwithstanding these actions, local communities may become dissatisfied with the impact of our operations or oppose our new development projects, including through litigation, potentially affecting costs and production, and in extreme cases viability. Community related risks may include community protests or civil unrest, delays to proposed developments and inadvertent breaches of human rights or other international laws or conventions.

Health risks faced include fatigue and occupational exposure to noise, silica, manganese, diesel exhaust particulate, fluorides, coal tar pitch, nickel and sulphuric acid mist. Longer-term health impacts may arise due to unanticipated workplace exposures or historical exposures to hazardous substances by employees or site contractors. These effects may create future financial compensation obligations.

We invest in workplace and community health programs, where indicated by risk assessment. However, infectious diseases such as HIV and malaria may have a material adverse impact upon our workers or on our communities, primarily in Africa. Because we operate globally, we may be affected by potential pandemic influenza outbreaks, such as A(H1N1) and avian flu, in any of the regions in which we operate.

Legislation requiring manufacturers, importers and downstream users of chemical substances, including metals and minerals, to establish that the substances can be used without negatively affecting health or the environment may impact our operations and markets. These potential compliance costs, litigation expenses, regulatory delays, rehabilitation expenses and operational costs could negatively affect our financial results.

During FY2011, BHP Billiton acquired Chesapeake Energy Corporation’s interests in the Fayetteville Operation in the United States, and in August 2011, acquired Petrohawk Energy Corporation, a US shale development company. Both businesses include operations that involve hydraulic fracturing, an essential and common practice in the oil and gas industry to stimulate production of natural gas and oil from dense subsurface rock formations. Hydraulic fracturing involves using water, sand and a small amount of chemicals to fracture the hydrocarbon-bearing rock formation to allow flow of hydrocarbons into the wellbore. We routinely apply hydraulic fracturing techniques in our drilling and completion programs.

Increased regulation and attention given to the hydraulic fracturing process could lead to greater opposition to oil and gas production activities using hydraulic fracturing techniques, including regulations that could impose more stringent permitting, public disclosure and well construction requirements on hydraulic fracturing operations. Additional legislation or regulation could also lead to operational delays or increased operating costs in the production of oil and natural gas, including from the developing shale plays, or could make it more difficult to perform hydraulic fracturing. The adoption of any federal, state or local laws or the implementation of regulations regarding hydraulic fracturing could potentially cause a decrease in the completion of new oil and gas wells, increased compliance costs and time, and potential class action claims, all of which could adversely affect our business.

~~Due to the nature of our operations HSEC incidents or accidents and related regulations may adversely affect our reputation or licence to operate.~~

~~Climate change and greenhouse effects may adversely impact our operations and markets~~

~~Carbon-based energy is a significant input~~ in a ~~number of the Group’s mining and processing operations and we have significant sales of carbon-based energy products.~~

A number of governments or governmental bodies have introduced or are contemplating regulatory change in response to the impacts of climate change. Under the December 2009 Copenhagen Accord, developed countries established individual greenhouse gas targets and developing countries established national mitigation actions. The European Union Emissions Trading System (EU ETS), which came into effect on 1 January 2005, has had an impact on greenhouse gas and energy-intensive businesses based in the EU. Our Petroleum assets in the United Kingdom are currently subject to the EU ETS, as are our EU based customers. Elsewhere, there is current and emerging climate change regulation that will affect energy prices, demand and margins for carbon intensive products. The Australian Government’s plan of action on climate change, which commenced on 1 July 2012, includeschallenging global environment straddling multiple jurisdictions, a fixed price on carbon emissions and converting to an emissions trading scheme after three years, and a mandatory renewable energy target of 20 per cent by the year 2020. From a medium to long-term perspective, we are likely to see some changes in the cost position of our greenhouse-gas-intensive assets and energy-intensive

assets as a result of regulatory impacts in the countries in which we operate. These proposed regulatory mechanisms may impact our operations directly or indirectly through our suppliers and customers. Inconsistency of regulations particularly between developed and developing countries may also change the competitive position of some of our assets. Assessments of the potential impact of future climate change regulation are uncertain given the wide scope of potential regulatory change in the many countries in which we operate. The South African Government plans to introduce a carbon tax beginning in 2013, however the details are not yet finalised. Carbon pricing has also been discussed as part of a broader tax reform package in Chile.

The physical impacts of climate change on our operations are highly uncertain and will be particular to the geographic circumstances. These may include changes in rainfall patterns, water shortages, rising sea levels, increased storm intensities and higher average temperature levels. These effects may adversely impact the productivity and financial performance of our operations.

A breach of our governance processes may lead to regulatory penalties and loss of ~~reputation~~reputation.

related performance requirements designed to ensure effective management control of these risks.

Our approach to corporate planning, investment decision-making and portfolio management provides a focus on the identification, assessment and management of climate change risks. We ~~operate~~have been applying an internal price on carbon in our investment decisions for more than a ~~global environment straddling multiple jurisdictions~~decade. Through a comprehensive and ~~complex regulatory frameworks.~~strategic approach to corporate planning, we work with a broad range of scenarios to assess our portfolio, including consideration of a broad range of potential policy responses to and impacts from climate change. Our ~~governance~~models suggest that BHP Billiton’s portfolio diversification results in the resilience of our overall asset valuation through all these scenarios.

Our approach to engagement with community stakeholders is outlined in ourCommunity GLD. Businesses are also required to undertake social impact opportunity assessments to identify, mitigate or manage key potential social and human rights risks.

As with our other risks, for climate change risk ourRisk Management GLD provides the framework for risk management. Internal audits are conducted to test compliance ~~processes, which include~~with GLD requirements and action plans are developed to address any gaps. Key findings are reported to senior management and reports are considered by relevant Board committees.

OurCode of Business Conduct sets out requirements related to working with integrity, including dealings with government officials and third parties. Processes and controls are in place for the ~~review of~~ internal control over financial reporting, including under Sarbanes-Oxley. We have established anti-corruption and ~~specific internal controls~~antitrust related performance requirements, which are overseen by the Legal and Compliance function as described in ~~relation to offers~~section 3.17. Additionally, the Disclosure Committee oversees our compliance with securities dealing obligations and continuous and periodic disclosure obligations as described in sections 3.15 and 3.18.

At BHP Billiton, we have a governance framework that goes beyond an interest in governance for its own sake or the need to comply with regulatory requirements. We believe that high-quality governance supports long-term value creation. Simply put, we think good governance is good business, and our approach is to adopt what we consider to be the best of the prevailing governance standards in Australia, the United Kingdom and the United States.

In the same spirit, we do not see governance as just a matter for the Board. Good governance is also the responsibility of executive management and is embedded throughout the organisation.

The diagram below describes the governance framework at BHP Billiton. It shows the interaction between the shareholders and the Board, demonstrates how the Board Committee structure facilitates the relationship between the Board and the Chief Executive Officer (CEO) and illustrates the flow of delegation from shareholders. We have robust processes in place to ensure that the delegation flows through the Board and its committees to the CEO and the GMC and into the organisation. At the same time, accountability flows upwards from the Company to shareholders. This process helps to ensure alignment with shareholders.

As part of our corporate planning cycle, we include a range of scenarios that are reviewed annually and updated by the Group with executive management’s involvement. The scenarios, and the governance process supporting them, also form part of the Board agenda.

These scenarios provide a lens to assess the performance of our business portfolio. They include assumptions around commodity prices, currencies, costs, tax rates and the price of carbon and ranges for a number of risks the Group faces. These include global growth, levels of trade, geopolitical situations, climate change and technology. All of the scenarios are used to inform BHP Billiton’s strategy and the resilience of our diversified asset portfolio over the short and long term.

Regardless of which direction the world may take, we will always be guided byOur Charter values, including our value of Sustainability, in how we operate our business, interact with our stakeholders and plan for the future.

Our Charter is core to the governance framework of BHP Billiton. It embodies our corporate purpose, strategy and values, and defines when we are successful. We foster a culture that values and rewards high ethical standards, personal and corporate integrity and respect for others.

Part of the Board’s commitment to high-quality governance is expressed through the approach BHP Billiton takes to engaging and communicating with shareholders. We encourage shareholders to make their views known to us.

Our shareholders are based across the globe. Outside of the two Annual General Meetings (AGMs), which are an important step in the governance and investor engagement process, the Board uses a range of formal and

informal communication channels to understand shareholder views to ensure it can represent shareholders in governing BHP Billiton. Regular proactive engagement with institutional shareholders and investor representative organisations takes place in Australia, South Africa, the United Kingdom and the United States. The purpose of these meetings is to discuss the full range of governance issues, as well as the broad strategy of the Group. They offer an important opportunity to build relationships and to engage directly with governance managers, fund managers and governance advisers.

For more information on our corporate governance processes, refer to section 3 of this Annual Report.

Our Remuneration Committee recognises that remuneration has an important role to play in supporting the implementation and achievement of the Group’s strategy and our ongoing performance, aligning the activities of management to the interests of shareholders, and in supportingOur Charter.

The key principles of our remuneration policy, which remain unchanged from FY2014, are to:

support the execution of the Group’s business strategy in accordance with a risk framework that is appropriate for the organisation;

provide competitive rewards to attract, motivate and retain highly skilled executives willing to work around the world;

apply demanding performance measures, including key financial and non-financial measures of performance;

link a significant component of pay to our performance and the creation of value for our shareholders from relative outperformance;

ensure remuneration arrangements are equitable and facilitate the deployment of people around the Group;

limit severance payments on termination to pre-established contractual arrangements (which do not commit us to making any unjustified payments).

Our Charter sets out our values, placing health and safety first, upon which the Remuneration Committee places great weight in the determination of performance-based remuneration outcomes for BHP Billiton’s executives.Our Charter also sets out our purpose, our strategy and how we measure success. The Committee is guided by those measures in supporting our executives in taking a long-term approach to decision-making in order to build a sustainable and value-adding business. Our remuneration policy and strategy is focused on long-term success and minimising short-term behaviours or results that would jeopardise longer-term outcomes.

We want executive remuneration to reflect the Group’s performance and share price over an extended period and this is primarily achieved with the equity component of the Short-Term Incentive award being deferred for a two-year period, and with Total Shareholder Return under the Long-Term Incentive Plan being measured over a five-year performance period.

We have made no changes to the underlying approach to remuneration in the last year. It is an approach that BHP Billiton has practised for over 10 years and we believe it continues to serve our executives and shareholders well. The remuneration outcomes continue to appropriately reflect the performance of the Group, of the Businesses and of individuals.

While our approach has been given strong support by shareholders, with a vote ‘for’ the Remuneration Report in excess of 97 per cent at last year’s AGMs, and indeed over 96 per cent in each of the prior five years, the Remuneration Committee and the Board will continue to listen and give attention to feedback and views from shareholders on the Group’s approach to pay.

The Committee remains confident that our philosophy and policies on remuneration are appropriate to support long-term value creation, and the outcomes for FY2015 continue to demonstrate the alignment between remuneration and performance at BHP Billiton.

For more information on our remuneration policies and the remuneration outcomes for members of the GMC and Non-executive Directors, refer to section 4 of this Annual Report.

Our key performance indicators (KPIs) enable us to measure our sustainable development and financial performance. Their relevance to our strategy and our performance against these measures in FY2015 are explained below.

These KPIs are used as measures, directly and indirectly, in the short-term and/or long-term incentive arrangements for remuneration of senior executives. Certain KPIs (denoted with this symbol ) are used directly to calculate incentive outcomes and others (denoted with this symbol LOGO

) are considered more broadly in determining final overall results. Our Remuneration Report is contained in section 4 of this Annual Report and provides information on our overall approach to remuneration of executives, including remuneration policies and the remuneration outcomes for members of the GMC and Non-executive Directors.

~~plans, strategies~~ LOGO

LOGO

Definition

Underlying EBIT is earnings before net finance costs, taxation, Discontinued operations and ~~objectives~~any exceptional items.

Link to strategy

This is a key financial measure used across the Group. It gives insight to cost management, production growth and performance efficiency.

FY2015 performance

Underlying EBIT declined by 46 per cent to US$11.9 billion, as the reduction in controllable cash costs, productivity-led volume efficiencies and an increase in growth volumes, were more than offset by lower realised prices net of ~~management;~~price-linked costs.

~~closure or divestment~~For a reconciliation of ~~certain~~Underlying EBIT to Profit from operations, ~~or facilities (including associated costs);~~refer to sections 1.11 and 2.5.1 of this Annual Report. For our Financial Statements, refer to section 7 of this Annual Report.

~~anticipated production or construction commencement dates;~~
⁽¹⁾ Excludes data from Discontinued operations for the financial years being reported.

Net operating cash flows⁽¹⁾

~~capital~~ LOGO

LOGO

Definition

Net operating cash flows represents the cash generated by the Group’s consolidated operations, after dividends received, interest, taxation and royalty-related taxation. This figure excludes cash flows relating to investing and financing activities and includes net operating cash flows from Discontinued operations.

Link to strategy

Net operating cash flows provides insight into how we are managing costs and ~~scheduling;~~increasing efficiency and productivity across the Company.

~~operating costs and shortages of materials and skilled employees;~~FY2015 performance

~~anticipated productive lives of projects, mines and facilities;~~

~~provisions~~Net operating cash flows decreased by 24 per cent to US$19.3 billion during FY2015. The major contributor was the US$7.7 billion decrease in cash generated from operations (after changes in working capital balances), which was partially offset by a decrease of US$2.1 billion in net taxes paid.

For our Financial Statements, refer to section 7 of this Annual Report.

⁽¹⁾	Includes data for Continuing and ~~contingent liabilities;~~Discontinued operations for the financial years being reported.

1.10.3 Capital management KPIs

Total shareholder return (TSR)

~~tax~~ LOGO

LOGO

Definition

TSR shows the total return to the shareholder during the year. It combines both movements in share prices and ~~regulatory developments.~~

~~Forward looking statements can~~dividends paid (which are assumed to be identified by the use of terminology such as ‘intend’, ‘aim’, ‘project’, ‘anticipate’, ‘estimate’, ‘plan’, ‘believe’, ‘expect’, ‘may’, ‘should’, ‘will’, ‘continue’ or similar words. These statements discuss future expectations concerning the results of operations or financial condition, or provide other forward looking statements.reinvested).

~~These forward looking statements are not guarantees or predictions of future~~

Link to strategy

TSR measures performance and involve known and unknown risks, uncertainties and other factors, many of which are beyond our control, and which may cause actual results to differ materially from those expressed in the statements contained in this release. Readers are cautioned not to put undue reliance on forward looking statements.

~~For example, our future revenues from our operations, projects or mines described in this Report will be based, in part, upon the market price~~ of the ~~minerals, metals or petroleum products produced,~~organisation in terms of shareholder wealth generation, which ~~may vary significantly from current levels. These variations, if materially adverse, may affect~~aligns to our purpose as presented inOur Charter, and enables the ~~timing or the feasibility~~comparison of ~~the development~~our performance with that of ~~a particular project, the expansion of certain facilities or mines, or the continuation of existing operations.~~our peer companies.

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 some 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; labour unrest; and other factors identified in the risk factors described in section 1.5.1.

We cannot assure you that our estimated economically recoverable 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.FY2015 performance

~~Except as required by applicable regulations or by law, the Group does not undertake any obligation to publicly update or review any forward looking statements, whether~~

TSR was negative 27.0 per cent during FY2015 as a result of ~~new information or future events.~~

~~2 Information on~~a decrease in the ~~Company~~

~~2.1~~ BHP Billiton ~~locations~~share price, partly offset by an increase in the dividends paid. BHP Billiton underperformed its peer companies by 10.7 per cent from 1 July 2010 to 30 June 2015.

~~Projects and exploration activities are not shown on this map.~~

~~Locations are current at 10 September 2012.~~

~~Petroleum~~

Long-term credit rating

Ref

Country

Fields

Description

Ownership

1
   Algeria    ROD Integrated Development ^(a)    Onshore oil production    38 %
2
   Australia    Bass Strait ^(a)    Offshore Victoria oil, condensate, LPG, natural gas and ethane production    50 %
3
   Australia    Minerva    Offshore Victoria natural gas and condensate production    90 %
4

Australia
   North West Shelf^(a)    Offshore Western Australia oil, condensate, LPG, natural gas and LNG production    8.3 – 16.7 %
5
   Australia    Pyrenees    Offshore Western Australia oil production    40 – 71.4 %
6
   Australia    Stybarrow    Offshore Western Australia oil and gas production    50 %
7
   Pakistan    Zamzama    Onshore natural gas and condensate production    38.5 %
8

Trinidad
and Tobago
   Angostura    Offshore oil and natural gas production    45 %
9
   UK    Bruce/Keith/ Liverpool Bay
Offshore North Sea and Irish Sea oil and natural gas production
- Bruce ^(a) 16%
- Keith 31.8%
- Liverpool Bay 46.1%

10
   US    Gulf of Mexico
Offshore oil, LPG and natural gas production from several fields
- Atlantis^(a) 44%
- Neptune 35%
- Genesis^(a) 5%
- Shenzi 44%
- Mad Dog^(a) 23.9%

11
   US    Onshore US
Onshore shale gas and liquids in Arkansas, Louisiana and Texas
- Eagle Ford
- Haynesville
- Fayetteville
- Permian
   <1 – 100 %
Aluminium^(b)


Ref

Country

Asset

Description

Ownership

12
   Australia    Worsley    Integrated alumina refinery and bauxite mine in Western Australia    86 %
13
   Brazil    Alumar^(a)    Integrated alumina refinery and aluminium smelter    36 – 40 %
14
   Brazil    Mineração Rio do Norte ^(a)    An open-cut bauxite mine    14.8 %
15
   Mozambique    Mozal    An aluminium smelter, located near Maputo    47.1 %
16
   South Africa    Aluminium South Africa    Hillside and Bayside aluminium smelters, located at Richards Bay    100 %

~~Stainless Steel Materials~~^(b) LOGO

Ref

Country

Asset

Description

Ownership

17
   Australia    Nickel West    Mt Keith and Leinster nickel-sulphide mines, Kalgoorlie nickel smelter, Kambalda nickel concentrator and the Kwinana nickel refinery    100 %
18
   Colombia    Cerro Matoso
Integrated laterite ferronickel mining and smelting operation in northern Colombia
   99.9 %
Base Metals


Ref

Country

Asset

Description

Ownership

19
   Australia    Cannington    Underground silver, lead and zinc mine, located in northwest Queensland    100 %
20
   Chile    Pampa Norte    Cerro Colorado and Spence open-cut mines producing copper cathode in the Atacama Desert, northern Chile    100 %
21
   Chile    Escondida    Comprises the world’s largest copper mine, concentrators and solvent extraction plants and port operations    57.5 %
22
   Peru    Antamina ^(a)    A joint venture open-cut copper and zinc mine, located in the Andes north-central Peru    33.8 %
23
   US    Base Metals North America    Includes the Pinto Valley open-cut copper mine, located in Arizona    100 %
Uranium^(c)


Ref

Country

Asset

Description

Ownership

24
   Australia
Olympic
Dam
   Large poly-metallic orebody and the world’s largest uranium deposit, producing copper, uranium, gold and silver    100 %
Diamonds and Specialty Products


Ref

Country

Asset

Description

Ownership

25
   Canada    EKATI Diamond Mine    Open-cut and underground diamond mines, located in the Northwest Territories of Canada    80 %
Iron Ore


Ref

Country

Asset

Description

Ownership

26
   Australia    Western Australia Iron Ore    Integrated iron ore mines (Area C, Jimblebar, Yandi, Newman and Yarrie), and rail and port operations in the Pilbara region of Western Australia    85 – 100 %
27
   Brazil    Samarco ^(a)    Open-cut mine that produces iron ore pellets    50 %

LOGO

Manganese


Ref

Country

Asset

Description

Ownership

28
   Australia    Manganese Australia    Producer of manganese ore at GEMCO in the Northern Territory and manganese alloys at TEMCO in Tasmania    60 %
29
   South Africa    Manganese South Africa    Mamatwan open-cut and Wessels underground manganese mines and the Metalloys manganese alloy plant    44.4 – 60 %

~~Metallurgical Coal~~Definition

Ref

Country

Asset

Description

Ownership

30
   Australia
Illawarra
Coal
   Underground coal mines (West Cliff, Dendrobium, Appin) in southern New South Wales, with access to rail and port facilities    100 %
31
   Australia    BHP Billiton Mitsubishi Alliance    Saraji, Goonyella Riverside, Peak Downs, Norwich Park, Gregory Crinum, Blackwater and Broadmeadow open-cut and underground mines in the Queensland Bowen Basin and Hay Point Coal Terminal    50 %
32

Australia
   BHP Billiton Mitsui Coal    South Walker Creek and Poitrel open-cut coal mines in the Queensland Bowen Basin    80 %
Energy Coal


Ref

Country

Asset

Description

Ownership

33
   Australia    New South Wales Energy Coal    Mt Arthur Coal open-cut mine    100 %
34
   Colombia    Cerrejón^(a)    An open-cut coal mine, with integrated rail and port operations    33.3 %
35
   South Africa    Energy Coal South Africa    Khutala, Middelburg, Klipspruit, Wolvekrans open-cut and underground mines and coal processing operations    50 – 100 %
36
   US    New Mexico Coal    Navajo open-cut and San Juan underground mines    100 %
BHP Billiton principal office locations


Ref

Country

Location

Office

37
   Australia    Adelaide    Uranium Head Office
38
   Australia    Brisbane    Metallurgical Coal Head Office
39
   Australia    Melbourne    Global Headquarters
40
   Australia    Perth
Aluminium ^(b) and Stainless Steel Materials ^(b) Head Offices
Iron Ore Head Office


41
   Australia    Sydney    Energy Coal Head Office
42
   Canada    Saskatoon    Diamonds and Specialty Products Head Office
43
   Chile    Santiago    Base Metals Head Office
44
   Malaysia    Kuala Lumpur    Global Shared Services Centre

~~Ref~~
~~Country~~
~~Location~~
~~Office~~
45
~~Singapore~~ ~~Singapore~~
~~Marketing Head Office~~
~~Minerals Exploration Head Office~~
46
~~South Africa~~ ~~Johannesburg~~ ~~Manganese Head Office~~
47
UK ~~London~~ ~~Corporate Office~~
48
US ~~Houston~~ ~~Petroleum Head Office~~

~~(a)~~

~~Jointly or non-operated BHP Billiton Assets or Fields.~~

~~(b)~~

~~Aluminium and Stainless Steel Materials form the Aluminium and Nickel Customer Sector Group.~~

~~(c)~~

~~Uranium is part of the Base Metals Customer Sector Group.~~

~~Percentage ownership figures have been rounded to one decimal place.~~

~~2.2 Business overview~~

~~2.2.1 History~~Credit ratings are forward looking opinions about credit risk. Standard & Poor’s and ~~development~~

~~Since 29 June 2001, we have operated under a Dual Listed Company (DLC) structure. Under~~Moody’s credit ratings express the ~~DLC structure,~~opinion of each agency about the ~~two parent companies,~~ability and willingness of BHP Billiton ~~Limited (formerly~~to meet its financial obligations in full and on time.

Link to strategy

One of BHP ~~Limited and before that The Broken Hill Proprietary Company Limited) and BHP Billiton Plc (formerly Billiton Plc) operate as~~Billiton’s priorities for capital management is to maintain a ~~single economic entity, run by a unified Board and management team. More details~~solid ‘A’ credit rating, which indicates the strength of ~~the DLC structure are located under section 2.10 of this Report.~~our balance sheet.

FY2015 performance

BHP Billiton ~~Limited was incorporated in 1885~~has maintained a long-term credit rating of A+ from Standard & Poor’s and ~~is registered in Australia with ABN 49 004 028 077.~~A1 from Moody’s. On 4 May 2015, Standard & Poor’s revised the Group’s ratings outlook to negative from stable.

For more information on our liquidity and capital resources, refer to section 1.15.5 of this Annual Report.

1.11 Summary of consolidated performance

1.11.1 Selected financial information

Our selected financial information reflects the operations of the BHP Billiton Group, and should be read in conjunction with the FY2015 Financial Statements, together with the accompanying notes.

We prepare our Consolidated Financial Statements in accordance with International Financial Reporting Standards (IFRS), as issued by the International Accounting Standards Board, and as outlined in note 41 ‘Basis of preparation and measurement’ to the Financial Statements in this Annual Report. We publish our Consolidated Financial Statements in US dollars.

Comparative financial information for FY2014, FY2013, FY2012 and FY2011 has been restated for the effects of the application of IFRS 5/AASB 5 ‘Non-current Assets Held for Sale and Discontinued Operations’ following

the demerger of South32, unless otherwise noted. The Consolidated Balance Sheet for these periods is not required to be and has not been restated, for further information refer to note 41 ‘Basis of preparation and measurement’ to the Financial Statements.

We use several financial measures to monitor the financial performance of our overall strategy. The two key measures are Profit after taxation attributable to members of the BHP Billiton Group (Attributable profit) and Underlying EBIT.


Year ended 30 June US$M	2015			2014		2013			2012⁽⁷⁾		2011^(7) (8)
Consolidated Income Statement (Section 7.1.1)
Revenue		44,636			56,762		53,860			56,642		57,088
Profit from operations		8,670			22,649		21,977			22,602		28,462
Profit after taxation from Continuing operations		4,390			14,955		14,132			15,233		21,062
(Loss)/profit after taxation from Discontinued operations		(1,512	)		269		(1,312	)		1,384		2,884
Profit after taxation from Continuing and Discontinued operations attributable to members of BHP Billiton Group⁽¹⁾		1,910			13,832		11,223			15,473		23,648
Dividends per ordinary share – paid during the period (US cents)		124.0			118.0		114.0			110.0		91.0
Dividends per ordinary share – determined in respect of the period (US cents)		124.0			121.0		116.0			112.0		101.0
Basic earnings from Continuing and Discontinued operations per ordinary share (US cents)^{(1) (2)}		35.9			260.0		210.9			290.7		429.1
Diluted earnings from Continuing and Discontinued operations per ordinary share (US cents)^{(1) (2)}		35.8			259.1		210.2			289.4		426.9
Basic earnings from Continuing operations per ordinary share (US cents)⁽²⁾		65.5			256.5		238.6			265.3		380.8
Diluted earnings from Continuing operations per ordinary share (US cents)⁽²⁾		65.3			255.7		237.8			264.1		378.8
Number of ordinary shares (millions)
– At period end		5,324			5,348		5,348			5,348		5,350
– Weighted average		5,318			5,321		5,322			5,323		5,511
– Diluted		5,333			5,338		5,340			5,346		5,540
Consolidated Balance Sheet (Section 7.1.3)⁽³⁾
Total assets		124,580			151,413		139,178			129,201		102,920
Net assets		70,545			85,382		75,291			69,315		57,755
Share capital (including share premium)		2,761			2,773		2,773			2,773		2,771
Total equity attributable to members of BHP Billiton Group		64,768			79,143		70,667			65,526		56,762
Other financial information
Underlying EBITDA⁽⁴⁾		21,852			30,292		28,109			31,554		32,904
Underlying EBIT⁽⁴⁾		11,866			22,098		21,680			25,948		28,626
Underlying attributable profit⁽⁴⁾		6,417			13,263		12,017			15,928		19,194
Underlying basic earnings per share (US cents)⁽⁴⁾		120.7			249.3		225.8			299.2		348.3
Capital and exploration expenditure (BHP Billiton share) ⁽⁵⁾		11,581			15,181		22,291			19,793		12,387
Net operating cash flows⁽⁶⁾		19,296			25,364		20,154			25,259		30,080

⁽¹⁾	Includes (loss)/profit after taxation from Discontinued operations attributable to members of BHP Billiton ~~Plc was incorporated~~Group.

⁽²⁾	For more information on earnings per share refer to note 6 ‘Earnings per share’ to the Financial Statements.

⁽³⁾ The Consolidated Balance Sheet for FY2015 does not include the assets and liabilities of the Businesses demerged with South32. IFRS 5/AASB 5 ‘Non-current Assets Held for Sale and Discontinued Operations’ does not require the Consolidated Balance Sheet to be restated for comparative periods.

⁽⁴⁾

Underlying attributable profit, Underlying EBIT and Underlying EBITDA are non-IFRS financial measures that we use to reflect the underlying performance of BHP Billiton. Underlying attributable profit is Attributable profit excluding Discontinued operations and any exceptional items. Underlying EBIT is earnings before net finance costs, taxation, Discontinued operations and any exceptional items. Underlying EBITDA is Underlying EBIT before depreciation, impairments and amortisation. We believe that Underlying attributable profit, Underlying EBIT and Underlying EBITDA provide useful information, but should not be considered as an indication of, or as an alternative to, Attributable profit as an indicator of actual operating performance or as an alternative to cash flow as a measure of liquidity. Underlying EBIT and Underlying EBITDA are included in ~~1996~~the FY2015 Consolidated Financial Statements as required by IFRS 8 ‘Operating Segments’ and ~~is registered~~are disclosed in ~~England~~sections 1.15.3 Operating results and ~~Wales with registration number 3196209. Successive predecessor entities~~2.5 Business performance.

⁽⁵⁾

Represents the share of capital and exploration expenditure attributable to BHP Billiton ~~Plc have operated since 1860.~~

~~The registered office of~~shareholders on a cash basis. Includes BHP Billiton ~~Limited~~proportionate share of equity accounted investments, capital and exploration expenditure from Discontinued operations; excludes capitalised deferred stripping and non-controlling interests.

⁽⁶⁾	Net operating cash flows are after dividends received, net interest and taxation and include net operating cash flows from Discontinued operations.

⁽⁷⁾

FY2012 and FY2011 restated data is ~~180 Lonsdale Street, Melbourne, Victoria 3000, Australia,~~not required to be and its telephone number is 1300 55 47 57 (within Australia) or +61 3 9609 3333 (outside Australia). The registered office of BHP Billiton Plc is Neathouse Place, London SW1V 1BH, United Kingdom, and its telephone number is +44 20 7802 4000. Our agent for service in the United States is Maria Isabel Reuter at 1360 Post Oak Boulevard, Suite 150, Houston, TX 77056.

~~2.2.2 Petroleum Customer Sector Group~~

Our Petroleum Customer Sector Group (CSG) comprises a base of onshore and offshore operations that are located in six countries throughout the world. We explore for significant upstream opportunities around the world.

~~Petroleum continues~~has not been subject to invest through economic cycles and maintains a long-term view. The acquisition of Petrohawk Energy Corporation was completed in FY2012 at a purchase price of US$12.0 billion, excluding the assumption of net debt of US$3.8 billion, and provided us with operating positions in the Eagle Ford, Haynesville and Permian fields in the United States. Combined with our interests in the Fayetteville field, acquired from Chesapeake Energy Corporation in the third quarter of audit.

⁽⁸⁾

FY2011 ~~oil and gas operations in these fields constitute our Onshore US business. We will continue to evaluate other commercial opportunities for growth, including through acquisitions, in the future.~~

During FY2012, total production increased by 40 per cent from the prior year to 222.3 million barrels of oil equivalent (MMboe). Production from our Onshore US business, strong uptime performance from existing operated assets and the first full year of production from the Angostura gas facility (Trinidad and Tobago) largely offset reduced production caused by maintenance activity and adverse weather at our non-operated offshore Gulf of Mexico, United States, and North West Shelf, Australia, fields and natural field decline at our operated Pyrenees facility.

We remain committed to organic growth opportunities through exploration, using the latest seismic and geophysical technology to locate new resources and yield results. In FY2012, we executed a major international drilling campaign focused on proven basins in Southeast Asia, Western Australia and the Gulf of Mexico.

~~Our production operations are as follows:~~

~~Bass Strait~~

~~Together with our 50-50 joint venture partner, Esso Australia (a subsidiary of ExxonMobil), we have~~data has not been producing oil and gas from Bass Strait, off the south-eastern coast of Australia, for over 40 years, having participated in the original discovery of hydrocarbons in 1965. We dispatch the majority of our Bass Strait crude oil and condensate production to refineries along the east coast of Australia. Gas is piped onshore to our Longford processing facility, from which we sell our production to domestic distributors under contracts with periodic price reviews.

~~North West Shelf~~

We are a joint venture participant in the North West Shelf Project in Western Australia. The North West Shelf Project was developed in phases: the domestic gas phase supplies gas to the Western Australian domestic market mainly under long-term contracts, and a series of liquefied natural gas (LNG) expansion phases supplying LNG to buyers in Japan, Korea and China under a series of long-term contracts. The project also produces LPG and condensate.

~~We are also a joint venture participant in four nearby oil fields. Both the North West Shelf gas and oil ventures are operated by Woodside.~~

~~Australia operated~~

~~We operate two oil fields offshore Western Australia and one gas field in Victoria.~~

The Pyrenees oil development consists of three fields, two of which (Crosby and Stickle) are located in blocks WA-42-L (71.43 per cent interest), while the third (Ravensworth) straddles blocks WA-42-L and WA-43-L (40 per cent interest). The project uses a FPSO facility.

~~The Stybarrow operation (50 per cent BHP Billiton share) is an oil development located offshore Western Australia. The project uses a FPSO facility.~~

The Minerva operation (90 per cent BHP Billiton share) is a gas field located offshore Victoria. The operation consists of two subsea producing wells which pipe gas onshore to a processing plant. The gas is delivered into a pipeline and sold domestically.

~~Gulf of Mexico~~

We operate two fields in the Gulf of Mexico (Neptune and Shenzi) and hold non-operating interests in a further three fields (Atlantis, Mad Dog and Genesis). We divested our interest in the West Cameron and Starlifter areas in June 2012. We also own 25 per cent and 22 per cent, respectively, of the companies that own and operate the Caesar oil pipeline and the Cleopatra gas pipeline which transport oil and gas from the Green Canyon area, where a number of our fields are located, to connecting pipelines that transport product to the mainland. We deliver our oil production to refineries along the Gulf Coast of the United States.

~~Onshore US~~

~~We operate in four shale fields located onshore in the United States – Fayetteville, Eagle Ford, Haynesville and Permian.~~

The combined leasehold acreage of the Onshore US fields is approximately 1.6 million net acres in the states of Texas, Louisiana and Arkansas. Our ownership interests range from less than one per cent to 100 per cent. Working interest will change due to events such as a party’s non consent election, or through farm-ins and farm-outs with other parties.

In FY2012, the Onshore US business delivered 6.9 million barrels of crude oil and condensates, 448 billion cubic feet of natural gas and 4.0 million barrels of natural gas liquids. Our Onshore US total production increased by 80 MMboe from 6 MMboe in FY2011 to 86 MMboe in FY2012, which more than accountedrestated for the ~~63 MMboe increase~~effects of new accounting standards and interpretations and other voluntary changes in ~~total production.~~

~~Due to the low price of US natural gas~~accounting policy, which were effective in ~~FY2012, the capital expenditure in the Onshore US business in the second half of~~ the financial year ~~was focused~~commencing from 1 July 2013. This information has however been restated where required by IFRS 5/AASB 5 ‘Non-current Assets Held for Sale and Discontinued Operations’, unless otherwise noted.

Non-IFRS measures

We use a number of non-IFRS measures to assess our performance. Non-IFRS measures include the following:

Adjusted effective tax rate – comprises Total taxation expense excluding remeasurement of deferred tax assets associated with the Minerals Resource Rent Tax (MRRT), exceptional items, Discontinued operations and exchange rate movements included in taxation expense divided by Profit before taxation and exceptional items.

Controllable cash costs – comprises operating cash costs and exploration and business development costs and excludes Discontinued operations.

Free cash flow – comprises Net operating cash flows less net investing cash flows and excludes Discontinued operations.

Gearing – represents the ratio of net debt to net debt plus net assets.

Net debt – comprises Interest bearing liabilities less Cash and cash equivalents for the total operations within the Group at the reporting date.

Net operating assets – represents operating assets net of operating liabilities, including the carrying value of equity accounted investments and predominantly excludes cash balances, interest bearing liabilities and deferred tax balances. The carrying value of investments accounted for using the equity accounted method represents the balance of the Group’s investment in equity accounted investments, with no adjustment for any cash balances, interest bearing liabilities and deferred tax balances of the equity accounted investment.

Underlying attributable profit – comprises Profit after taxation attributable to members of BHP Billiton Group less exceptional items as described in note 2 ‘Exceptional items’ to the Financial Statements and excludes Discontinued operations.

Underlying basic earnings per share – represents basic earnings per share excluding any exceptional items and Discontinued operations.

Underlying EBIT – is earnings before net finance costs, taxation, Discontinued operations and any exceptional items.

Underlying EBITDA – is Underlying EBIT before depreciation, impairments and amortisation.

Underlying EBIT margin – comprises Underlying EBIT, excluding third party product profit from operations, divided by revenue excluding third party product revenue.

Underlying EBITDA margin – comprises Underlying EBITDA, excluding third party product EBITDA, divided by revenue excluding third party product revenue.

Underlying EBITDA interest coverage – for the purpose of deriving interest coverage, net interest comprises Interest on bank loans and overdrafts, Interest on all other borrowings, Finance lease and hire purchase interest less Interest income.

Underlying return on capital – represents net profit after tax, excluding exceptional items, Discontinued operations and net finance costs (after tax), divided by average capital employed. Capital employed is net assets before net debt.

Financial results for year ended 30 June 2015 compared with year ended 30 June 2014

Information in this section has been presented on a Continuing operations basis to exclude the contribution from assets that were demerged with South32, unless otherwise noted. Details of the contribution of the South32 assets to the Group’s results are disclosed under ‘Discontinued operations’ below and in note 29 ‘Discontinued operations’ to the Financial Statements.

Revenue in FY2015 was US$44.6 billion, a decrease of US$12.2 billion or 21 per cent from US$56.8 billion in the corresponding period. Revenue decreased across all Businesses, but mainly in the Iron Ore and Petroleum and Potash Businesses, where revenue decreased by US$6.6 billion and US$3.4 billion, respectively. Our Copper Business and our Coal Business contributed additional revenue decreases of US$1.3 billion and US$678 million, respectively.

The decrease in revenue in Iron Ore was primarily due to a 41 per cent decline in the average realised price of iron ore to US$61 per wet metric tonne (FOB), which more than offset a 13 per cent volume increase at WAIO to a record 254 Mt (100 per cent basis) as a result of continued improvement in the performance of our integrated supply chain and the successful ramp-up of the Jimblebar mining hub. The decrease in revenue in Petroleum was primarily driven by lower realised prices.

Overall, the US$12.2 billion decrease in revenue in FY2015 was primarily attributable to weaker realised prices for our commodities, which reduced total revenue by US$17.0 billion, which more than offset additional revenue of US$6.2 billion attributable to increased volumes during the year.

Year ended 30 June
   2015
US$M 2014
US$M
Restated 2013
US$M
Restated

Raw materials and consumables used
   4,667    5,540    5,407
Employee benefits expense
   4,971    5,413    5,578
External services (including transportation)⁽¹⁾
   8,928    9,899    10,202
Third party commodity purchases
   1,165    1,702    1,158
Net foreign exchange (gains)/losses
   (469 ) 168    (187 )
Fair value change on derivatives
   124    (122 ) 63
Government royalties paid and payable
   1,708    2,412    2,179
Depreciation and amortisation expense
   9,158    7,716    6,067
Exploration and evaluation expenditure
   670    698    1,026
Impairment of assets⁽²⁾
   4,024    478    3,286
Operating lease rentals
   636    665    679
Other operating expenses⁽³⁾
   1,428    1,954    1,371
Total expenses
   37,010    36,523    36,829
Less exceptional items
   (3,196 ) –    (2,862 )
Total expenses excluding exceptional items
   33,814    36,523    33,967

⁽¹⁾	Includes exceptional items of US$ nil (2014: US$ nil; 2013: US$96 million).

⁽²⁾	Includes exceptional items of US$3,196 million (2014: US$ nil; 2013: US$2,924 million).

⁽³⁾	Includes exceptional items of US$ nil (2014: US$ nil; 2013: credit of US$158 million).

Total expenses increased from US$36.5 billion in FY2014 to US$37.0 billion in FY2015. Total expenses excluding exceptional items of US$3.2 billion, the majority of which related to impairments in FY2015, decreased by US$2.7 billion or seven per cent during FY2015 from US$36.5 billion to US$33.8 billion.

The increase of non-cash expenses for depreciation and amortisation of US$1.4 billion and impairments not classified as exceptional items of US$350 million, was more than offset by our ability to reduce operating costs across all of our Businesses, demonstrated by the delivery of a US$2.7 billion reduction in cash cost efficiencies and a favourable foreign exchange impact of US$1.7 billion.

Reductions in expenses (excluding exceptional items) were evident in Raw materials and consumables used of US$873 million, External services (including transportation) of US$971 million, Employee benefit expense of US$442 million, Third party commodity purchases of US$537 million, and Government royalties paid and payable of US$704 million. Total operating costs were aided by favourable exchange rates, including a favourable restatement of monetary items in the balance sheet of US$637 million compared to FY2014. For further information, refer to note 42 ‘Functional and presentation currency’ to the Financial Statements.

Other income decreased from US$1.2 billion in FY2014 to US$496 million in FY2015, mainly due to the gain on sale for the Pinto Valley mining operation of US$551 million recognised in FY2014. For further information, refer to note 5 ‘Other income’ to the Financial Statements.

Profit from operations decreased by US$13.9 billion or 62 per cent, from US$22.6 billion to US$8.7 billion. Gross exceptional items during FY2015 comprised an impairment of Onshore US assets of US$2.8 billion and an impairment of Nickel West assets of US$409 million, compared with gross exceptional income of US$551 million in FY2014.

Underlying EBIT

Underlying EBIT is a key measure that management uses internally to assess the performance of our Businesses, make decisions on the allocation of resources and assess operational management. Management uses this measure because financing structures and tax regimes differ across our assets and substantial components of our tax and interest charges are levied at a Group level rather than an operational level.

We exclude exceptional items from Underlying EBIT in order to enhance the comparability of the measure from period to period and provide clarity into the underlying performance of our operations. Our management monitors exceptional items separately.

For FY2015, Underlying EBIT declined by 46 per cent to US$11.9 billion. Further analysis of Underlying EBIT for the Businesses is included in section 1.12 and for the Group in section 1.15.3 of this Annual Report.

The following table reconciles Underlying EBIT to Profit from operations.


Year ended 30 June	2015 US$M			2014 US$M Restated		2013 US$M Restated
Year ended 30 June	2015 US$M			2014 US$M Restated		2013 US$M Restated
Underlying EBIT		11,866			22,098		21,680
Exceptional items (before taxation) – refer section 1.15.3		(3,196	)		551		297

Profit from operations (EBIT)		8,670			22,649		21,977

Net finance costs

Net finance costs decreased by US$300 million to US$614 million in FY2015. The decrease reflected foreign exchange gains on finance leases and the early redemption of the Petrohawk Energy Corporation Senior Notes in August 2014, which resulted in a gain on redemption and lower interest expense.

Taxation expense

Total taxation expense decreased by US$3.1 billion to US$3.7 billion in FY2015. This decrease was mainly driven by the decrease of Profit before taxation. The adjusted effective tax rate, which excludes the influence of exchange rate movements, remeasurement of deferred tax assets associated with the MRRT and exceptional items, decreased from 32.2 per cent to 31.8 per cent.

Discontinued operations

South32’s contribution to BHP Billiton’s FY2015 results comprised US$753 million Profit after taxation, excluding exceptional items. Exceptional items comprised a tax expense of US$111 million related to the repeal of the MRRT and a net loss on the demerger of US$2.2 billion (after tax benefit). This contribution has been included in Loss attributable to members of BHP Billiton Group from Discontinued operations of US$1.6 billion.

Underlying attributable profit

The following table reconciles Underlying attributable profit to Attributable profit.


Year ended 30 June	2015 US$M			2014 US$M		2013 US$M
Year ended 30 June	2015 US$M			2014 US$M		2013 US$M
Underlying attributable profit		6,417			13,263		12,017
Attributable loss – Discontinued operations		(1,573	)		184		(1,475	)
Exceptional items (after taxation)		(2,946	)		385		681
Minority interest in exceptional items		12			–		–

Attributable profit		1,910			13,832		11,223

Attributable profit decreased by 86 per cent to US$1.9 billion mainly driven by a significant decline in commodity prices and included an Attributable loss related to Discontinued operations of US$1.6 billion.

Underlying basic earnings per share of 120.7 US cents is calculated using Underlying attributable profit divided by the weighted average number of ordinary shares.

Other financial information

Net operating cash flows from Continuing operations decreased by 25 per cent to US$17.8 billion during FY2015. The major contributor was the US$7.7 billion decrease in cash generated from operations (after changes in working capital balances), which was partially offset by a decrease of US$2.1 billion in net taxes paid. Despite the significant decline in commodity prices, we generated US$6.3 billion of free cash flow during the period as we further improved both operating and capital productivity and exercised the flexibility in our investment program. In this regard, we invested US$11.0 billion in capital projects and exploration (BHP Billiton share) for Continuing operations during the year.

We finished the period with net debt of US$24.4 billion (2014: US$25.8 billion) for a gearing ratio of 25.7 per cent (2014: 23.2 per cent). IFRS 5/AASB 5 ‘Non-current Assets Held for Sale and Discontinued Operations’ does not require the Consolidated Balance Sheet to be restated for comparative periods. The FY2014 figures therefore includes assets and liabilities of the Businesses demerged with South32. For information relating to Discontinued operations refer to note 29 ‘Discontinued operations’ to the Financial Statements.

1.11.2 Production performance

A summary of our production volumes for FY2015 and the previous two financial years is shown below. Further details appear in section 2.2 of this Annual Report.


Year ended 30 June⁽¹⁾	2015		2014		2013
Production – Continuing operations
Total Petroleum production (MMboe)		256		246		236
Copper (kt)		1,708		1,727		1,689
Iron ore (kt)		232,508		203,564		169,856
Metallurgical coal (kt)		42,621		37,565		29,708
Energy coal (kt)		41,012		43,108		40,818
Nickel (kt)		90		99		103
Production – Discontinued operations
Metallurgical coal (kt)		7,216		7,513		7,942
Energy coal (kt)		28,677		30,384		31,627
Alumina (kt)		4,284		5,178		4,880
Aluminium (kt)		843		1,174		1,179
Manganese ores (kt)		7,224		8,302		8,517
Manganese alloys (kt)		612		646		608
Nickel (kt)		34		44		51

⁽¹⁾	BHP Billiton Group share of production includes our proportional share of production for which profit is derived from our equity accounted investments, unless otherwise stated.

1.11.3 Projects and pipeline

Our project pipeline focuses on commodities that are expected to be high-margin and create significant future value. During FY2015, three major projects achieved first production for a total capital expenditure (subject to finalisation) of US$6.7 billion. At the end of FY2015, we had four major projects under development with a combined budget of US$7.0 billion. This budget does not include an additional US$1.5 billion of capital expenditure that we expect to spend in FY2016 on development of our Onshore US asset.

For more information on our major projects and pipeline refer to sections 1.12, 2.1 and 2.4 of this Annual Report.

1.12 Our Businesses

The description of our Businesses and a discussion of their performance are set out below.

For further information on our assets, production, results and reserves refer to section 2 of this Annual Report. For further information on the financial results of our Businesses, refer to note 1 ‘Segment reporting’ to the Financial Statements.

1.12.1 Revenue and Underlying EBIT performance by Business

The following tables provide a summary of Revenue and Underlying EBIT for FY2015 and the two prior corresponding periods of our Businesses and the Group. Our use of Underlying EBIT is explained in section 1.11.1 of this Annual Report. Underlying EBIT is one of the financial measures used to monitor the financial performance of our overall strategy and is disclosed by segment in note 1 ‘Segment reporting’ to the Financial Statements.

Group and business level information is reported on a statutory basis in accordance with IFRS 8 ‘Operating Segments’. Revenue excludes revenue from investments accounted for using the equity method. Underlying EBIT includes net finance costs and taxation expense of investments accounted for using the equity method.


Year ended 30 June	2015 US$M		2014 US$M Restated		2013 US$M Restated
Year ended 30 June	2015 US$M		2014 US$M Restated		2013 US$M Restated
Revenue ⁽¹⁾
Petroleum and Potash		11,447		14,833		13,224
Copper		11,453		12,789		13,172
Iron Ore		14,753		21,356		18,593
Coal		5,885		6,563		6,574
Group and unallocated items⁽²⁾		1,098		1,221		2,297

BHP Billiton Group		44,636		56,762		53,860


Year ended 30 June	2015 US$M			2014 US$M Restated			2013 US$M Restated
Year ended 30 June	2015 US$M			2014 US$M Restated			2013 US$M Restated
Underlying EBIT
Petroleum and Potash		1,802			5,287			5,636
Copper		3,353			4,668			5,033
Iron Ore		6,932			12,102			11,109
Coal		348			575			424
Group and unallocated items⁽²⁾		(569	)		(534	)		(522	)

BHP Billiton Group		11,866			22,098			21,680

⁽¹⁾	Includes the ~~liquids-rich Eagle Ford and Permian fields, both in Texas. Consequently, we reduced the development~~sale of ~~the dry gas assets~~third party products.

⁽²⁾

Comprises Group Functions, other unallocated operations including Nickel West (previously disclosed in the ~~Haynesville~~former Aluminium, Manganese and ~~Fayetteville fields in the second half~~Nickel Business), consolidation adjustments and external sales of ~~FY2012. The mix of liquids~~freight and ~~gas development opportunities in all four fields provides us with the flexibility~~fuel to ~~adjust our onshore development program towards those operations with the highest return on investment.~~

~~Liverpool Bay and Bruce/Keith~~

The Liverpool Bay, United Kingdom, integrated development consists of five producing offshore gas and oil fields in the Irish Sea, the Point of Ayr onshore processing plant in north Wales, and associated infrastructure. We deliver the Liverpool Bay gas by pipeline to E.ON’s Connah’s Quay power station.

We own 46.1 per cent of and operate Liverpool Bay. We also hold a 16 per cent non-operating interest in the Bruce oil and gas field in the North Sea and operate the Keith field (31.83 per cent share), a subsea tie-back, which is processed via the Bruce platform facilities.

~~Algeria~~

Our Algerian operations comprise our effective 38 per cent interest in the ROD Integrated Development, which consists of six satellite oil fields that pump oil back to a dedicated processing train. We exited our effective 45 per cent interest in the Ohanet wet gas development in October 2011.

Our interest in ROD is subject to a contractual determination to ensure interest from participating association leases is accurately reflected. Future redetermination of our interest may be possible under certain conditions.

~~Trinidad and Tobago~~

The Greater Angostura project is an integrated oil and gas development located offshore east Trinidad. We operate the field and have a 45 per cent interest in the production sharing contract for the project. Gas sales from the gas export platform commenced in May 2011.

~~Zamzama~~

~~We hold a 38.5 per cent working interest in and operate the Zamzama gas project in Sindh province of Pakistan. Both gas and condensate are sold domestically.~~

~~Information on Petroleum operations~~

~~The following table contains additional details of our production operations. This table should be read in conjunction with the production (see section 2.3.1) and reserve tables (see section 2.13.1).~~third parties.

Year ended 30 June 2015 compared with year ended 30 June 2014

Underlying EBIT for FY2015 was US$11.9 billion, a decrease of 46 per cent compared to the prior year.

A significant decline in commodity prices reduced Underlying EBIT by US$16.4 billion. This was offset in part by a reduction in operating cash costs of US$2.7 billion and the generation of productivity-led volume efficiencies of US$1.2 billion. A US$142 million reduction in capitalised exploration expenditure contributed to the delivery of US$4.1 billion of productivity gains during the period, two years ahead of our FY2017 target.

Non-cash charges and one-off items decreased Underlying EBIT by US$1.3 billion and US$456 million respectively, but were offset by the favourable impact of a stronger US dollar of US$1.6 billion, a reduction of price-linked costs of US$1.2 billion and the impact of additional growth volumes of US$1.8 billion.

The use of the term operating cash costs is described in section 1.15.3 of this Annual Report.

1.12.2 Petroleum and Potash Business

Our Petroleum and Potash Business headquartered in Houston, United States, comprises conventional and non-conventional oil and gas operations and a potash project based in Saskatchewan, Canada.

Results

~~Operation &~~
~~Location~~

~~Product~~

~~Ownership~~

~~Operator~~

~~Title, Leases or Options~~

~~Nominal Production~~
~~Capacity~~

~~Facilities, Use & Condition~~

Year ended 30 June
   2015
US$M    2014
US$M    2013
US$M

Revenue
   11,447       14,833       13,224
Underlying EBIT
   1,802       5,287       5,636
Capital expenditure
   5,359       6,423       7,675
Net operating assets
   36,287       39,514       37,525
Total petroleum production (MMboe)
   256       246       236

Our Petroleum Business includes exploration, development, production and marketing activities. We have a high-quality resource base concentrated in the United States and Australia. Our core production operations are located in the US Gulf of Mexico, Australia, Trinidad and Tobago (conventional) and Onshore US (unconventional). We produce crude oil and condensate, gas and natural gas liquids (NGLs). A summary of the assets, capital projects and FY2015 performance of our Petroleum and Potash Business is presented as follows.

Description of the Petroleum Business

Our production operations include the following:

Gulf of Mexico (United States)

We operate two fields in the Gulf of Mexico (Shenzi with a 44 per cent interest and Neptune with a 35 per cent interest) and hold non-operating interests in three other fields (Atlantis with a 44 per cent interest, Mad Dog with a 23.9 per cent interest, and Genesis with a 4.95 per cent interest). We have ongoing infill drilling in most of our Gulf of Mexico fields and also planned ongoing water injection wells at the Shenzi and Atlantis fields. All the fields are located between 155 and 210 kilometres offshore from the US state of Louisiana. We also own 25 per cent and 22 per cent, respectively, of the companies that own and operate the Caesar oil pipeline and the Cleopatra gas pipeline. These pipelines transport oil and gas from the Green Canyon area, where our Gulf of Mexico fields are located, to connecting pipelines that transport product onshore. Our US oil production is delivered to refineries along the Gulf Coast of the United States. Production in FY2015 was 36.6 million barrels of oil equivalent (MMboe), up from 36.1 MMboe in FY2014.

Onshore US (United States)

We produce oil, condensate, gas and NGLs in four shale areas: Eagle Ford, Permian, Haynesville and Fayetteville. The Eagle Ford area has two fields, Black Hawk and Hawkville. Much of the Eagle Ford and Permian areas are focused on hydrocarbon liquids. The Haynesville and Fayetteville areas are focused on gas. Our combined leasehold acreage onshore in the United States is approximately 1.1 million net acres. Our ownership interests in those leases range from less than one per cent to 100 per cent. At 30 June 2015, we held an interest in approximately 7,300 gross wells and approximately 2,300 net wells. We acted as joint venture operator for approximately 27 per cent of our gross wells. Production in FY2015 was 125.7 MMboe, up from 108.1 MMboe in FY2014.

Oil and gas production from our onshore shale areas is sold domestically in the United States, via connections to intrastate and interstate pipelines, and internationally through the export of processed condensate from Black Hawk. Prices for oil, NGLs and gas are based on US regional price indices, including West Texas Intermediate prices for oil, relevant published US regional gas indices for natural gas and Mont Belvieu prices for NGLs.

Map of Onshore US and Gulf of Mexico

LOGO

Bass Strait (Australia)

Together with our 50-50 joint venture partner, Esso Australia (a subsidiary of ExxonMobil), through the Gippsland Basin Joint Venture, we participated in the original discovery of hydrocarbons in 1965 and we have been producing oil and gas from Bass Strait for more than 40 years. The Bass Strait operations are located between 25 and 80 kilometres off the southeastern coast of Australia.

We sell the majority of our Bass Strait crude oil and condensate production to refineries along the east coast of Australia under 12-month contracts. The contract price is based on the average Dated Brent price. Gas is piped onshore to the joint venture’s Longford processing facility, from where we sell our share of production to domestic distributors under contracts with periodic price reviews. Liquefied petroleum gas (LPG) is dispatched via pipeline, road tanker or sea tanker. Ethane is dispatched via pipeline to petrochemical plants in western Melbourne.

Production in FY2015 was 31.2 MMboe, down from 34.0 MMboe in FY2014.

Minerva (Australia)

We are the operator of Minerva (90 per cent interest), a gas field located 11 kilometres south-southwest of Port Campbell in western Victoria. The operation consists of two subsea wells, with gas piped onshore to a processing plant. After processing, the gas is delivered into a pipeline and sold domestically under long-term contracts.

Production in FY2015 was 3.1 MMboe, up from 3.0 MMboe in FY2014.

North West Shelf (Australia)

We are a joint venture participant in the North West Shelf Project, located approximately 125 kilometres northwest of Dampier in Western Australia. The North West Shelf Project supplies gas to the Western Australian domestic market, mainly under long-term contracts, and liquefied natural gas (LNG) to buyers in Japan, South Korea and China under a series of long-term contracts.

North West Shelf gas is piped from the fields to the Karratha Gas Plant for processing. LPG, condensate and LNG are transported to market by ship, while domestic gas is transported by the Natural Gas and Pilbara Energy pipelines. We are also a joint venture partner in four nearby oil fields – Cossack, Wanaea, Lambert and Hermes.

All North West Shelf gas and oil joint ventures are operated by Woodside. Production in FY2015 was 28.7 MMboe, down from 28.8 MMboe in FY2014.

Pyrenees (Australia)

We operate six oil fields in Pyrenees, which are located offshore approximately 23 kilometres northwest of Northwest Cape, Western Australia. We had an effective 62 per cent interest in the fields as at 30 June 2015, based on inception-to-date production from two permits in which we have interests of 71.43 per cent and 40 per cent, respectively. The project uses a floating, production, storage and off-take (FPSO) facility. The crude oil produced is sold internationally on the spot market. Production in FY2015 was 7.2 MMboe, down from 7.5 MMboe in FY2014.

Macedon (Australia)

We are the operator of Macedon (71.43 per cent interest), an offshore gas field located approximately 75 kilometres west of Onslow, Western Australia, and an onshore gas processing facility, located approximately 17 kilometres southwest of Onslow. The operation achieved first gas in August 2013 and consists of four subsea wells, with gas piped onshore to the processing plant. After processing, the gas is delivered into a pipeline and sold into the Western Australian domestic market, mainly under long-term contracts. Production in FY2015 was 6.8 MMboe, up from 5.5 MMboe in FY2014.

Stybarrow (Australia)

We are the operator of Stybarrow (50 per cent interest), an oil field located 55 kilometres west-northwest of Exmouth, Western Australia. The project uses a FPSO facility. The crude oil produced is sold internationally on the spot market. Stybarrow reached the end of its field life and ceased production on 30 June 2015.

Map of North West Shelf and Bass Strait

LOGO

Trinidad and Tobago

We operate the Greater Angostura field (45 per cent interest in the production sharing contract), an integrated oil and gas development, located offshore, 40 kilometres east of Trinidad. The crude oil is sold on a spot basis to international markets, while the gas is sold domestically under term contracts. Production in FY2015 was 6.7 MMboe, down from 7.5 MMboe in FY2014.

Other

We are the operator of the Zamzama gas project (38.5 per cent interest) in the Sindh province of Pakistan and the Keith oil and gas field (31.83 per cent interest) in the North Sea. We have non-operating interests in ROD Integrated Development (38 per cent interest), which consists of six satellite oil fields in Algeria, and in the Bruce oil and gas field (16 per cent interest) in the North Sea. Production in FY2015 was 9.0 MMboe, down from 14.2 MMboe in FY2014.

More information on our assets and operations is presented in section 2.1.1 of this Annual Report.

Development projects in execution at year-end

North West Shelf Greater Western Flank–A

The North West Shelf Greater Western Flank–A (GWF-A) gas project was approved by the Board in November 2011 to recover gas from the near field Goodwyn H and Tidepole fields. The project consists of a five well subsea tie-back of the Goodwyn H and Tidepole fields to the Goodwyn A platform. The Goodwyn A platform is located in 130 metres of water, approximately 130 kilometres offshore from Karratha on the northwest coast of Australia. First gas production is expected in CY2016. Woodside is the operator and we own a 16.67 per cent interest.

Bass Strait Longford Gas Conditioning

The Longford Gas Conditioning Plant (LGCP) Project was approved by the Board in December 2012 to enable the production of Turrum reserves plus the production of Kipper and other undeveloped high carbon dioxide content hydrocarbons. The Project scope includes a carbon dioxide extraction facility, brownfield tie-ins, an electrical upgrade and multiple supporting utilities. First gas production is expected in CY2016.

Bass Strait Kipper gas field development

Initial development of the Kipper gas field in the Gippsland Basin, located offshore from Victoria, was approved by the Board in December 2007. A supplemental approval of the development was granted in January 2011. The first phase of the project included two new subsea wells, three new pipelines and platform modifications to supply 10 thousand barrels per day (Mbbl/d) of condensate and 80 million cubic feet per day (MMcf/d) of gas.

Gas and liquids will be processed via the existing Gippsland Basin Joint Venture facilities. The Kipper gas field development comprises the Kipper Unit Joint Venture and the Gippsland Basin Joint Venture. We own a 32.5 per cent interest in the Kipper Unit Joint Venture, with Esso Australia owning 32.5 per cent and Santos owning 35 per cent. We own a 50 per cent interest in the Gippsland Basin Joint Venture, with Esso Australia owning the remaining 50 per cent.

The main Kipper gas field facilities were completed in September 2012; however, first production has not yet commenced due to the need to provide for mercury removal. Funding for the installation of the mercury treatment facilities of US$120 million was approved in March 2014, with completion expected to occur in CY2016. Our share of costs incurred to 30 June 2015 was US$59 million.

Bass Strait Turrum field development

The Turrum field development operates under the Gippsland Basin Joint Venture, in which we own a 50 per cent interest, with Esso Australia owning the remaining 50 per cent. Initial production of low carbon dioxide gas through the Turrum facilities occurred in June 2013. High carbon dioxide gas production from the Turrum reservoir will come online with completion of the Longford Gas Conditioning Plant in CY2016.

Onshore US development

BHP Billiton’s Onshore US drilling and development expenditure in FY2015, presented on an accruals basis within this section, was US$3.3 billion (FY2014: US$4.2 billion). The expenditure was primarily related to drilling and completion activities in our liquids-rich Black Hawk and Permian fields, while deferring development in areas that are predominantly gas.

Eagle Ford capital expenditure for FY2015 was US$2.1 billion (FY2014: US$3.1 billion). The expenditure was primarily related to drilling and completion activities, resulting in 188 net development wells completed during the year. Of the US$2.1 billion, approximately US$95 million was spent on the installation of more than 52 kilometres of pipeline infrastructure and additional gas processing facilities. The operated rig count was seven for the year (FY2014: 17).

Permian capital expenditure for FY2015 was US$0.7 billion (FY2014: US$0.5 billion). The expenditure was primarily related to drilling and completion activities, resulting in 45 net development wells completed during the year. Of the US$0.7 billion, approximately US$54 million was spent on the installation of more than 101 kilometres of pipeline infrastructure and additional gas processing facilities. The operated rig count was three for the year (FY2014: four).

Haynesville capital expenditure for FY2015 was US$0.3 billion (FY2014: US$0.4 billion). The expenditure was primarily related to drilling and completion activities, resulting in 25 net development wells completed during the year. There were no operated rigs in Haynesville at the end of this year (FY2014: three).

Fayetteville capital expenditure for FY2015 was US$0.2 billion (FY2014: US$0.2 billion). The expenditure was primarily related to participation in drilling and completion activities for wells operated by third parties, resulting in 45 net development wells completed during the year.

More information on our development and capital projects is presented in section 2.4 of this Annual Report.

Exploration and evaluation

Our exploration strategy is to focus on material opportunities, at high working interest, with a bias for liquids and operatorship. While the majority of the expenditure incurred was in our Gulf of Mexico, Western Australia and Trinidad and Tobago focus areas, we also incurred expenditure in South Africa, Brazil, South-East Asia, India and Onshore US.

After exploration and appraisal we then perform development evaluation activities to determine the technical feasibility and commercial viability of prospective projects.

More information on our development evaluation activities and exploration is presented in section 2.1.1 of this Annual Report.

Description of Potash

Jansen Potash Project

Our Potash strategy is to build a material industry position over the long term.

We hold exploration permits and mining leases, issued by the Government of Saskatchewan, covering more than 16,000 square kilometres of mineral rights in the province of Saskatchewan in Canada. The Government of Saskatchewan has issued a Potash Lease Special Agreement (KLSA) for the Jansen Potash Project, which provides long-term security of tenure to allow the ongoing development and subsequent operation of Jansen for the life of the operation.

We have progressively explored our permit areas over the past eight years and continue to evaluate their economic development potential. We are converting our exploration permits to long-term mining leases as these permits mature in order to enable further evaluation. To date, we have secured 8,000 square kilometres under long-term mining leases.

We continue to progress Jansen, a greenfield potash project, located approximately 140 kilometres east of Saskatoon in south-central Saskatchewan. We believe Jansen is one of the world’s best undeveloped potash resources and is likely to be a low-cost source of supply once fully developed. Investment in Jansen could underpin a potential fifth Business within BHP Billiton, given the opportunity to develop a multi-decade, multi-mine basin in Saskatchewan.

On 20 August 2013, we announced an additional US$2.6 billion investment in Jansen, bringing total approved spending to US$3.8 billion. This investment is funding the excavation and lining of the Project’s production and service shafts, and the installation of essential surface infrastructure and utilities and was 46 per cent complete as of 30 June 2015.

The level of expenditure on the Project in FY2015 was US$423 million. Shaft excavation is progressing, while the construction workforce camp and service shaft permanent headframe have been completed. Necessary infrastructure work continues to be progressed.

With our investment premised on the attractive longer-term market fundamentals for potash, we will continue to modulate the pace of development. The introduction of one or more minority partners, consistent with our approach for some of our other resource operations, will be considered at the appropriate time.

On the basis of our current projections and subject to Board approval, Jansen is likely to ramp-up production in the decade beginning 2020.

We are continuing to evaluate other areas for which we have exploration permits in the Saskatchewan potash basin, including Young, Boulder, Burr and Melville, through analysis of the extensive data collected from successive exploration programs.

In October 2014, the management of the closed mine sites associated with Base Metals North America was transitioned from the Potash to the Petroleum Business. All locations are in care and maintenance or in various stages of closure.

As at 1 August 2015, management of the Jansen Potash Project transferred from the Petroleum Business to BHP Billiton’s Chief Commercial Officer.

Performance

Total petroleum production increased by four per cent in FY2015 to a record 256 MMboe. A 17 per cent increase in liquids production to 125 MMboe was supported by a 67 per cent increase in Onshore US liquids volumes and strong uptime performance in the Gulf of Mexico. Natural gas production declined by six per cent to 787 billion cubic feet due to weaker seasonal demand at Bass Strait, along with lower Onshore US gas volumes as a result of the decision to defer development activity for longer-term value.

Petroleum revenue decreased by US$3.4 billion to US$11.5 billion. Revenue in Australia for the Australia Production Unit (which includes Macedon, Pyrenees, Stybarrow and Minerva), Bass Strait and North West Shelf collectively decreased by US$1.5 billion (27 per cent) to US$4.2 billion and revenue in the Gulf of Mexico for Atlantis, Shenzi and Mad Dog decreased by US$963 million (30 per cent) to US$2.2 billion.

Underlying EBIT for Petroleum decreased by US$3.9 billion to US$1.9 billion in FY2015. Price related impacts, net of price-linked costs decreased Underlying EBIT by US$4.1 billion due to the decrease in average realised

prices of crude and condensate oil from US$102/bbl to US$68/bbl, US natural gas from US$4.10/Mscf to US$3.27/Mscf and LNG from US$14.67/Mscf to US$11.65/Mscf.

Higher volumes contributed an increase of US$799 million to Underlying EBIT. This was partially offset bynon-cash costs which reduced Underlying EBIT by US$639 million. The increase in non-cash costs includes: US$316 million of higher depreciation and amortisation charges in Onshore US following the ramp-up of liquids production at Black Hawk and the progressive development of our Permian acreage; and US$328 million of impairment charges associated with the divestment of conventional assets in North Louisiana (Haynesville) and unconventional gas assets in the Pecos field (Permian). The rate of depreciation in Onshore US assets is expected to continue to rise as the proportion of currently higher-margin liquids volumes increase relative to gas. During the period, a US$79 million impairment of Neptune was also recognised as the fall in near-term oil prices has affected its value due to its short field life.

Petroleum capital expenditure declined by 15 per cent to US$5.0 billion in FY2015, which included US$3.7 billion of Onshore US drilling and development expenditure. We continued to realise significant improvements in shale drilling efficiency during the period as spud to sales timing in the Black Hawk improved by 17 per cent and drilling costs declined by 19 per cent to US$3.4 million per well.

~~Bass Strait~~

~~Offshore Victoria~~

~~Oil and gas~~

~~BHP Billiton 50%~~

~~Esso Australia (Exxon Mobil subsidiary) 50%~~

~~Oil Basins Ltd 2.5% royalty interest in 19 production licences~~

~~Esso Australia~~

~~20 production licences and 2 retention leases issued by Australian Government~~

~~Expire between 2016 and end of life of field~~

~~One production licence held with Santos Ltd~~

~~Oil: 200 Mbbl/d~~

~~Gas: 1,075 MMcf/d~~

~~LPG: 5,150 tpd~~

~~Ethane: 850 tpd~~

~~20 producing fields with 21 offshore developments (14 steel jacket platforms, 3 subsea developments, 2 steel gravity based mono towers, 2 concrete gravity based platforms)~~

~~Onshore infrastructure: Longford Facility (3 gas plants, liquid processing facilities)~~

~~Interconnecting pipelines~~

~~Long Island Point LPG and oil storage facilities~~

~~Ethane pipeline~~

~~North West Shelf~~

~~Offshore Western Australia~~

~~North Rankin, Goodwyn, Perseus, Echo-Yodel, Angel, Searipple fields~~

~~Domestic gas, LPG, condensate,~~

~~LNG~~

~~North West Shelf Project is an unincorporated JV~~

~~BHP Billiton:~~

~~8.33% of original domestic gas JV, will progressively increase to 16.67%~~

~~16.67% of Incremental Pipeline Gas (IPG) domestic gas JV~~

~~16.67% of original LNG JV 12.5% of China LNG JV~~

~~16.67% of LPG JV Approximately 15% of current condensate production~~

~~Woodside Petroleum Ltd~~

~~9 production licences issued by Australian Government~~

~~6 expire in 2022 and 3 expire 5 years from end of production~~

~~North Rankin A platform: 2,300 MMcf/d gas 60 Mbbl/d condensate~~

~~Goodwyn A platform: 1,450 MMcf/d gas 110 Mbbl/d condensate~~

~~Angel platform: 960 MMcf/d gas 50 Mbbl/d condensate~~

~~Withnell Bay gas plant: 600 MMcf/d gas~~

~~5-train LNG plant: 45,000 tpd LNG~~

~~Production from North Rankin and Perseus processed through North Rankin A platform~~

~~Production from Goodwyn, Searipple and Echo-Yodel processed through Goodwyn A platform~~

~~4 subsea wells in Perseus field tied into Goodwyn A platform~~

~~Production from Angel field processed through Angel platform~~

2015 financial year

Liquids focused areas

Gas focused areas

(2014 financial year)

Eagle Ford
~~Operation &~~
~~Location~~
~~Product~~
~~Ownership~~
~~Operator~~
~~Title, Leases or Options~~
~~Nominal Production~~
~~Capacity~~
~~Facilities, Use & Condition~~
~~Other participants: subsidiaries of Woodside Energy, Chevron, BP, Shell, Mitsubishi/Mitsui and China National Offshore Oil Corporation~~
~~Onshore gas treatment plant at Withnell Bay processes gas for domestic market~~
~~5-train LNG plant~~
~~North West Shelf~~
~~Offshore Western Australia~~
~~Wanaea, Cossack, Lambert and Hermes fields~~
~~Oil~~
~~BHP Billiton 16.67%~~
~~Woodside Energy 33.34%, BP, Chevron, Japan Australia LNG (MIMI) 16.67% each~~
~~Woodside Petroleum Ltd~~ 3 production licences issued by Australian Government. 2 expire in 2014 and 2018. The third production licence, WA-9-L, expired in 2012 and was recently renewed for a period of 21 years and will expire in 2033
~~Production capacity: 60 Mbbl/d~~
~~Storage capacity: 1 MMbbl~~
~~Floating production storage and off-take unit~~
Permian Haynesville Fayetteville Total
Capital expenditure⁽ⁱ⁾
US$ billion 2.3 (3.1) 0.8 (0.5) 0.4 (0.4) 0.2 (0.2) 3.7 (4.2)
Rig allocation
At period-end 7 (17) 3 (4) 0 (3) 0 (0) 10 (24)
Net wells drilled and completed⁽ⁱⁱ⁾ Period total 188 (262) 45 (43) 25 (38) 45 (71) 303 (414)
Net productive wells⁽ⁱⁱⁱ⁾
At period-end 836 (647) 75 (57) 395 (899) 1,070 (1,023) 2,376 (2,626)
~~Minerva~~
~~Offshore Victoria~~

~~Gas plant located approximately 4 km inland from Port Campbell~~

~~Gas and condensate~~

~~BHP Billiton 90%~~

⁽ⁱ⁾	Includes land acquisition, site preparation, drilling, completions, well site facilities, mid-stream infrastructure and pipelines.

~~Santos (BOL) 10%~~

~~BHP Billiton~~

~~Production licence issued by Australian Government expires 5 years after production ceases~~

~~150 TJ/d gas~~

⁽ⁱⁱ⁾	Can vary between periods based on changes in rig activity and the inventory of wells drilled but not yet completed at period-end.

~~600 bbl/d condensate~~

~~2 well completions~~
⁽ⁱⁱⁱ⁾ Change in productive well count includes reduction associated with the divestment of assets in North Louisiana (Haynesville) and Pecos (Permian).

Petroleum exploration expenditure for FY2015 was US$567 million, of which US$481 million was expensed. Activity for the period was largely focused on the Gulf of Mexico, Western Australia and Trinidad and Tobago.

Potash recorded an Underlying EBIT loss of US$184 million in FY2015 compared to a loss of US$285 million in FY2014. The reduction in loss was driven by a decrease in non-cash costs and exploration expenditure.

Outlook

Petroleum production is forecast to decrease by seven per cent in FY2016 to 237 MMboe (Conventional: 125 MMboe; Onshore US: 112 MMboe). In Onshore US, further improvements in drilling and completions efficiency will support stable volumes in the liquids-rich Black Hawk and Permian despite lower capital spend in FY2016. However, we anticipate a 19 per cent decline in the combined production of the predominantly gas-rich, and currently lower-margin Haynesville, Fayetteville and Hawkville fields as we continue to defer development of these assets for longer-term value. Conventional volumes are expected to decrease as a result of planned maintenance programs and natural field decline.

In FY2016, we expect to reduce drilling costs further to US$2.5 million per well in the Black Hawk. In our Conventional business, investment remained focused on high-return infill drilling opportunities in the Gulf of Mexico and life extension projects at Bass Strait and North West Shelf.

Petroleum capital expenditure of approximately US$3.1 billion is planned in FY2016. Onshore US capital expenditure is expected to account for US$1.5 billion of this and support a development program of nine operated rigs. Completions activity will continue to be tailored to market conditions and we will exercise further flexibility should there be greater value in deferral. Drilling activity will be focused on our liquids-rich Black Hawk and Permian acreage with our dry-gas development program in Haynesville and Fayetteville deferred for longer-term value.

A US$600 million exploration program, largely focused on acreage access and seismic data acquisition is planned for FY2016.

During February 2015, BHP Billiton signed an agreement with Tri-Resources, a subsidiary of the Hashoo Group, for the sale of our gas business in Pakistan. The transaction is subject to regulatory approval.

The excavation and lining of the Jansen Potash project shafts is steadily progressing and the pre-development project was 46 per cent complete at the end of the period. We expect to spend approximately US$350 million in FY2016. With our investment premised on the attractive longer-term market fundamentals for potash, we will continue to review the appropriate pace and level of development activity and capital expenditure for the project.

1.12.3 Copper Business

Results


Year ended 30 June⁽¹⁾	2015 US$M		2014 US$M Restated		2013 US$M Restated
Year ended 30 June⁽¹⁾	2015 US$M		2014 US$M Restated		2013 US$M Restated
Revenue		11,453		12,789		13,172
Underlying EBIT		3,353		4,668		5,033
Capital expenditure		3,822		3,697		3,891
Net operating assets		23,701		21,997		19,868
Production – copper (kt)		1,708		1,727		1,689

~~Single flow line transports gas to onshore gas processing facility~~

⁽¹⁾

Information included in this table excludes Cannington given it formed part of the South32 demerger. The financial results for FY2013 and FY2014 have been restated to exclude Cannington.

~~Stybarrow~~

A summary of the assets and operations, development projects and FY2015 performance of our Copper Business is presented as follows.

Description of the Copper Business

Our assets consist of the following:

Escondida (Chile)

Pampa Norte (Chile)

Pampa Norte consists of two wholly owned operations in the Atacama Desert in northern Chile – Spence and Cerro Colorado. During FY2015, Spence produced 171.4 kt of high-quality copper cathode, using oxide and sulphide ore treatment through leaching, solvent extraction and electrowinning processes. Although production levels at Cerro Colorado have fallen in recent years as grades have declined, production in FY2015 reached 78.2 kt of copper cathode. A project currently being studied, referred to as the Spence Growth Option (SGO), is being conducted to consider exploiting the large and expandable hypogene resource with associated molybdenum sulphide by building a 95 kilotonnes per day (ktpd) concentrator at the Spence operation. SGO would extend the mine life by approximately 50 years beyond the current CY2025 closure date.

Antamina (Peru)

We own 33.75 per cent of Antamina, a large, low-cost copper and zinc mine in north central Peru. Antamina’s total production for FY2015 was 107.7 kt of copper in concentrate and 66.4 kt of zinc in concentrate. Antamina also produces molybdenum and lead/bismuth concentrate, as well as small amounts of silver in the form of by-products.

In FY2015, following the identification of a number of debottlenecking opportunities, Antamina successfully increased nominal milling capacity to 53 million tonnes per annum (Mtpa).

Olympic Dam (Australia)

Our wholly owned Olympic Dam mine is a producer of copper cathode and uranium oxide and a refiner of gold and silver bullion. The site includes an underground mine, where the primary method of ore extraction islong-hole open stoping with cemented aggregate fill, and an integrated metallurgical processing plant.

The underground mine extracts copper uranium ore and hauls the ore by an automated train and trucking network feeding underground crushing, storage and ore hoisting facilities. The processing plant consists of two grinding circuits in which high-quality copper concentrate is extracted from sulphide ore through a flotation extraction process. The operation includes a fully integrated metallurgical complex with a grinding and concentrating circuit, a hydrometallurgical plant incorporating solvent extraction circuits for copper and uranium, a copper smelter, a copper refinery and a recovery circuit for precious metals.

In FY2015, Olympic Dam produced 124.5 kt of copper cathode, 3.1 kt of uranium oxide, 104.8 kilo-ounces (koz) of refined gold and 724 koz of refined silver.

More information on our assets and operations is presented in section 2.1.2 of this Annual Report.

Development projects in execution at year-end

Escondida

The Organic Growth Project 1 (OGP1) is a new concentrator with a 152 ktpd plant. We expect this project to provide additional processing capacity and allow access to higher-grade ore. OGP1 was approved in February 2012 with budgeted expenditure of US$3.8 billion (US$2.2 billion BHP Billiton share). A US$361 million increase in the budget of OGP1 to US$4.2 billion (US$ 2.4 billion BHP Billiton share) was approved in October 2014 following challenges associated with contractor’s progress. The Project was completed in May 2015 and is currently in the commissioning and ramp-up phase.

The Escondida Water Supply (EWS) project was approved in July 2013 and consists of a new 2,500 litres per second sea water desalination facility. This project will provide an alternative water supply to Escondida, as water usage increases upon completion of the 152 ktpd OGP1 copper concentrator. Construction of the new desalination facility commenced in July 2013 and includes the development of two pipelines, four high-pressure pump stations, a reservoir at the mine site and high-voltage infrastructure to support the system. The new facility is expected to be commissioned in CY2017 at a cost of US$3.4 billion (US$2.0 billion BHP Billiton share).

The Oxide Leach Area Project (OLAP) was completed in November 2014. The Project involved the creation of a new dynamic leaching pad and mineral handling system that included several overland conveyors. The new pad is expected to maintain oxide leaching capacity at current levels. OLAP was approved in February 2012 with budgeted expenditure of US$721 million (US$414 million BHP Billiton share) and a US$212 million increase in the budget of OLAP to US$933 million (US$536 million BHP Billiton share) was approved in March 2014. Expected final cost is US$899 million (US$517 million BHP Billiton share).

More information on our development projects is presented in section 2.4 of this Annual Report.

Exploration activities

Our greenfield copper exploration activities during FY2015 were focused on advancing targets within Chile, Peru and southwestern United States. Greenfield activities include opportunity identification, application for and acquisition of mineral title, early reconnaissance operations and drilling programs.

Performance

Total copper production, including our proportional share of production for which profit is derived from our equity accounted investments for FY2015 was unchanged at 1.7 Mt. Escondida copper production increased by six per cent to 1.23 Mt as an 11 per cent improvement in truck utilisation and higher grades more than offset the impact of severe wet weather, water restrictions, industrial action and a power outage throughout northern Chile. Pampa Norte copper production increased by seven per cent to 250 kt as Spence benefited from higher recoveries. Olympic Dam copper production decreased by 32 per cent to 125 kt following an electrical failure which caused a mill outage in January 2015. Antamina copper production decreased by 25 per cent to 108 kt as lower grades more than offset record mill throughput.

Copper revenue decreased by US$1.3 billion to US$11.5 billion. The decrease was across all operations with revenue for Escondida decreasing by three per cent to US$7.8 billion, revenue at Olympic Dam decreased 30 per cent to US$1.2 billion and revenue at Pampa Norte decreased 20 per cent to US$1.4 billion.

Underlying EBIT for FY2015 decreased by US$1.3 billion to US$3.4 billion. Price impact net of price-linked costs for Copper reduced Underlying EBIT by US$1.6 billion due to lower average realised prices for copper

from US$3.22/lb to US$2.78/lb. The increase in non-cash costs of US$839 million largely reflects increased ore mined resulting in higher depletion of stripping capitalised in previous periods in line with mine plans at Escondida; increased depreciation following the completion of OLAP; and a US$199 million impairment driven by a lower copper price and permitting uncertainty for the proposed mine life extension at Cerro Colorado. In contrast, a stronger US dollar against the Chilean peso and Australian dollar increased Underlying EBIT by US$359 million. Productivity cost efficiencies increased Underlying EBIT additionally by US$1.0 billion driven by improved productivity at Escondida and improved ore grades.

Unit cash costs is one of the financial measures used to monitor the performance of our individual assets.

Unit cash costs (excluding one-off items, freight and treatment and refining charges) at our operated copper assets declined by 14 per cent during FY2015. At Escondida, the improvement in truck utilisation and significant costs savings resulted in an eight per cent decrease to US$1.07 per pound. The excluded one-off costs primarily reflect the implementation of the Escondida voluntary redundancy program which is expected to reduce employee head count by more than 20 per cent.

Outlook

Total copper production is forecast to decrease by 12 per cent in FY2016 to 1.5 Mt. Escondida copper production of approximately 940 kt is forecast as increased throughput, enabled by the completion of OGP1 and further productivity improvements, partly offset an anticipated 27 per cent decline in grade. Pampa Norte production is forecast to remain at a similar level for FY2016. At Olympic Dam, an increase in full-year production is anticipated following the full ramp-up of the mill at the end of July 2015. Higher average copper grades at Antamina are expected to support an increase in copper volumes in FY2016.

During FY2015, OLAP delivered first production while OGP1 achieved mechanical completion and is now in the commissioning phase. The commissioning of the EWS project remains on schedule to commence in CY2017. In the medium term, completion of the EWS project and the life extension of Los Colorados will allow the use of three concentrators at Escondida to offset grade decline and support a strong recovery in production. At Olympic Dam, we will continue with our low-cost underground transition into the higher-grade Southern Mining Area. This high-grade ore will release latent capacity within our existing operations and lay the foundation for the longer-term underground expansion.

In FY2016, despite an anticipated increase in material moved to mitigate grade decline, a further step change in unit cost performance is expected as additional benefits from our productivity agenda are realised. In this context, Escondida unit costs are expected to decline by 15 per cent to US$0.91 per pound on a grade-adjusted basis.

1.12.4 Iron Ore Business

Our Iron Ore Business, headquartered in Perth, Australia, is one of the leading iron ore producers in the world. We sell lump and fines products produced in Australia and produce pellets from our operations in Brazil.

Results


Year ended 30 June	2015 US$M		2014 US$M		2013 US$M
Year ended 30 June	2015 US$M		2014 US$M		2013 US$M
Revenue		14,753		21,356		18,593
Underlying EBIT		6,932		12,102		11,109
Capital expenditure		1,930		2,949		5,979
Net operating assets		23,954		23,390		22,126
Production – iron ore (Mt)		233		204		170

A summary of the assets, development projects and FY2015 performance of our Iron Ore Business is presented as follows.

Description of the Iron Ore Business

Our assets consist of the following:

Western Australia Iron Ore (Australia)

Operations at Western Australia Iron Ore (WAIO) involve an integrated system of mines and more than 1,000 kilometres of rail infrastructure and port facilities in the Pilbara region of northern Western Australia, with our headquarters located in Perth. Our focus is to safely maximise output through operating our mines and utilising available infrastructure at our disposal.

Since 2001, we have expanded our WAIO operations in response to increasing demand for iron ore, particularly from China. We have completed eight expansion projects during this period to increase our mine, rail and port capacity. This includes our plan to continue to grow production following the recent completion of a number of expansion projects and ongoing debottlenecking of the supply chain to underpin potential further growth in capacity to 290 Mtpa (100 per cent basis). Our share of FY2015 production was 218.0 Mt of ore, which is expected to increase in FY2016 to 233 Mtpa.

Our Pilbara reserve base is relatively concentrated, allowing us to plan our development around a series of integrated mining hubs joined to the orebodies by conveyors or spur lines. This approach enables us to maximise the value of installed infrastructure by using the same processing plant and rail infrastructure for a number of orebodies.

Lump and fines products are sold to steel mills in China, South Korea, Japan, Singapore, Hong Kong, Taiwan, Switzerland and Australia under long-term and short-term contracts. Contract prices are generally linked to market indices.

In order to establish a consistent, long-term, high-quality lump ore product with a stable grade, we produce a blended lump product. The product is a blend of lump ores produced from the Newman, Area C and Jimblebar mining areas, known as Newman Blend lump. During FY2015, 23 per cent of our sales were lump and 77 per cent were fines.

Our WAIO operations consist of four main joint ventures: Mt Newman, Yandi, Mt Goldsworthy and Jimblebar. Our interest in the joint ventures is 85 per cent, with Mitsui and ITOCHU owning the remaining 15 per cent. The joint ventures are unincorporated, except Jimblebar.

Our rail operations are controlled from Perth via our integrated remote operations centre, which co-locates rail control, port production control, mine dispatch control and mine fixed plant control.

Our port facilities are located on both sides of the harbour at Port Hedland. These facilities consist of Nelson Point, owned by the Mt Newman JV, and Finucane Island, owned by the Mt Goldsworthy JV. The port facilities include five ore car dumpers, three lump rescreening plants, eight stackers, five reclaimers, stock and blending yards, and eight ship loaders.

Map of Western Australia Iron Ore

LOGO

Samarco (Brazil)

We are a 50–50 joint venture partner with Vale at the Samarco operation in Brazil. Samarco currently comprises a mine and three concentrators located in the state of Minas Gerais, and four pellet plants and a port, located in Anchieta in the state of Espirito Santo. Three 400-kilometre pipelines connect the mine site to the pelletising facilities.

Samarco’s main product is iron ore pellets. Extraction and beneficiation of iron ore are conducted at the Germano facilities in the municipalities of Mariana and Ouro Preto. Conveyor systems are used to extract the ore and convey it from the mines. Ore beneficiation then occurs in concentrators, where crushing, milling, desliming and flotation processes produce iron concentrate. The concentrate leaves the concentrators as slurry and is pumped through the slurry pipelines from the Germano facilities to the pellet plants in Ubu, Anchieta, where the slurry is processed into pellets. The iron ore pellets are then heat treated. The pellet output is stored in a stockpile yard before being shipped out of the Samarco-owned Port of Ubu in Anchieta.

Pellets are independently marketed by Samarco and sold to steelmakers in 19 countries, with prices generally linked to market indices.

In FY2015, our share of production was 14.5 Mt of pellets.

More information on our assets and operations is presented in section 2.1.3 of this Annual Report.

Development projects in execution at year-end

Western Australia Iron Ore

WAIO has been executing a number of expansion projects in recent years. These projects, approved in March 2011 for a total of US$7.4 billion (US$6.6 billion BHP Billiton share) plus pre-commitment funding of US$2.3 billion (US$2.1 billion BHP Billiton share), were designed to deliver an integrated operation with a minimum capacity of 220 Mtpa (100 per cent basis).

These projects, each of which is substantially complete, included:

the Jimblebar Mine Expansion project to develop the Jimblebar mine and rail links, and procure mining equipment and rolling stock in order to deliver a capacity of 35 Mtpa. The project costs as at 30 June 2015 amounted to US$3.5 billion (BHP Billiton share). Final costs are expected to be delivered below the revised budget of US$3.6 billion;

further development of Port Hedland, including two additional berths and ship loaders, a car dumper, connecting conveyor route, and associated rail works and rolling stock. The project costs as at 30 June 2015 amounted to US$1.8 billion (BHP Billiton share). Final costs are expected to be delivered below the revised budget of US$1.9 billion;

port blending facilities and rail yards to enable ore blending. The project costs as at 30 June 2015 amounted to US$0.9 billion (BHP Billiton share). Final costs are expected to be delivered below the revised budget of US$1.0 billion.

Our plan to continue to grow production following the recent completion of a number of expansion projects includes ongoing debottlenecking of the supply chain to underpin potential further growth in capacity to 290 Mtpa (100 per cent basis).

Western Australia Iron Ore – Orebody 24 mine

In FY2014, WAIO completed execution of its development of the Orebody 24 mine, located approximately 10 kilometres northeast of Newman. Orebody 24 is a sustaining mine to maintain iron ore production output from the Mt Newman JV operations. The project costs as at 30 June 2015 amounted to US$0.6 billion (BHP Billiton share). Final costs are expected to be delivered below the revised budget of US$0.7 billion.

More information on our development projects is presented in section 2.4 of this Annual Report.

Exploration activities

~~Offshore~~ Western Australia

WAIO has a substantial existing reserve base supported by considerable additional mineralisation, all within a 250-kilometre radius of our existing infrastructure. This concentration of orebodies also gives WAIO the flexibility to add growth tonnes to existing hub infrastructure and link brownfield developments to our existing mainline rail and port facilities. The total area covered by exploration and mining tenure amounts to 6,500 square kilometres, excluding crown leases and general purpose and miscellaneous licences, which are used for infrastructure space and access.

Total exploration expenditure in FY2015 amounted to US$118 million.

Guinea Iron Ore

BHP Billiton has a 41.3 per cent interest in a joint venture that holds the Nimba Mining Concession and four iron ore prospecting permits in southeast Guinea.

On 29 July 2014, BHP Billiton and ArcelorMittal signed an agreement for the acquisition by ArcelorMittal of BHP Billiton’s 43.5 per cent stake in Euronimba Limited, which holds an effective 95 per cent interest in the Mount Nimba iron ore project in Guinea. In May 2015, ArcelorMittal terminated the transaction following failure to meet the conditions to closing by the agreed deadline. We will continue to assess our options for the Mount Nimba iron ore project.

Liberia Iron Ore

BHP Billiton has a 100 per cent interest in a Mineral Development Agreement with the Government of Liberia. This enables the further exploration and development of our Liberian iron ore mineral leases.

On 25 August 2014, BHP Billiton and Cavalla Resources signed a sale and purchase agreement for the acquisition by Cavalla Resources of BHP Billiton’s 100 per cent interest in its Liberia iron ore project. Completion of the transaction remains subject to the receipt of regulatory approval and other customary closing conditions.

Performance

Total iron ore production, including our proportional share of production for which profit is derived from our equity accounted investments, increased by 14 per cent in FY2015 to a record 233 Mt. WAIO production increased by 13 per cent to a record 254 Mt (100 per cent basis) as a result of continued improvement in the performance of our integrated supply chain and the successful ramp-up of the Jimblebar mining hub. Continued optimisation of the port facilities and an increase in direct to ship ore resulted in record sales volumes at WAIO of 256 Mt (100 per cent basis). Samarco production increased by 33 per cent to 29 Mt (100 per cent basis) as the fourth pellet plant ramped up to full capacity.

Iron Ore revenue decreased by US$6.6 billion to US$14.8 billion, which included a 31 per cent decrease in revenue for WAIO of US$6.4 billion to US$14.4 billion. The major contributor to this decline was a 41 per cent decline in average realised price of iron ore to US$61 per wet metric tonne (FOB), which was partially offset by an increase in WAIO sales volumes.

Underlying EBIT for FY2015 decreased by US$5.2 billion to US$6.9 billion. The fall in the average realised price of iron ore reduced Underlying EBIT by US$8.7 billion, net of price-linked costs, although this was partially offset by a weaker Australian dollar, which increased Underlying EBIT by US$499 million. The improved performance of our integrated supply chain at WAIO and the successful ramp-up of the Jimblebar mining hub supported an increase of US$1.9 billion volume impact to Underlying EBIT. Cost efficiencies from productivity initiatives increased Underlying EBIT by US$1.2 billion.

Unit cash costs is one of the financial measures used to monitor the performance of our individual assets.

WAIO unit cash costs (excluding freight and royalties) declined by 31 per cent to US$19 per tonne, underpinned by reductions in labour, contractor and maintenance costs, lower diesel prices and a stronger US dollar against the Australian dollar.

Outlook

Total iron ore production is forecast to increase by six per cent in FY2016 to 247 Mt. WAIO production is forecast to increase to approximately 270 Mt (100 per cent basis) as a result of improved efficiency at Mining Area C, Newman and our rail and port operations.

Further productivity improvements and the low-cost expansion of the Jimblebar mining hub, which comprises the installation of a new primary crusher and additional conveying capacity, are expected to deliver an increase in system capacity to 290 Mtpa (100 per cent basis) over time.

Costs associated with the Jimblebar expansion, as well as the investment to purchase additional tugs and construct a new tug harbour at Port Hedland, are expected to be included within WAIO’s average sustaining capital expenditure budget of approximately US$5 per tonne. WAIO unit costs are expected to fall to US$15 per tonne in FY2016.

1.12.5 Coal Business

Our Coal Business, headquartered in Brisbane, Australia, is the world’s largest supplier of seaborne metallurgical coal, a key input in steel production. Our Coal Business is also a large supplier of seaborne energy coal (also known as thermal or steaming coal) and a domestic energy coal supplier in the countries where our mines are located.

Results


Year ended 30 June⁽¹⁾	2015 US$M		2014 US$M Restated		2013 US$M Restated
Year ended 30 June⁽¹⁾	2015 US$M		2014 US$M Restated		2013 US$M Restated
Revenue		5,885		6,563		6,574
Underlying EBIT		348		575		424
Capital expenditure		729		1,971		3,136
Net operating assets		11,769		11,909		10,632
Production – metallurgical coal (Mt)		43		38		30
Production – energy coal (Mt)		41		43		41

~~Stybarrow and Eskdale fields~~

~~Oil and gas~~

~~BHP Billiton 50%~~
⁽¹⁾ Information included in this table excludes Energy Coal South Africa and Illawarra Coal given they formed part of the South32 demerger. The numbers for FY2013 and FY2014 have been restated to exclude Energy Coal South Africa and Illawarra Coal.

A summary of the assets, development projects and FY2015 performance of our Coal Business is presented as follows.

Description of the Coal Business

Our assets comprise the following:

Queensland Coal (Australia)

Queensland Coal comprises the BHP Billiton Mitsubishi Alliance (BMA) and BHP Billiton Mitsui Coal (BMC) Assets in the Bowen Basin in Central Queensland, Australia.

The Bowen Basin is well positioned to supply the seaborne market because of its high-quality metallurgical coals, which are ideally suited to efficient blast furnace operations, and its geographical proximity to Asian customers. We have access to key infrastructure in the Bowen Basin, including a modern, multi-user rail network, and our own coal loading terminal at Hay Point, located near the city of Mackay. We also have contracted capacity at three other multi-user port facilities, including the Port of Gladstone (RG Tanna Coal Terminal), Dalrymple Bay Coal Terminal and Abbot Point Coal Terminal.

Map of Queensland Coal

LOGO

BHP Billiton Mitsubishi Alliance – BMA owns and operates open-cut and underground metallurgical coal mines in the Bowen Basin, and also owns and operates the Hay Point Coal Terminal. We share 50–50 ownership with Mitsubishi Development. BMA operates the Goonyella Riverside, Broadmeadow, Daunia, Caval Ridge, Peak Downs, Saraji, Gregory Crinum and Blackwater mines. Our share of total production in FY2015 was 33.9 Mt. During FY2015, BMA announced the ramping down of the Crinum underground mine as it approaches the end of its economic reserve life, with longwall production expected to cease in the March 2016 quarter.

BHP Billiton Mitsui Coal – BMC is a subsidiary company owned by BHP Billiton (80 per cent) and Mitsui and Co (20 per cent). BMC owns and operates South Walker Creek and Poitrel, both open-cut metallurgical coal mines in the Bowen Basin. Total production in FY2015 was 8.7 Mt.

New Mexico Coal (United States)

We own and operate the San Juan energy coal mine located in the US state of New Mexico. The mine transports its production directly to the nearby San Juan Generating Station (SJGS). Production for FY2015 was 5.1 Mt.

To ensure the ongoing supply of coal to the SJGS beyond 2017, in May 2015, the SJGS owners reached an in principle agreement for a new Coal Supply Agreement with Westmoreland Coal Company. In conjunction with this, in July 2015, New Mexico Coal executed a sales agreement with Westmoreland for the purchase of the San Juan Mine. Subject to regulatory approval, the transaction is expected to be completed at the end of CY2015 with Westmoreland assuming full operation of the mine from 1 January 2016.

We also operate the nearby Navajo mine, located on Navajo Nation land in New Mexico. Full ownership of the Navajo Coal Company transferred to the Navajo Transitional Energy Company (NTEC), an entity of the Navajo Nation, effective 30 December 2013. New Mexico Coal and NTEC have entered into a Mine Management Agreement where New Mexico Coal will continue as mine operator until 31 December 2016, at which time

control will pass to a new mine manager. Navajo mine transports its production directly to the nearby Four Corners Power Plant. Production for FY2015 was 4.9 Mt. As we retain control of the mine until full consideration is paid, production continues to be reported by the Group.

New South Wales Energy Coal (Australia)

Our wholly owned New South Wales Energy Coal Asset owns and operates the Mt Arthur Coal open-cut energy coal mine in the Hunter Valley region of New South Wales, Australia.

New South Wales Energy Coal produced 19.7 Mt in FY2015.

Cerrejón (Colombia)

We have a one-third interest in Cerrejón, which owns, operates and markets one of the world’s largest open-cut export energy coal mines, located in the La Guajira province of Colombia.

In FY2015, our share of Cerrejón production was approximately 11.3 Mt.

More information on our assets and operations is presented in section 2.1.4 of this Annual Report.

Completed development projects

Cerrejón P40 Project

In August 2011, we announced a US$437 million (BHP Billiton share) investment in the expansion of Cerrejón, known as the P40 Project, which is expected to increase Cerrejón’s thermal coal production by 8 Mtpa to approximately 40 Mtpa (100 per cent basis). The project scope includes a second berth and dual quadrant ship loader at Cerrejón’s 100 per cent owned and operated Puerto Bolivar, along with necessary mine, rail and associated supply chain infrastructure. Construction commenced in CY2011 and the project handled its first coal in the December 2013 quarter. However, operational issues are expected to constrain capacity to approximately 35 Mtpa (100 per cent basis) in the medium term. The final cost was US$376 million (BHP Billiton share) and the project was completed during the December 2014 quarter.

Development projects in execution at year-end

Hay Point Coal Terminal Expansion Stage 3

Newcastle Port Third Phase Expansion

In August 2011, we announced a US$367 million (BHP Billiton share) investment in the third stage development of the Newcastle Coal Infrastructure Group’s coal handling facility in Newcastle. The port expansion project is expected to increase total capacity at the coal terminal from 53 Mtpa to 66 Mtpa. This is expected to increase New South Wales Energy Coal’s allocation by 4.6 Mtpa to 19.2 Mtpa. First coal on ship, being the first ship loaded through the new facility, was achieved in June 2013, ahead of schedule. At 30 June 2015, the project was 99.5 per cent complete.

IndoMet Coal Project

IndoMet Coal comprises seven coal contracts of work covering a large metallurgical coal resource in Central and East Kalimantan, Indonesia, which was discovered by BHP Billiton in the 1990s. Following an assessment of the importance of local participation in developing the project, in 2010 we sold a 25 per cent interest in the project to a subsidiary of PT Adaro Energy TBK. We retain 75 per cent of the project and hold management responsibility.

During FY2015, IndoMet completed infrastructure development and received an operating permit to commence mining at Haju mine. Production is expected to commence from the 1 Mtpa Haju mine in Indonesia during FY2016.

More information on our development projects is presented in section 2.4 of this Annual Report.

Performance

Metallurgical coal production increased by 13 per cent in FY2015 to a record 43 Mt. Record production and sales volumes at Queensland Coal were supported by the successful ramp-up of the Caval Ridge mine and continued productivity improvements. An increase in equipment and wash-plant utilisation rates underpinned record volumes at six other operations.

Energy coal production, including our proportional share of production for which profit is derived from our equity accounted investments, for FY2015 decreased by five per cent to 41 Mt as anticipated. Lower production reflected drought conditions and the need to manage dust emissions at Cerrejón, as well as reduced demand for our Navajo Coal product.

Coal revenue for FY2015 decreased by US$678 million to US$5.9 billion. The decrease in revenues was driven by a 20 per cent reduction in the average realised price for hard coking coal to US$105/t, a 21 per cent reduction in the average price received for weak coking coal to US$88/t and a 22 per cent reduction in the average realised price for thermal coal to US$58/t.

Underlying EBIT for FY2015 decreased by US$227 million to US$348 million. The price impact, net of price-linked costs, on Underlying EBIT for FY2015 was a decrease of US$1.0 billion. This was partially offset by a stronger US dollar against the Australian dollar, which increased Underlying EBIT by US$406 million, and productivity cost efficiencies which increased Underlying EBIT by US$418 million.

Unit cash costs is one of the financial measures used to monitor the performance of our individual assets.

Queensland Coal unit cash costs (excluding freight and royalties) declined by 23 per cent to US$65 per tonne, supported by increased equipment and wash-plant utilisation rates, a continued reduction in labour, contractor and maintenance costs and a favourable currency movement.

Outlook

Metallurgical coal production is forecast to decrease in FY2016 to 40 Mt as operations at Crinum are expected to cease in the first quarter of CY2016 as the mine approaches the end of its economic reserve life. Energy coal production is forecast to remain broadly unchanged in FY2016 at 40 Mt.

In FY2016, unit costs are expected to decline to US$61 per tonne as the benefits from embedded productivity initiatives and a stronger US dollar, more than offset the removal of low-cost Crinum volumes and the expenses associated with its closure.

1.12.6 Other assets

Our Other assets include the following:

Nickel West (Australia)

Our wholly owned Nickel West Asset in Western Australia consists of an integrated system of mines, concentrators, a smelter and a refinery. Nickel West production in FY2015 was 89.9 kt of contained nickel. On 31 October 2013, production at the Nickel West Leinster Perseverance underground mine was suspended following a significant seismic event. A subsequent review of the incident determined it was unsafe to resume operations.

Performance

Revenue for Nickel West decreased by 13 per cent to US$1.4 billion predominantly due to lower sales volumes.

Underlying EBIT for Nickel West increased by US$134 million due to cost efficiencies and a favourable exchange rate movement, which was partially offset by a movement in ceased and sold operations from the closure of the Nickel West Leinster Perseverance underground mine during FY2014.

More information on our assets and operations is presented in section 2.1.5 of this Annual Report.

1.13 Our people

Enabling our organisation to realise its potential through our people is fundamental to our success. We are focused on facilitating a culture where our employees are provided with opportunities to develop, are valued and are encouraged to contribute toward making work safer, simpler and more productive. Achieving this in a focused and collaborative way will mean we can deliver greater value to our shareholders.

1.13.1 Employees and contractors

Our Charter enables us to align our people around a common purpose and values, as well as provide clear guidance for how we do business and the way in which we work, wherever we are based in the world.

The table below provides the average number of employees and contractors over the last three financial years.


Year ended 30 June	2015		2015		2014^(b)		2013^(b)
	Continuing operations^(a)		Discontinued operations^(a)
Employees		29,670		13,159		47,044		46,892
Contractors		50,698		13,352		76,759		79,330

Total		80,368		26,511		123,803		126,222

The table below shows the gender composition of our workforce, senior leaders and the Board over the last three financial years.


Year ended 30 June	2015		2015		2014^(b)		2013^(b)
	Continuing operations^(a)		Discontinued operations^(a)
Male employees		24,487		11,331		39,517		38,920
Female employees		5,183		1,828		7,527		7,972
Female employees (%)		17		14		16		17
Male senior leaders^(c)		293		85		317		326
Female senior leaders^(c)		62		19		55		40
Female senior leaders (%)		17		18		15		11
Male Board members		10				12		11
Female Board members^(d)		2				2		2
Female Board members (%)		17				14		15

~~Woodside Energy 50%~~

~~BHP Billiton~~

~~Production licence issued by Australian Government expires 5 years after production ceases~~

~~Production: 80 Mbbl/d oil~~

^(a)	For a description of the South32 demerger and reporting of Continuing and Discontinued operations, see sections 1.3.7, 1.6.4, and 2.1.7 of this Annual Report and note 29 ‘Discontinued operations’ to the Financial Statements.

~~Storage: 900 Mbbl~~

~~10 subsea well completions (6 producers, 3 water injectors, 1 gas injector)~~

^(b)	These figures have not been restated for the purposes of the South32 demerger or reporting of Continuing and Discontinued operations.

~~Gas production is reinjected~~

^(c)

For UK law purposes, we are required to show information for ‘senior managers’, which is defined to include both senior leaders and any persons who are directors of any subsidiary company even if they are not senior leaders. In FY2015, 355 senior leaders comprise the top people in the organisation. There are 50 directors of subsidiary companies who are not senior leaders, comprising 36 males and 14 females. Therefore, for UK law purposes, the total number of senior managers is 329 males and 76 females (19 per cent female).

~~Pyrenees~~

~~Offshore Western Australia~~

~~Crosby and Stickle Ravensworth fields~~

~~Oil~~

~~WA-42-L permit:~~

~~BHP Billiton 71.43% Apache PVG 28.57%~~
^(d) For information relating to changes to the Board following year-end please refer to section 3.1 of this Annual Report.

The tables below provide a breakdown of the average number of employees across the Group, in accordance with our reporting requirements under the UK Companies Act 2006. The calculation includes the Executive Director, 100 per cent of employees of subsidiary companies, and our share of joint operations, for each of the past three financial years. Employees of equity accounted entities are not included. Part-time employees are included on a full-time equivalent basis. Employees of businesses acquired or disposed of during a particular year are included for the period of ownership. Contractors are not included.


Year ended 30 June	2015		2014^(a)		2013^(a)
Average number of employees for Continuing operations
Petroleum and Potash		4,224		4,207		4,449
Copper		9,138		9,414		9,765
Iron Ore		7,483		8,035		6,883
Coal		5,579		6,160		6,006
Group and unallocated		3,246		3,687		4,054

Total average number of employees for Continuing operations		29,670		31,503		31,157

Total average number of employees from Discontinued operations		13,159		15,541		15,735

Total average number of employees		42,829		47,044		46,892

~~WA-43-L permit: BHP Billiton 40% Apache Permits 31.5%~~

~~Inpex Alpha 28.5%~~

~~BHP Billiton~~

~~Production licence issued by Australian Government expires 5 years after production ceases~~

~~Production: 96 Mbbl/d oil~~

~~Storage: 920 Mbbl~~

~~18 subsea well completions (14 producers, 3 water injectors, 1 gas injector), FPSO~~

~~WA-42-L production commenced third quarter of FY2010~~

~~WA-43-L production commenced first quarter of FY2011~~

^(a)	These figures have not been restated for the purposes of the South32 demerger or reporting of Continuing and Discontinued operations.

The table below provides a breakdown of our average number of employees by geographic region for each of the last three financial years.


Year ended 30 June	2015		2015		2014^(b)		2013^(b)
	Continuing operations^(a)		Discontinued operations^(a)
Africa		117		6,875		9,035		9,121
Asia		1,022		121		1,105		1,183
Australasia		16,839		4,589		23,048		21,977
Europe		83		19		146		231
North America		4,188		–		4,373		5,116
South America		7,421		1,555		9,337		9,264

Total		29,670		13,159		47,044		46,892

^(a)

For a description of the South32 demerger and reporting of Continuing and Discontinued operations, see sections 1.3.7, 1.6.4, and 2.1.7 of this Annual Report and note 29 ‘Discontinued operations’ to the Financial Statements.

~~Operation &~~
~~Location~~

~~Product~~

~~Ownership~~

~~Operator~~

~~Title, Leases or Options~~

~~Nominal Production~~
~~Capacity~~

~~Facilities, Use & Condition~~

^(b)

These figures have not been restated for the purposes of the South32 demerger or reporting of Continuing and Discontinued operations.

Changes in market conditions, and our business transformation programs focused on improving efficiencies and driving greater productivity have resulted in a decrease in our workforce requirements. Additionally, the deferral of some projects has had a consequential reduction in the workforce required for such projects. The FY2015 reductions were predominately in our contractor workforce, primarily in our Petroleum and Potash, Iron Ore and Coal Businesses.

1.13.2 Employee policies and engagement

At BHP Billiton, our people are fundamental to our success. Our people strategy focuses on developing our future leaders, engaging and supporting our high-performance workforce, and continuing to build a diverse team and inclusive workplace culture.

Our people strategy reflects our desire to have a highly motivated team and the importance of building effective leadership and deep functional expertise across our workforce to enable productivity. We strongly believe that having employees who are engaged and connected to our organisation reinforces our shared purpose, aligned toOur Charter, and will result in a more harmonious workplace.

An important component of our people strategy is how we enable our leaders to step up and drive greater productivity. In FY2015, a new leadership development framework, Leading the Future, was developed and implemented to address the findings of our FY2013 employee survey. Based on the premise that leadership drives culture and culture drives performance, the framework is globally consistent, sustainable and designed to build a distinctive BHP Billiton leadership capability. The first program introduced was Leading Step Up, a global approach to shifting our culture in the areas of employee engagement, the way we lead change, and how we develop our people. Targeted at all frontline people leaders in our operations, Group Functions and Marketing, Leading Step Up is delivered locally by BHP Billiton leaders, taught through practical everyday routines, and reinforced with regular feedback and coaching. To ensure continuous improvement, the program will be measured through local observation and feedback discussions, and through our annual employee surveys. Leading the Future will continue to be implemented across the business in FY2016.

Integral to achieving effective employee engagement is our approach to communication. We believe communication is a two-way process that we undertake through a variety of channels, including face-to-face, the

internet, intranet, email, newsletters, online collaboration forums and other means designed to cater for the local environment. Annually we seek feedback from our employees via an Employee Perception Survey. The findings from these surveys inform our HR practices and are used to measure and track people-related performance.

Our Charter, the BHP BillitonCode of Business Conduct and Human Resources GLDs prescribe what we will do and the behaviours that we expect of those who work for, or on behalf of, BHP Billiton. All of these documents are accessible to employees. Also, our employees can access our Annual Reports either via the internet or hard copy and receive regular communications on BHP Billiton goals and performance, as well as on other important issues such as health and safety, the environment and theCode of Business Conduct. Dispute and grievance handling processes exist to address issues across the Company. A business conduct advisory service, EthicsPoint, operates worldwide to allow concerns to be raised about conduct that is out of step withOur Charter values, our policies and procedures or legislation.

To help our people focus on clear goals, deliver our strategic and operational priorities and align behaviour toOur Charter, in FY2015, 86 per cent of our total number of employees participated in a formal performance management process, including 86 per cent of our operators and support staff. This process also provides the opportunity for employees to receive feedback and coaching, and identify skills and capabilities requiring further development. Due to industrial agreements, not all our employees are able to participate in individual performance or reward programs.

BHP Billiton is committed to creating a diverse workforce and inclusive work environment in which every employee is respected, treated fairly and embraced for their unique skills, experiences and perspectives. Discrimination on any basis, including disability, is not acceptable. In instances where employees require support for a disability, we work with them to identify roles that meet their skill, experience and capability, and offer retraining where required. Where practical to do so, flexible work practices are offered, taking into account the needs of the employee and those of the particular workplace. The employment packages under our remuneration policy, which must comply with local regulations, are aligned to our business requirements and are designed to be sufficiently attractive to recruit and retain highly capable and experienced candidates.

Our employee share purchase plan, Shareplus, is available to all permanent full-time and part-time employees, and those on fixed-term contracts, except where local regulations limit operation of the scheme. In these instances, alternate arrangements are in place. As at 30 June 2015, 14,077 employees were participants in Shareplus. Short-term and long-term incentive schemes also operate across the Group. Rewards for eligible individuals are predicated on the need to meet targets relating to the Group’s performance in areas such as health, safety and achievement of financial measures and on the personal performance of each employee.

1.13.3 Inclusion and diversity at BHP Billiton

Our Charter and Human Resources GLDs provide guidance on all aspects of our human resource management, including our approach to inclusion and diversity.

We believe that an inclusive work environment and a diverse workforce, where the unique skills, experiences and perspectives of our people are embraced, is pivotal to sustaining performance and further increasing our productivity. At BHP Billiton, we celebrate diversity in a broad sense, including differences in thought, perspectives, nationality, gender, sexual orientation, age and experience. In relation to gender, the Board had a goal of increasing the number of women on the Board to three by the end of CY2015. This has now been achieved with the announcement on 14 August 2015 that Anita Frew has been appointed to the Board (effective 15 September 2015) and will stand for election at the 2015 AGMs.

Each financial year, the Board considers, approves and monitors progress on the Group’s performance objectives. More details are set out below.

Our approach to inclusion and diversity is underpinned by the following principles:

a diverse workforce and an inclusive environment are necessary to the delivery of our strategy that is predicated on diversification by commodity, geography and market;

our aspiration is to have a workforce that best represents the communities in which our assets are located and our employees live;

actions that support our inclusion and diversity objectives should be consistent with our established approach to talent, performance and reward;

achieving an appropriate level of diversity is facilitated by line leadership and structured programs that support employees from an early career stage in developing the necessary skills and experiences for leadership roles;

•

creating an inclusive work environment will require every employee and leader to embrace diversity and act in a way that is consistent withOur Charter;

measurable objectives in support of inclusion and diversity will be transparent, fit for purpose and focus on (i) engaging, enabling and developing our workforce and (ii) establishing appropriate representation goals.

Progress against measurable objectives

A summary of the three objectives committed to in FY2015 and progress to date are set out below.

~~Onshore US~~

1.	Each Business, Group Function and Marketing will be evaluated on progress in executing the measurable objectives that form part of its multi-year diversity plan.
~~Fayetteville –Arkansas~~

As in previous years, monitoring and tracking performance against inclusion and diversity plans was undertaken as part of the Group’s internal compliance requirements. Performance for each Business, Group Function and Marketing was evaluated against FY2015 measurable objectives and the results of these evaluations were taken into account in determining bonus remuneration.

~~Eagle Ford – South Texas~~

~~Haynesville – Northern Louisiana and East Texas~~

~~Permian – West Texas~~

~~Oil, condensate, gas and NGL~~

~~BHP Billiton working interest in leases range from <1% to 100%.~~

~~BHP Billiton average working interest: Operated wells – 69.5% Non-operated wells – 12.5%~~

~~Largest partners include Southwestern Energy, XTO Energy and Chesapeake Energy.~~

~~BHP Billiton – 1,905 wells~~

~~Partners – 4,032 wells~~

~~We currently own leasehold interests in approximately 1.6 million net acres~~

~~Fayetteville – 487,000 acres~~

~~Eagle Ford – 341,000 acres~~

~~Haynesville – 268,000 acres~~

~~Permian – 433,000 acres Other – 76,000 acres~~

~~Leases associated with producing wells remain in place as long as oil and gas is produced in paying quantities~~

~~Maximum net daily production~~ ⁽¹⁾ ~~achieved during FY2012~~

~~1,455 MMcf/d gas 29 Mbbl/d oil and condensate 17 Mbbl/d NGL~~

~~Fayetteville – producing gas wells with associated pipeline and compression infrastructure~~

~~Eagle Ford – producing oil and gas wells and associated pipeline and compression facilities~~

~~Haynesville – producing gas wells with a pipeline network operated by a third party~~

~~Permian – oil and gas wells with associated pipelines and compression facilities under construction~~

~~All production from Onshore US fields is transported to various intrastate and interstate pipelines through multiple interconnects~~

⁽¹⁾~~Capacity varies due to additional wells and pipelines.~~

~~Operation &~~
~~Location~~
~~Product~~
~~Ownership~~
~~Operator~~
~~Title, Leases or Options~~
~~Nominal Production~~
~~Capacity~~
~~Facilities, Use & Condition~~
~~Neptune~~
~~(Green Canyon 613)~~
~~Offshore~~
~~Deepwater~~
~~Gulf of Mexico (1,300 m)~~
~~Oil and gas~~
~~BHP Billiton 35%~~
~~Marathon Oil 30% Woodside Energy 20% Maxus US Exploration 15%~~
~~BHP Billiton~~ ~~Lease from US Government as long as oil and gas produced in paying quantities~~ ~~50 Mbbl/d oil~~
~~50 MMcf/d gas~~ ~~Permanently moored tension-leg platform (TLP)~~
~~Shenzi~~
~~(Green Canyon 653)~~
~~Offshore~~
~~Deepwater~~
~~Gulf of Mexico (1,310 m)~~
~~Oil and gas~~
~~BHP Billiton 44%~~
~~Hess Corporation 28%~~
~~Repsol 28%~~
~~BHP Billiton~~ ~~Lease from US Government as long as oil and gas produced in paying quantities~~ ~~100 Mbbl/d oil 50 MMcf/d gas~~
~~Stand-alone TLP~~
~~Genghis Khan field (part of same geological structure) tied back to Marco Polo TLP~~
~~Atlantis~~
~~(Green Canyon 743)~~
~~Offshore Deepwater~~
~~Gulf of Mexico~~
~~(2,155 m)~~
~~Oil and gas~~
~~BHP Billiton 44%~~
~~BP 56%~~
BP ~~Lease from US Government as long as oil and gas produced in paying quantities~~ ~~200 Mbbl/d oil 180 MMcf/d gas~~ ~~Permanently moored semi-submersible platform~~
~~Mad Dog~~
~~(Green Canyon 782)~~
~~Offshore Deepwater~~
~~Gulf of Mexico~~
~~(1,310 m)~~
~~Oil and gas~~
~~BHP Billiton 23.9%~~
~~BP 60.5% Chevron 15.6%~~
BP ~~Lease from US Government as long as oil and gas produced in paying quantities~~ ~~80 Mbbl/d oil 60 MMcf/d gas~~ ~~Permanently moored integrated truss spar, facilities for simultaneous production and drilling operations~~
~~Genesis~~
~~(Green Canyon 205)~~
~~Offshore Deepwater~~
~~Gulf of Mexico~~
~~(approximately 790 m)~~
~~Oil and gas~~
~~BHP Billiton 4.95%~~
~~Chevron 56.67% ExxonMobil 38.38%~~
~~Chevron~~ ~~Lease from US Government as long as oil and gas produced in paying quantities~~ ~~55 Mbbl/d oil 72 MMcf/d gas~~ ~~Floating cylindrical hull (spar) moored to seabed with integrated drilling facilities~~

~~Operation &~~
~~Location~~
~~Product~~
~~Ownership~~
~~Operator~~
~~Title, Leases or Options~~
~~Nominal Production~~
~~Capacity~~
~~Facilities, Use & Condition~~
~~Other~~
~~Liverpool Bay~~
~~Offshore northwest England, Irish Sea~~
~~Douglas and Douglas West oil fields, Hamilton, Hamilton North gas fields, Lennox oil and gas field~~
~~Oil and gas~~
~~BHP Billiton 46.1%~~
~~ENI 53.9%~~
~~BHP Billiton~~ ~~3 production licences issued by UK Government expire 2016, 2025 and 2027~~ ~~308 MMcf/d gas 70 Mbbl/d oil and condensate~~
~~Integrated development of 5 producing fields~~
~~Oil treated at Douglas complex then piped to oil storage barge for export by tankers~~
~~Gas processed at Douglas complex then piped by subsea pipeline to Point of Ayr gas terminal for further processing~~
~~Bruce/Keith~~
~~Offshore North Sea, UK~~ ~~Oil and gas~~
~~Bruce:~~
~~BHP Billiton 16% BP 37% Total 43.25% Marubeni 3.75%~~
~~Keith:~~
~~BHP Billiton 31.83%~~
~~BP 34.84%~~
~~Total 25%~~
~~Marubeni 8.33%~~
~~Keith – BHP Billiton~~
~~Bruce – BP~~
~~3 production licences issued by UK Government expire 2015, 2018 and 2046~~ ~~920 MMcf/d gas~~
~~Integrated oil and gas platform~~
~~Keith developed as tie-back to Bruce facilities~~
~~ROD~~
~~Integrated Development~~
~~Onshore~~
~~Berkine Basin, 900 km southeast of Algiers, Algeria~~
~~Oil~~
~~BHP Billiton 45% interest in 401a/402a production sharing contract ENI 55%~~
~~BHP Billiton effective 38% interest in ROD unitised integrated development ENI 62%~~
~~Joint Sonatrach/ENI entity~~
~~Production sharing contract with Sonatrach (title holder)~~
~~Expires 2016 with option for two 5-year extensions under certain conditions~~
~~Approximately 80 Mbbl/d oil~~
~~Development and production of 6 oil fields~~
~~2 largest fields (ROD and SFNE) extend into neighbouring blocks 403a, 403d~~
~~Production through dedicated processing train on block 403~~

~~Operation &~~
~~Location~~
~~Product~~
~~Ownership~~
~~Operator~~
~~Title, Leases or Options~~
~~Nominal Production~~
~~Capacity~~
~~Facilities, Use & Condition~~
~~Greater~~
~~Angostura~~
~~Offshore Trinidad and Tobago~~ ~~Oil and gas~~
~~BHP Billiton 45%~~
~~Total 30% Chaoyang 25%~~
~~BHP Billiton~~ ~~Production sharing contract with Trinidad and Tobago Government entitles us to operate Greater Angostura until 2021~~
~~100 Mbbl/d oil~~
~~280 MMcf/d gas~~
~~Integrated oil and gas development: central processing platform connected to the Kairi-2 platform and gas export platform with 3 satellite wellhead protector platforms and flow lines~~
~~Oil pipeline from processing platform to storage and export at Guayaguayare~~
~~Gas supplied to Trinidad and Tobago domestic markets~~
~~Zamzama~~
~~Onshore Sindh Province,~~
~~Pakistan~~
~~Gas and condensate~~
~~BHP Billiton 38.5%~~
~~ENI Pakistan 17.75%~~
~~PKP Exploration 9.375%~~
~~PKP Exploration 2 9.375% Government Holdings 25%~~
~~BHP Billiton~~ ~~20-year development and production lease from Pakistan Government expires 2022 (option to extend 5 years)~~ ~~500 MMcf/d gas 3,350 bbl/d condensate~~
~~8 production wells, 4 process trains~~
~~2 front end compression trains~~

~~Development projects~~

~~Australia~~

~~North West Shelf North Rankin gas compression project~~

~~The North West Shelf gas compression project was~~
2. Execute the inclusion and diversity strategy and actions approved by the ~~Board~~GMC.

Our Businesses, Group Functions and Marketing executed the GMC approved inclusion and diversity plan. During the reporting period:

–

Our CEO and senior management across the organisation reinforced the Company’s commitment to inclusion and diversity through internal and external communication channels, including leadership messages, town hall meetings and participation in ~~March 2008~~external industry events.

–

Our CEO and the executive team participated in an Inclusive Leadership and Unconscious Bias development experience. Key content was also included in the BHP Billiton Group-wide Leadership Development Program, Leading Step Up, seeking to ~~recover remaining lower pressure gas from~~strengthen the ~~North Rankin~~ability of all people leaders to engage, lead change and ~~Perseus gas fields. The project consists~~develop our people.

–

A Senior Executive Sponsorship program for female talent was launched. In addition, Businesses continued executing their female mentoring programs. These initiatives have contributed to increasing female representation in pipelines to manager and above level roles.

–

After successful pilot programs during FY2014, flexible work arrangements were implemented in some Businesses, Group Functions and Marketing. Implementation was supported by information and engagement sessions led by line managers.

–

Initiatives to keep employees engaged while on parental leave were successfully implemented. These included keep in touch meetings with employees during their parental leave and parental coaching sessions for managers.

– Initiatives to develop and promote diverse talent continued to be deployed across different regions. Key initiatives included career panel discussions, talent discussions sessions for diverse employees and implementing inclusion of ~~a new gas compression platform, North Rankin B, capable~~diverse candidates for vacant roles.

–

Actions to increase representation of ~~processing 2,500 million cubic feet per day (MMcf/d) of gas, which will~~Indigenous peoples (including Aboriginal and Torres Strait Islander peoples) in our workforce continued to be ~~constructed adjacent~~executed. Actions included targeted resourcing strategies, training programs and integration initiatives to ~~the existing North Rankin A platform, 135 kilometres offshore from Karratha on the northwest coast of Western Australia. The two platforms will be connected~~broaden their employment opportunities.

–

From our baseline in 2010, female representation increased by ~~a 100 metre long bridge and operate as a single facility. We own a 16.67~~(i) 13 per cent ~~share~~in manager and senior leadership roles to 21 per cent and (ii) two per cent in our overall workforce representation to 17 per cent^(a). We remain committed to increasing overall female representation, with a specific focus on operational areas.

–

In FY2015, female representation in our graduate intake increased by 7.6 per cent at a global level to 42 per cent and by 10 per cent to 46 per cent in Australia^(b). Representation of Aboriginal and Torres Strait Islander peoples in the ~~project and our development costs are approximately US$850 million, of which US$561 million was incurred as of 30 June 2012. First gas production is expected~~graduate intake in ~~CY2013. This project is operated~~Australia increased by ~~Woodside with an equally shared interest between Woodside, BHP Billiton, BP, Chevron, MIMI and Shell.~~

~~Bass Strait Kipper gas field development~~

Initial development of the Kipper gas field in the Gippsland Basin located offshore Victoria was approved by the Board in December 2007. A supplemental approval of the development was granted in January 2011. The first phase of the project includes two new subsea wells, three new pipelines and platform modifications to supply 10 thousand barrels of condensate per day (Mbbl/d) and 80 (MMcf/d) of gas. Gas and liquids will be processed via the existing Gippsland Basin joint venture facilities. Our share of development costs is approximately US$900 million, of which US$832 million was incurred as of 30 June 2012. Facilities are expected to be ready in CY2012 with first production pending resolution of mercury content. Additional treatment facilities will be required onshore due to mercury containment within the gas. The mercury issue will be undertaken as a separate project. The Kipper gas field development is comprised of the Kipper Unit Joint Venture and the Gippsland Basin Joint Venture. We own a 32.5six per cent ~~interest~~to 11 per cent.

3.	Demonstrate year-on-year improvement in ~~the Kipper Unit Joint Venture, with Esso Australia~~creating a work environment of inclusion, as measured by our employee survey index.

As part of our employee survey, we gauge employees’ perceptions of feeling valued and heard. Results, together with tools and materials to assist action planning and improvement, were cascaded to business leaders and line managers. Results demonstrate a three per cent increase from last year.

^(a)

These figures represent outcomes for Continuing operations. For Discontinued operations, female representation in manager and ~~Santos owning the remaining 67.5 per cent. We own a 50~~senior leadership roles was 17 per cent ~~interest in the Gippsland Basin Joint Venture with Esso Australia owning the remaining 50 per cent.~~

~~Bass Strait Turrum field development~~

Further expansion of the Gippsland Basin facilities is underway following approval by the Board in July 2008 of the full field development of the Turrum oil and gas field. A supplemental approval of the development was obtained in January 2011. The project consists of a new platform, Marlin B, linked by a bridge to the existing Marlin A platform. The Turrum field, which has a capacity of 11 Mbbl/d of oil and 200 MMcf/d of gas, is located 42 kilometres from shore in approximately 60 metres of water. Our share of development costs is approximately US$1.4 billion, of which US$941 million was incurred as of 30 June 2012. Initial production is targeted for CY2013. The Turrum field development operates under the Gippsland Basin Joint Venture in which we own a 50(totalling 19 per cent ~~interest with Esso Australia owning~~for the ~~remaining 50~~Group for FY2015) and female representation for the overall Discontinued operations workforce was 14 per ~~cent.~~

~~Macedon~~

Macedon is a domestic gas development in Western Australia. The project will consist of a 200 MMcf/d stand alone gas plant, four subsea production wells, a 90 kilometre, 20 inch wet gas pipeline and a 67 kilometre, 2 inch sales gas pipeline. In August 2010,cent (totalling 16 per cent for the project was approved at an investment level of US$1.1 billion (BHP Billiton share) of which US$770 million was incurred as of 30 June 2012. Execution phase work is on track with first gas production expected in CY2013.Group for FY2015). We ~~are the operator~~remain committed to increasing overall female representation, with a ~~71.43 per cent interest and Apache PVG Pty Ltd holds~~specific focus on operational areas.

^(b)

These figures represent outcomes for the ~~remaining 28.57 per cent interest.~~

~~United States~~

~~Onshore US~~

~~BHP Billiton’s Onshore US capital program in FY2012 was US$3.3 billion, primarily related~~total Group (including Discontinued operations). In relation to drilling and completion activities at the Fayetteville, Haynesville and Eagle Ford fields and the installation of approximately 500 kilometres of pipeline infrastructure and additional gas processing facilities. In FY2012, 190 wells were completed in Onshore US. Drilling in the Permian Basin was primarily exploration and appraisal in FY2012.

Due to the low US natural gas price in FY2012, the majority of drilling and completion activity in Onshore US was directed towards the liquids rich Eagle Ford and Permian fields. At the end of FY2012, over 80Discontinued operations, three per cent of ~~drilling activity was focused~~these graduates from the total Group were transferred to South32 as part of the demerger.

Continuous improvement

In FY2016, we will continue to focus on creating a more inclusive work environment and on enhancing our gender and diversity profile. We will take the following steps to achieve this commitment:

demonstrate progress against key objectives to improve the diversity of our workforce profile with particular emphasis on increasing female representation year-on-year, both overall and in leadership roles;

demonstrate year-on-year improvement in creating a work environment of inclusion, as measured by our employee survey index.

As in previous years, each Business, Group Function and Marketing will be evaluated on progress in executing the measurable objectives that form part of their scorecards and appraisal commitments. Successful completion of these objectives will be taken into account in determining bonus remuneration. Progress against each year’s measurable objectives will continue to be tracked as part of the Group’s internal compliance requirements and disclosed in the Annual Report.

1.14 Sustainability

Sustainability is core to our business strategy and integrated into our decision-making. It helps us liveOur Charter values of putting health and safety first, being environmentally responsible and supporting our host communities.

In reporting our sustainability performance, we include our impact on the environment and approach to climate change, water stewardship, resource conservation and biodiversity; and our efforts to ensure the broader economic contributions of our operations benefit the regions in which we operate.

The information (including performance data) contained in this section, unless otherwise stated, covers assets that have been wholly owned and operated by BHP Billiton or that have been operated by BHP Billiton in a joint venture operation (operated assets) for FY2015. It also includes information (including performance data) relating to, and including, the demerged assets for the period from 1 July 2014 to 8 May 2015. Unless otherwise stated, data included in this section is presented on a Continuing operations basis.

We acknowledge the importance of measuring our broader impact. As such, in FY2015 we expanded our definition of work-related activities to align with the recording boundaries of the International Council on Mining and Metals (ICMM). This includes the recording of events that occur outside of our operated locations where we have established the work to be performed and can set and verify the health and safety standards.

1.14.1 Identifying our material sustainability issues

To deliver successfully on our business strategy, we identify and respond to the sustainability issues that have a direct or indirect impact on our business and our stakeholders. Using a materiality assessment process, we identify and prioritise material sustainability issues. The following issues are discussed in this Annual Report:

Governance

Health and safety

Environment

Society

• Governance and sustainability

• Identifying and managing our material risks

• Operating with integrity

• Climate change

• Keeping our people and operations safe

• Focusing on ~~these~~the health of our people

• Biodiversity management

• Water

• Responsibly managing hydraulic fracturing

• Engaging with our host communities

• Respecting human rights

• Making a positive contribution to society

Additional information relating to our materiality assessment process and our sustainability performance for FY2015 is available in our Sustainability Report 2015 and can be found online atwww.bhpbilliton.com.

1.14.2 Governance

Governance and sustainability

Our Board governs the Group in a manner consistent withOur Charter, our strategy and our commitment to a transparent and high-quality governance system. The Board has established a number of committees to assist in exercising its authority, including monitoring the performance of the Group.

The Sustainability Committee assists the Board in oversight of health, safety, environment and community (HSEC) matters, including climate change. This includes overseeing areas relating to HSEC risk control, compliance with applicable legal and regulatory requirements, and overall HSEC performance of the Group.

During FY2015, the Sustainability Committee continued to assist the Board in its oversight of HSEC issues and performance. This included consideration of strategic environmental and community matters, HSEC audits and trends, and the detailed reports from management of the relevant operation on the event, actions taken and investigations in the event of a fatality or significant incident.

Below the level of the Board, key management decisions are made by the CEO, the GMC, other management committees and individual members of management to whom authority has been delegated.

At the Group level, health, safety, environment and community teams provide guidance and thought leadership by developing and implementing HSEC management frameworks, focusing on catastrophic and fatal hazards management; identifying relevant HSEC trends; tracking performance and alignment with other Company requirements; and reporting progress against targets.

To link HSEC matters to remuneration, 20 per cent of the FY2015 short-term incentive opportunity for GMC members was based on HSEC performance. Given the importance the Group places on safety, the short-term incentive opportunity attached to HSEC has been increased for FY2016 to 25 per cent. The Sustainability Committee assists the Remuneration Committee in determining appropriate HSEC metrics to be included in GMC scorecards and in assessing performance against those measures.

The Remuneration Committee and the Board also have discretion over both the short-term and long-term incentive opportunities for GMC members and take into consideration HSEC performance. As a consequence of the five tragic fatalities in FY2015, the Board and the Remuneration Committee concluded, after taking advice from the Sustainability Committee, that a zero outcome was appropriate for the CEO’s FY2015 short-term incentive HSEC component, with the decision supported by the CEO.

Further information on the metrics and their assessment is available in the Remuneration Report contained in section 4 of this Annual Report.

Identifying and managing our material risks

In addition to the legal requirements of the countries in which we operate, our approach to sustainability risks is defined by our GLDs. These clearly describe our mandatory minimum performance requirements and accountabilities across the Group and are the foundation for developing and implementing management systems at our operations.

GLDs relating to HSEC matters set our Group-wide HSEC-related performance requirements to ensure effective management control of our sustainability risks. Our GLDs are consistent with the principles and mandatory requirements of the position statements of the ICMM Sustainable Development Framework, the United Nations (UN) Global Compact, the UN Declaration of Human Rights and the Voluntary Principles on Security and Human Rights.

At our operated assets, we have the ability to set workplace HSEC standards and enforce their application. Contractors working at our operated assets must comply with the minimum performance requirements in our relevant GLDs. In addition we seek to ensure our customers, suppliers, agents and service providers maintain business practices and workplaces that are aligned with our GLDs. We also seek to apply GLD performance requirements to our non-operated assets.

We use the framework in ourRisk Management GLD to identify and manage the risk involved in our business activities, functions and processes. This provides a strong foundation for our active and consistent risk-based approach to sustainability. A broader discussion of our risk factors and management approach is provided in section 1.7 of this Annual Report.

Operating with integrity

Integrity and accountability are core values at BHP Billiton and central to our reputation as one of the world’s leading companies. We are committed to ethical business practices and high-quality governance in all that we do. Regardless of the country or culture within which our people work, ourAnti-corruption GLD andCode of Business Conduct prohibit bribery and corruption in all our business dealings. Particulars in relation to theCode of Business Conduct and anti-corruption are referred to the Sustainability Report 2015 and in section 3.17 of this Annual Report. Specific discussion on legal proceedings is available in section 6 of this Annual Report.

Transparency of payments to governments

BHP Billiton considers the licences we have to operate in jurisdictions around the world as a privilege that bestows upon us a responsibility to contribute to the economic and social development of our host countries. A critical component of this responsibility is our taxation obligations to our host governments.

Our payments to governments in FY2015 on a country-by-country basis of US$7.3 billion are presented in our Sustainability Report 2015. Approximately US$1.4 billion in taxes collected on behalf of employees was also remitted to governments in FY2015. More than 99 per cent (excludes demerged assets) of our payments were made to nine countries. Of these, our largest payments were made in Australia, where we have the majority of our assets.

BHP Billiton has long been deeply committed to the role transparency plays in contributing to the good governance of natural resources for the benefit of the governments and citizens of countries that host our operations. This is why BHP Billiton has voluntarily publicly reported our payments of taxes and royalties in our Annual Sustainability Report in increasing detail over the last 15 years and has been a member of the Extractive Industries Transparency Initiative (EITI) since its inception in 2002. We continue our strong support through our active participation on the EITI Board.

We believe that transparency by governments and companies around revenue flows from the extraction of natural resources is an important element in the fight against corruption. A level and globally consistent playing field will ensure all companies disclose on the same basis and reduce the reporting burden for those operating in multiple jurisdictions. To this end, and consistent with our Transparency Principles, we support appropriate national and extra-territorial mandatory corporate reporting to complement the EITI and provide a globally consistent regulatory framework for all extractive industry companies.

We have disclosed our payments of taxes and royalties on a project-by-project basis, and payments to state and provincial governments at a subnational level, in a stand-alone BHP Billiton Economic contribution and payments to governments Report. This Report is available online atwww.bhpbilliton.com.

Closure planning

Closure planning is an important consideration in the planning and development of our mining and petroleum operations. We recognise the significant risks associated with ineffective closure and seek to minimise these through our closure governance framework. The closure framework integrates resource planning and development, health, safety and environment, stakeholder engagement, finance and assurance into business operational design.

Specifically, the framework requires each asset to develop closure plans. These plans describe closure objectives and the management process in place to reduce closure liabilities over the life of the asset.

An ongoing internal audit program continues to test the effectiveness of these closure plans and the business alignment to the closure planning framework, including the financial provisions. Information on these provisions can be found in note 14 ‘Closure and rehabilitation provisions’ to the Financial Statements. Audit findings are reviewed annually and reported to the relevant Business Presidents, while summary reports are considered by the Sustainability Committee of the Board. During FY2015, 11 audits were conducted against performance criteria and recommendations from such audits have been initiated.

Climate change

Our perspective on climate change

We accept the Intergovernmental Panel on Climate Change (IPCC) assessment of climate change science, which has found that warming of the climate is unequivocal, the human influence is clear and physical impacts are unavoidable.

Sustainable economic growth requires an effective response to climate change. The world needs reliable, affordable energy to support higher living standards and lower GHG emissions to keep the global average temperature rise below two degrees Celsius. We do not prioritise one of these requirements over the other. Both are essential.

Even allowing for significant improvements in energy efficiency, energy demand is expected to increase as the global population grows and living standards improve. Today, fossil fuels are often the most affordable, reliable and accessible way of meeting this demand and provide more than 80 per cent of the world’s primary energy. However, their growing use would substantially increase GHG emissions and exacerbate climate change unless new technology reduces their impact. To meet its development and climate goals, the world must find ways to progressively decarbonise the use of fossil fuels, improve energy efficiency and increase the use of alternative energy sources such as renewables and nuclear power.

Climate change governance

BHP Billiton’s strategy is tied to economic growth in both emerging and developed economies, and sustainable growth requires an effective response to climate change. Responding to climate change is a priority Board governance and strategic issue for our Company.

Our GMC has primary responsibility for the design and implementation of an effective position and response to climate, and accountability for performance against GHG emissions, our climate change metric. We also seek input and insight from external experts, such as the Forum on Corporate Responsibility.

To reflect updates in scientific knowledge and global regulatory and political responses, we regularly review our position on climate change. We incorporate climate change considerations into our Group scenario planning to understand potential impacts on our portfolio. We also conduct annual reviews of performance against Business GHG targets to ensure we are on track to achieve our Company target. The Sustainability Committee has considered a range of climate change scenarios and continues to monitor the actions being taken to manage a range of climate change impacts and policy responses.

Our approach

Our strategic approach to climate change is underpinned by engagement with policy makers and other stakeholders, including investors, companies and non-government organisations. We believe industry has a key role to play in climate change policy development by working with governments and other stakeholders to inform the development of effective long-term policy framework that delivers a measured transition to a lower emissions economy. BHP Billiton believes an effective policy framework should include a complementary set of measures, including a price on carbon, support for low-emissions technologies and measures to build resilience.

We continue to share lessons learnt with our stakeholders and identify solutions that we believe can drive emissions reductions at the lowest cost. In September 2014, BHP Billiton signed the World Bank’s Putting a Price on Carbon statement, which was presented at the 2014 UN Climate Summit in New York and we are a member of their Carbon Pricing Leadership Coalition. In 2015, we made two climate change policy submissions in response to the Australian Government’s discussion papers Setting Australia’s Post-2020 Target for GHG Emissions and Emission Reduction Fund: Safeguard Mechanism, sharing our perspective on the importance of this issue.

We have also hosted several policy roundtables, bringing cross-sectoral business groups together to discuss different ways that business and government can address climate change. Internationally, we look forward to the 21st Conference of the Parties (COP21) in Paris in December 2015 delivering a positive outcome that puts the world on a path to limit global temperatures to less than 2 degrees Celsius above pre-industrial levels, in line with current international commitments.

We are committed to transparent and open communications and have an ongoing and extensive engagement program with investors, government and the broader society, including our voluntary submission to the CDP (formerly known as the Carbon Disclosure Project). The CDP score is a measure of the actions that a company has demonstrated in carbon management. Our commitment to continuing transparency and disclosure has resulted in an improvement in our CDP score since 2013.

We have been taking action for many years to understand and manage the impacts of climate change on our business. We have been applying an internal price on carbon in our investment decisions and portfolio evaluation for more than a decade and were early adopters of this approach. We maintain a view on carbon pricing using a carbon price protocol, which we update regularly. Our carbon price protocol tracks the progress of national emissions reduction ambitions to tackle climate change throughout the world, including in our major operating regions and customer demand centres. In parallel, we look at the potential for reductions in emissions and the cost associated with those reductions to determine an appropriate long-term price level. We carry out this assessment for various scenarios which reflect the effectiveness and ambition of policies, the timing to implement reductions, the interaction between policy mechanisms and the role of low carbon technologies. We have an integrated approach to addressing climate change that has three key areas: mitigation, adaptation andlow-emissions technology.

Mitigation

As a major producer and consumer of energy, we prioritise GHG reductions and energy efficiency.

BHP Billiton is among the sector leaders in setting an absolute target to limit our GHG emissions. As we grow our business, this target encourages us to look for ways to improve our energy efficiency, increase productivity and implement additional GHG reduction projects across our operations. All our Businesses are required to identify, evaluate and implement suitable GHG reduction opportunities, including during project design and equipment selection.

In FY2015, the Group’s total GHG emissions were 38.3 million tonnes (Mt) of carbon dioxide equivalent (CO₂-e). Taking into account the impact of the demerger, this represents a six per cent reduction on FY2014 GHG emissions. For the purposes of the FY2014 comparison, emissions from assets demerged with South32 for the period 1 July 2014 to 30 April 2015 were annualised. This reduction has been driven in part by GHG reduction projects across our Businesses and improved productivity.

GHG Scope 1 and 2 (millions of tonnes CO₂-e)^(a)


Year ended 30 June^(b)	2015		2014		2013
Scope 1^(c)		20.7		22.7		22.0
Scope 2^(d)		17.6		22.3		24.7

Total GHG millions of tonnes CO₂-e		38.3		45.0		46.7

^(a)	Measured according to the World Resources Institute/World Business Council for Sustainable Development Greenhouse Gas Protocol.

^(b)	Includes data for Continuing and ~~Onshore US liquids production had risen~~Discontinued operations.

^(c)	Scope 1 refers to ~~more than 40 thousand barrels per day.~~direct GHG emissions from our operated assets.

^(d)	Scope 2 refers to indirect GHG emissions from the generation of purchased electricity and steam that is consumed by our operated assets.

In line with the requirements of the UK Companies Act 2006, our reported FY2015 GHG intensity was 3.8 tonnes of CO₂-e per tonne of copper equivalent production (FY2014: 4.9 tonnes of CO₂-e). Our reported FY2015 energy intensity was 30 petajoules per million tonnes of copper equivalent production. Copper

equivalent production has been based on FY2013 average realised product prices. Rather than use an intensity metric, we have set ourselves a challenging goal to limit our overall emissions by keeping our absolute FY2017 GHG emissions below our FY2006 baseline while we continue to grow our business.

A key example of our ongoing activity to reduce GHG emissions is our Fuel Quality Network that brings people together from across our Company to understand and test the benefits of improving fuel quality. Our investigations have shown that improving fuel chemistry can deliver significant reductions in diesel exhaust particulates and GHG emissions. We estimate that improving the quality of fuel delivered to our mobile plants has the potential to reduce energy consumption across the Company by around 4,600 terajoules (TJ) per annum and reduce GHG emissions by approximately 320,000 tonnes of CO₂-e per annum. In addition, the Fuel Quality Network will help us to achieve cost savings in maintenance operations and deliver improved productivity.

Projects and initiatives such as these keep us on track to achieve our GHG emissions reduction target. We are committed to continued focus on the delivery of GHG reduction opportunities within our Businesses.

In addition to identifying opportunities within our Company, we also seek to contribute to global GHG emissions reductions. We are currently implementing a strategy to support REDD+ (Reducing Emissions from Deforestation and Forest Degradation), an international mechanism that provides economic, social and environmental incentives for developing countries to reduce GHG emissions from deforestation and related activities through the creation of carbon credits. Through project support, improved governance and climate finance market stimulation, BHP Billiton is playing a role in reducing deforestation, enhancing community livelihoods and improving biodiversity and watershed conservation. BHP Billiton and the International Finance Corporation are exploring ways of stimulating demand for REDD+ credits to support forest protection and conservation.

Adaptation

BHP Billiton’s corporate strategy is based on owning and operating long-life assets diversified by commodity, geography and market. Our success over many years can be attributed to the way we have successfully adapted to the changing business landscape. Building resilience to the physical impacts of climate change is just as essential to long-term business success.

We take a multifaceted approach to climate change adaptation, building resilience across activities both within our operations and investments, and outside of our operational control in our communities and ecosystems. We seek to leverage many of our established core business processes such as risk and planning. Climate risks may occur as a result of acute (extreme) weather events (e.g. floods and cyclones); chronic (incremental) changes in climate conditions, which may progressively increase risk over time (e.g. changes to temperature); and cumulative impacts from the interaction of direct and indirect climate impacts (e.g. changes to water availability). Our analysis has found that climate change will exacerbate existing risks while also exposing our Businesses to new risks. For example, cyclone management is critical for our Western Australia Iron Ore (WAIO) Asset and maintaining adaptive management practices will allow WAIO to respond to the expected increase in cyclone intensity in the Pilbara. We also require new investments to assess risks associated with the forecast impacts of climate change. For example, during the project design, identification and assessment of increasing storm intensity and storm surge levels resulted in raising the height of the trestle at our Hay Point coal port facility in Queensland, Australia, as part of our expansion plans.

Effective analysis of climate science is critical to our resilience planning and we take care to understand what variables and analysis make the most sense to our business. We are currently working with the CSIRO (Australia’s national science agency) to obtain analyses of the climate science. This will inform climate resilience planning at an asset level, improving our understanding of the material climate vulnerabilities that face our Businesses.

Technology

Technology and innovation have the potential to significantly reduce global emissions and meet long-term climate goals. Given that fossil fuels are likely to continue to be a significant part of the energy mix for decades, it is vital that low-emissions technologies (LET) are available at scale, lower cost and much faster than the usual commercial time frames to meet the challenge of climate change. Industry has a significant collaborative role to play with government, academia and the community to facilitate this necessary step change.

Since 2007, we have spent over US$400 million on LET research, development and deployment across a number of projects ranging in scale and complexity. For example, the West Cliff Ventilation Air Methane Project (WestVAMP) first piloted at Illawarra Coal’s Appin Colliery in 2001, utilises 20 per cent of available mine ventilation air to produce electricity. This reduces the site’s overall GHG emissions footprint by removing the methane from mine ventilation air.

BHP Billiton is also part of ONE Future, a coalition of companies from across the natural gas industry in the United States focused on identifying solutions for fugitive methane emissions management. ONE Future has developed an approach, that if widely adopted, could lower the total methane emissions of participating coalition companies to less than one per cent of gross production.

To build upon this contribution to the development of LET, we have recently established an integrated strategy that considers investment across a range of technologies that can lead to material emissions reductions in our operations and across our supply chains. When evaluating opportunity areas for potential investment, we look at several different factors, including the potential to impact upon global emissions and the opportunity to use our own skills and expertise to accelerate the change required, including our expertise in geology, engineering and markets.

We also seek to leverage our investments with the contribution of suitable partners, including governments, peers and research organisations. The focus for us is to consider the catalytic role that BHP Billiton can play in working with others to accelerate the deployment of technology to address material sources of emissions.

Our roadmap for investment includes the development and demonstration of carbon capture and storage (CCS) technologies, the reduction of fugitive methane emissions from coal and petroleum operations, high-efficiency/low-emissions power generation, low-emissions transportation and improvement and application of battery storage to enhance the wider deployment of renewable energy.

CCS can play a pivotal role in reducing emissions from oil and gas production, and from the use of fossil fuels in power generation and industrial processes. The key components of CCS (capture, transport and storage of CO₂) have all been demonstrated successfully for many years. The challenge for large-scale deployment of CCS technology in the power and industrial sectors is the integration of the key components of CCS and appropriate commercial and regulatory support to foster further development.

Addressing the key barriers to deployment (regulatory uncertainty, cost and stakeholder concern) is essential if CCS is to become a global mitigation tool at the scale required to make a meaningful contribution to long-term climate goals. We have previously contributed to the development of CCS in both Australia and the United States and we are a founding member of CO2CRC, one of the world’s leading collaborative research organisations focused on long-term geological storage of carbon dioxide.

Portfolio evaluation

As well as taking action to reduce emissions, build resilience to the physical impacts of climate change, develop and deploy LETs and support an effective global response, we continue to identify and assess the impacts of climate change on our portfolio.

The starting point of our corporate planning process is the construction of a central case based on extensive analysis and research. Our current central case assumes the US economy continues to recover and strengthen, progressive development of China and India, integration of emerging economies into a multi-polar economic environment, and action on climate change centred on national policies.

Our corporate planning process uses scenario analysis to encompass a wide spectrum of potential outcomes for key global uncertainties. Designed to interpret external factors including technical, economic, political and governance trends facing the global resources industry, the scenarios offer a means by which to explore potential portfolio discontinuities and opportunities, as well as to test the robustness of decisions. Our scenarios do not constitute preferred outcomes for BHP Billiton. The scenarios are designed to be divergent, but also plausible and internally consistent, spanning unique potential future business environments.

According to independent bodies such as the International Energy Agency (IEA), fossil fuels will continue to supply a significant amount of the world’s energy for decades. This is the case even in the IEA’s ‘450 Scenario’, under which the world achieves a 2ºC outcome. Oil, coal and gas are likely to continue to constitute a significant part of the energy supply mix in countries like China and India, notwithstanding strong growth in renewables.

Given the ongoing role of fossil fuels, and the many uncertainties facing not only the resources sector but the world in general, accurately predicting how the world will respond to the challenge posed by climate change is difficult. Our scenario planning approach endeavours to consider a range of potential outcomes in order to understand the impacts on our portfolio and the critical signposts we must monitor in order to respond in a timely and effective way.

Our analysis highlights that our uniquely diversified portfolio of high-quality assets is robust across our scenarios and is highly unlikely to result in BHP Billiton assets being ‘stranded’. In a scenario where there is strong impetus to develop and implement cleaner, more energy efficient solutions and unified societal action to address climate change, our analysis indicates that there is a potential of upside for uranium, our high-quality hard coking coal and iron ore lump product. Copper is resilient and would offer continued opportunity for growth and our gas exposure may yet provide opportunities during a transition to a lower carbon economy. In aggregate, we anticipate these commodities are robust and provide options that could mitigate potential negative impacts on other commodities.

Regardless of the path the world chooses, we are committed to reducing our own emissions and to supporting global efforts to reduce general emissions.

1.14.3 Health and safety

Keeping our people and operations safe

The health and safety of our people and of the broader communities in which we operate is central to every aspect of our business. Regardless of where our people are located, the area of the organisation in which they work, or the type of work they undertake, we strive to create an environment that is free from occupational harm. However, we do recognise that environments we operate in can be hazardous.

As part of our ongoing focus to eliminate fatal and other serious incidents, a Company-level safety intervention was initiated in FY2015. The safety intervention was launched with engagement across our business through a variety of methods, including workshops, team talks and surveys. Feedback was presented at our senior leaders’

meeting in July 2015, identifying the key controls, programs, systems, processes and tools currently in place that require improvement and Company-wide adoption through focused leadership.

Safety risk controls for Company-wide risks are included in ourSafety GLD and serve as the minimum mandatory controls. Each Business is required to assess whether additional controls are required to manage risks and to meet the objective of no fatalities.

During FY2015, our overall total recordable injury frequency (TRIF) performance of 4.1 injuries per million hours worked improved by two per cent compared with FY2014. Over the past five years, our TRIF has reduced by 18 per cent.

Total recordable injury frequency (per million hours worked)


Year ended 30 June^(a)	2015		2014		2013
Total recordable injury frequency (TRIF)		4.1		4.2		4.6

^(a)	Includes data for Continuing and Discontinued operations for the financial years being reported.

Focusing on the health of our people

We want our people to be fit for work and make sure their work does not negatively impact their health or wellbeing now or in the future.

During FY2015, we continued to establish, maintain and review our exposure profiles and manage significant health risks. The minimum mandatory controls contained within ourHealth GLD are structured around three principal aims: the prevention of illness from exposure; ensuring people are fit for work; and returning people to work after illness or injury. These principal aims form the cornerstone of our health risk management framework.

In FY2012, we established a health target baseline and committed to reduce potential occupational exposure to carcinogens and airborne contaminants by 10 per cent by FY2017. In FY2015, the number of potential exposures to carcinogens and airborne contaminants requiring the use of personal protective equipment reduced by 40 per cent compared with our FY2012 baseline. We have therefore exceeded our target to date. While good progress has been made in relation to occupational exposures to carcinogens and airborne contaminants, we remain vigilant in adopting and maintaining effective exposure controls. Our FY2015 results are due to a number of initiatives across our operations, details of which can be found in our Sustainability Report 2015.

In FY2015, the incidence of employee occupational illness was 4.93 per million hours worked, an increase of 74 per cent compared with FY2014. Noise induced hearing loss cases increased significantly due to a more accurate assessment triggered by incorrectly applying our hearing loss criteria in previous years at some assets. Our reduction in musculoskeletal illnesses was primarily due to the introduction of a multifaceted control program at one of our assets.


Year ended 30 June^(a)	2015		2014		2013
Noise induced hearing loss		3.05		0.68		0.51
Musculoskeletal		1.52		1.61		1.24
Other illnesses		0.36		0.55		0.64

Total		4.93		2.84		2.39

^(a)	Includes data for Continuing and Discontinued operations for the financial years being reported.

1.14.4 Environment

We seek to demonstrate our environmental responsibility by minimising our environmental impacts and leaving lasting benefits. We approach our environmental management in ways that address our responsibilities to firstly understand and minimise impacts, and, secondly to contribute more broadly as environmental stewards.

We complement our core business processes of risk management, and corporate planning, community development and stakeholder engagement with the minimum mandatory requirements for environmental management of ourEnvironment GLD. In this GLD, we take a risk-based approach and emphasise implementation of the mitigation hierarchy to avoid, minimise and rehabilitate direct, indirect and cumulative impacts within our area of influence across both short-term and long-term business horizons. We require our Businesses to set target environmental outcomes for land, biodiversity, water resources and air, and prevent or minimise GHG emissions, including in project design. Where unacceptable impacts remain to important biodiversity and ecosystems, we apply compensatory actions to address the residual impacts.

Biodiversity management

A sustainable society depends on biodiversity and its associated ecosystem services, such as food, air and water. Similarly, our operations depend on and have the potential to impact biodiversity and its related ecosystem services.

We have two targets focused on biodiversity that acknowledge the importance of maintaining the unique ecosystems and biodiversity of the areas in which we operate and the importance of conserving these more broadly. The first target requires the development and maintenance of land and biodiversity management plans that include controls demonstrating application of the mitigation hierarchy to manage the biodiversity and ecosystem impacts of our operations. This target is supported by the requirements of ourEnvironment GLD. In FY2015, consistent with our target, all operations developed land and biodiversity management plans.

The second target is at a wider Group level and is a voluntary commitment to financing the conservation and ongoing management of areas of high biodiversity and ecosystem value that are of national or international conservation significance. In FY2012, we established an alliance with Conservation International to support the delivery of this target and improve our approach to biodiversity management more broadly. As a result, we will improve our environmental performance and broaden our contributions to lasting environmental benefits beyond what could be achieved by our operations alone. As of FY2015, we have committed more than US$35 million to conservation, in addition to the environmental management activities at our operations.

A central part of our approach to managing our impacts on land and biodiversity is the rehabilitation of land no longer required for our activities. Our Businesses are required to maintain rehabilitation plans that support life-of-asset and closure plans. This includes rehabilitating disturbed areas that are no longer required for our operational purposes, consistent with the pre-disturbance land use or alternate land use, while taking into account regulatory requirements and stakeholder expectations. As at the end of FY2015, our total land rehabilitated was 40,800 hectares, a five per cent increase since FY2014, on the total area rehabilitated.

Water

The sustainability of our operations relies on our ability to obtain an appropriate quality and quantity of water, use it responsibly and manage it appropriately, including taking account of natural supply variations. As economies and populations continue to expand and pressure for water becomes more intense, we recognise the role we have as responsible stewards of the water we share with our host communities. We anticipate climate change is likely to make the patterns and cycles of water flow less predictable and require our operations to implement adaptive responses. Managing our shared water resources is therefore a complex task for our business.

To manage our shared water resources, our operations are required to assess the direct, indirect and cumulative impacts and risks to water resources. We do this by understanding the social, cultural, ecological and economic values of these resources at a catchment level within our area of influence. Based on the risks and impacts, our operations apply a mitigation hierarchy; implement controls and monitor their effectiveness. At the operational level, we maintain quantitative water balance models to predict and support the management of water inputs, use and outputs and to enable timely management responses to water-related risks. Where possible, we seek to use lower-quality or recycled water to minimise extraction requirements from higher-quality water resources.

Recognising the regional nature of our water risks, we introduced a target in FY2013 requiring our operations with water-related material risks to implement projects to reduce their impact on associated water resources. The target allows our Businesses to annually review and focus on the water challenges specific to the regions in which they operate. Further discussion on projects implemented as part of our water target can be found in our Sustainability Report 2015.

We report on our water use publicly, consistent with the Input Output model of the Minerals Council of Australia’s Water Accounting Framework (WAF). We are working with the ICMM to support broader adoption across the industry. The WAF aims to improve data integrity and comparability across the sector to allow a more meaningful analysis on which to base policy making and deliver improved outcomes.

Under the WAF, water is categorised as Type 1 (close to drinking water standards), Type 2 (suitable for some purposes), and Type 3 (unsuitable for most purposes). In FY2015, our total water input (water intended for use) was 340,200 megalitres across the Group, with 85 per cent defined as Type 2 or Type 3. Our use of Type 2 and Type 3 water demonstrates our approach to utilising lower-quality water wherever feasible.

Responsibly managing hydraulic fracturing

Since 2011, we have conducted onshore shale operations in the Eagle Ford, Permian, Haynesville and Fayetteville shale operations according to our North America Shale Operating Principles. These principles state our commitment to safety, and to protect the land where we operate, safeguard and manage water resources, minimise air emissions from our operations, and be a good neighbour to our host communities. We construct and operate our facilities in an environmentally sensitive manner. We conduct environmental assessments, and prepare plans with controls to minimise impacts to air, water, land and biodiversity.

We publicly report the ingredients of the fracturing fluids from each well completion into FracFocus, the hydraulic fracturing chemical disclosure registry. We don’t use benzene, toluene, ethylbenzene or xylene (BTEX) or diesel in our fracturing fluids, and we work with our service companies to reduce toxicity of fracturing fluids where possible.

We check every well we drill against our list of critical elements to ensure well integrity and the safety of our operations. Our Groundwater Risk Management Plan incorporates controls to prevent the loss of containment of pressurised fluids, including: casing annulus monitoring procedures to verify well integrity; proper wellhead and casing design and construction; and specialised training to assure competency. During FY2015, we voluntarily implemented a pre-drilling groundwater monitoring program in the active drilling areas of the Eagle Ford, Permian and Haynesville shale operations to establish a baseline of groundwater quality.

To improve management of water resources and reduce fresh water demand at our Eagle Ford operations, we implemented a mobile reverse osmosis system to produce potable water and treat waste water for reuse in drilling and completions at our drilling camps, while reducing trucking of water and waste. In our Permian shale operation, we use predominately a blend of brackish water and recycled produced water for our drilling and completions operations.

The majority of our air emissions relate to GHG emissions from fuel combustion, flaring and venting during well construction and production. We reduce methane emissions across our shale operations by capturing and selling the produced natural gas that would otherwise be vented or flared.

At our Permian shale operation, we increased the percentage of produced water sent through pipeline to disposal, eliminating a portion of trucking to disposal wells, which also contributed to GHG reductions. We utilise temporary pipelines instead of trucks throughout our shale operations to supply water to our construction operations. This reduces air emissions and relieves traffic stress on local roads and communities.

We accept the scientific basis for linking seismic activity to waste water injection wells associated with unconventional oil and gas production. As such, we conduct enhanced seismicity monitoring and other types of data acquisition to better understand and mitigate the risk of the potential for induced seismic activity associated with waste water disposal operations. We actively participate in cooperative efforts with stakeholders (industry, government, science community and the public) to better understand and promote best practice risk management in our operations.

1.14.5 Society

We strive to be a valued partner in the communities in which we operate and, through all our interactions, seek to foster meaningful, long-term relationships that respect local cultures and create lasting benefits. We believe this is fundamental to being a responsible corporate citizen and is a clear demonstration ofOur Charter values.

Engaging effectively in communities

OurCommunity GLD prescribes an inclusive and proactive approach to stakeholder engagement. We seek to build connections with stakeholders early in the life cycle of our operations, maintain open and ongoing communications with them, and operate transparently in relation to our plans and performance. In order to be effective and reach as many people as possible, we ensure these engagement activities are culturally and socially inclusive.

Our stakeholder engagement process requires our assets and operations to identify and analyse stakeholder groups to determine the level of impact the Company has on them and their level of interest in engaging with us. Each asset and operation then designs community engagement activities suitable for each of the stakeholder groups and individuals, where appropriate. Through engagement, with our host communities we also develop an understanding of the social and economic environment, including potential impacts and opportunities.

To measure the effectiveness of our engagement and community development activities, our operations are required to complete a community perception survey every three years. These surveys provide a valuable external perspective on the quality of our engagement and whether our stakeholders believe we are addressing their key concerns.

Respecting human rights

BHP Billiton’s corporate responsibility to respect human rights is embedded within the Company’s systems and processes and aligns with the UN Declaration of Human Rights and the UN Global Compact principles. The UN Guiding Principles on Business and Human Rights require companies to address three aspects to fulfil their responsibility to respect human rights: express a commitment to human rights through a policy statement; perform human rights due diligence to identify, prevent, mitigate and account for potential human rights impacts; and provide remediation where business enterprises have been identified as having caused or contributed to adverse human rights impacts. We meet these requirements by embedding them into our Company systems and processes.

BHP Billiton’s commitment to human rights is publicly stated in ourCode of Business Conduct (the Code), which clearly outlines our responsibilities and expectations. All employees and certain contractors are provided with the Code on commencement of employment with BHP Billiton, and it is a condition of that employment that they behave in accordance with the Code. Annual risk-basedCode of Business Conduct training and communication plans must be completed and executed by each area of the Group. In addition, we measure effectiveness and obtain assurance of our human rights processes through the internal audits of our GLDs.

As part of our human rights due diligence process, our operations are required to identify and document key potential human rights risks by completing a Human Rights Impact Assessment (HRIA). This includes assessing performance against the articles of the UN Universal Declaration of Human Rights, the UN Global Compact principles, and host country legislation governing human rights issues. We require each HRIA to be reviewed internally on an annual basis.

Every three years, each HRIA is required to be verified through an engagement process with stakeholders and, in medium- and high-risk jurisdictions, validated by a qualified human rights specialist. Where a HRIA identifies a material risk, a Human Rights Management Plan is required to be implemented and reviewed annually. Selected employees and contractors receive training on compliance with BHP Billiton’s human rights commitments.

Managing our security-related material risks

The nature and global reach of our organisation can result in our people working in countries where there is potential exposure to personal and business risks. We require an assessment of each country for the degree of risk associated with visiting, exploring and operating within it, and appropriate controls are developed to mitigate identified risks.

Through our commitment to the Voluntary Principles on Security and Human Rights (VPs), we seek to protect people and property from material security-related risks. Performance requirements related to the VPs are implemented through ourSecurity and Emergency Management GLD. Our operations are required to identify security-related material risks to people and property, and engage relevant stakeholders to develop and manage security programs that respect human rights and fundamental freedoms.

In addition, we require our operations to conduct an annual review for alignment with the VPs and implement an improvement plan to close identified gaps. The process also provides an opportunity to further build awareness and understanding of the VPs across the Company.

Respecting and including Indigenous communities

As many of our operations are located on or near Indigenous peoples’ lands, it is important we recognise the traditional rights and values of Indigenous peoples, respect their cultural heritage and the significance of their lands and provide opportunities for inclusion and advancement.

BHP Billiton’s approach to engaging with and supporting Indigenous peoples is articulated in our Indigenous Peoples Policy Statement, which was developed and approved by our GMC in FY2015. Implementation of the Policy Statement will help us strengthen relationships with Indigenous peoples and be a valued partner in their economic, social and cultural empowerment. We are currently in the process of developing a Group-wide Indigenous Peoples Strategy to guide implementation of the Policy Statement.

As a member of the ICMM, our Indigenous Peoples Policy Statement is consistent with the 2013 ICMM Indigenous Peoples and Mining Position Statement and is implemented in accordance with ourCommunity GLD.

Commitments through our Policy Statement include understanding Indigenous peoples’ rights and interests; building cross-cultural understanding; agreeing on appropriate engagement processes; and ensuring effective

participation in decision-making. A number of related commitments address how we engage where government is responsible for managing Indigenous peoples’ interests and how to move forward when differences of opinion arise.

Our Policy Statement specifically addresses the issue of free, prior and informed consent through committing to seek the consent of Indigenous peoples for new operations or major capital projects that are located on lands traditionally owned by, or under customary use of, Indigenous peoples and which are likely to have significant adverse impacts on Indigenous peoples.

In making this commitment, we recognise the right of governments to ultimately make decisions on the development of resources and that, in most countries, neither Indigenous peoples nor other groups have a right to veto projects. Where consent cannot be reached, a host government may decide to proceed with a project after balancing the rights and interests of Indigenous peoples with the wider population. In these circumstances, BHP Billiton will determine whether we remain involved with the project. The BHP Billiton Indigenous Peoples Policy Statement can be found in our Sustainability Report 2015.

Respecting customary rights

At a very early stage of a project, we seek to identify customary owners, occupiers and users of the land on which we intend to operate, as well as conduct land usage surveys. Knowing who is connected to the land and how it is used is critical to establishing effective community consultation and engagement. This helps to ensure people potentially affected by our operations are fully aware of our activities and have an opportunity to express their concerns and aspirations.

In instances where land may be used for customary purposes and no formal land title has been issued, information is requested from relevant organisations, including government authorities with responsibilities for customary land uses, and Indigenous peoples’ representative organisations, such as land and tribal councils. Further enquiries are also made directly with the people in the area to help identify those with connections to the land. Arising from this engagement, the operational work plan may be amended to reduce potential impacts on landowners and users.

Our projects are designed in a way that avoids or minimises resettlement of individuals or communities. If resettlement is required (voluntary or involuntary), programs must be implemented consistent with the requirements set out in the International Finance Corporation’s Performance Standard 5, Land Acquisition and Involuntary Resettlement. This includes being planned and implemented in a participatory manner that leads to a demonstrable improvement in livelihoods of the displaced persons or communities.

Ok Tedi

BHP Billiton exited from Ok Tedi Mining Limited (OTML) in February 2002. The exit arrangements included the transfer of BHP Billiton’s shares in OTML to Papua New Guinea Sustainable Development Program Limited (PNGSDP) and a statutory undertaking protecting BHP Billiton from environmental claims by the PNG Government. In September 2013, the PNG Parliament passed laws which compulsorily acquired PNGSDP’s shares in OTML and changed other aspects of the exit arrangements, including the repeal of the protection from environmental claims by the PNG Government. PNGSDP is challenging the validity of actions taken by the PNG Government to restructure and obtain control of PNGSDP. BHP Billiton retains an indemnity from PNGSDP in respect of environmental claims by the PNG Government and certain environmental claims by third parties. This indemnity is secured against certain key assets of PNGSDP. BHP Billiton remains committed to ensuring that the substantial long-term fund held by PNGSDP remains well governed for the benefit of the people of Papua New Guinea and the Western Province in particular.

Making a positive contribution to society

We know we are successful when our host communities value their relationship with us. Our aim is to work alongside host communities to help them achieve sustainable economic and social benefits, as well as diversified

and resilient local economies, so that these benefits continue beyond the life of our operations. Our broader contribution to local economies can be realised through indirect employment and our support of local businesses that provide a range of services and products, which enable our operations to function effectively.

Our operations around the world support local and national economies through creating jobs, providing infrastructure, purchasing goods and services and contributing significant payments of taxes and royalties to governments. By supplying many of our commodities to markets in developing countries, we also support economic development to help improve living standards and quality of life.

Improving the quality of life in our host communities

We aim to be partners with our host communities and are committed to understanding their needs and priorities. We seek to invest in projects that will continue to promote a benefit to the community beyond the life of the project. Using data from a social baseline study and social impact and opportunity assessment, we prepare a community development management plan. Community development projects and donations are required to be aligned to the overall community development management plan, implemented in consultation with local stakeholders, and meet our due diligence and anti-corruption requirements.

We voluntarily invest one per cent of our pre-tax profit, calculated on the average of the previous three years’ pre-tax profit, in community programs that aim to have a long-lasting, positive impact on people’s quality of life, including implementing new and supporting existing community projects. With a focus on improving quality of life, our community development programs are developed by working openly with governments and the communities in which we operate, and focusing on the needs and resources of our key stakeholders. This is how we are contributing to economic and social development.

During FY2015, our voluntary community investment totalled US$225 million, comprising US$142 million cash, in-kind support and administrative costs, and a US$83 million contribution to the BHP Billiton Foundation. The BHP Billiton Foundation was established in FY2013 to identify and support large sustainable development projects in countries and regions of interest to BHP Billiton, in order to complement the local programs managed by our assets. This builds on contributions that have previously been paid to the BHP Billiton Sustainable Communities charitable organisation. At the end of FY2015, BHP Billiton Sustainable Communities had a total of US$62.5 million and the BHP Billiton Foundation had a total of US$219.2 million in funds available for future sustainable development projects.

Community investment (US$M)


Year ended 30 June	2015		2014		2013
Expenditure⁽¹⁾ (including in-kind support and administrative costs)		142.0		141.7		139.8
Contribution into BHP Billiton Sustainable Communities and BHP Billiton Foundation		83.0		100.0		106.0

Total Community investment		225.0		241.7		245.8

⁽¹⁾	Includes BHP Billiton’s ~~Onshore~~equity share for both operated and non-operated joint venture operations. Includes payments made by operations demerged with South32.

BHP Billiton Social Investment Framework

During FY2015, we developed a new BHP Billiton Social Investment Framework to guide our approach to voluntary social investment (social and environmental programs with net social benefit) between FY2016 and FY2020, providing a unified and integrated framework across our Company. The Framework is the outcome of an extensive review of BHP Billiton’s existing approach to social investment and has been informed by a thorough analysis of information about our internal and external operating context. Specific inputs to the review

included our material sustainability risks, emerging global trends and the stakeholder needs and expectations of our host communities. Using this information to inform our Social Investment Framework has ensured a strong linkage between our business and social investment objectives.

BHP Billiton is committed to ensuring our significant social investment adds value to the communities in which we operate and leaves behind a lasting change. Details of our new Social Investment Framework can be found in our Sustainability Report 2015.

1.15 Additional information

1.15.1 External factors and trends

The following section describes some of the external factors and trends that have had a material impact on our financial condition and results of operations. We operate our business in a dynamic and changing environment and with information that is rarely complete and exact. We primarily manage the risks discussed in this section under our portfolio risk management approach, which relies on the effects of diversification, rather than individual risk management programs. Details of our risk factors can be found in section 1.7.2 of this Annual Report. Details of our financial risk management strategies and financial instruments outstanding at 30 June 2015 can be found in section 1.7.3 of this Annual Report and in note 23 ‘Financial risk management’ to the Financial Statements.

Management monitors particular trends arising from external factors with a view to managing the potential impact on our future financial condition and results of operations. The following external factors could have a material adverse effect on our business and areas where we make decisions on the basis of information that is incomplete or uncertain.

Commodity prices

The prices we obtain for our products represent a key driver of our business, and fluctuations in these commodity prices affect our results, including cash flows and asset values. The estimated impact on FY2015 profit after taxation of changes of commodity prices is set out below.


	US$M
US$1/bbl on oil price		54
US¢10/MMBtu on US ~~capital expenditure~~gas price		27
US¢1/lb on copper price		24
US$1/t on iron ore price		144
US$1/t on metallurgical coal price		23
US$1/t on energy coal price		11
US¢1/lb on nickel price		2

Commodity markets were influenced by modest growth in global economic activity in FY2015. Solid momentum in the US economy, supported by improved growth in the Eurozone and Japan, saw developed economies contribute an improved share of activity relative to emerging markets. A number of emerging economies, including China, saw growth slow while Russia and Brazil experienced recessions. In the case of most steelmaking raw materials and energy commodities, supply growth was greater than demand growth resulting in lower prices. The price for crude oil dropped significantly, while the Henry Hub gas price declined on higher supply and increased inventory levels relative to the previous year. The Asian LNG price dropped on greater

supply and lower oil prices. The copper price was also lower as supply disruptions were offset by weaker than expected consumption. Although aluminium demand grew, supply exceeded consumption due to increasing production from China. In the manganese market, the supply side response to weak demand growth was slower than expected resulting in a decrease in prices.

The following tables show the prices for our most significant commodities for the years ended 30 June 2015, 2014 and 2013, on both a Continuing and Discontinued operations basis. These prices represent selected quoted prices from the relevant sources as indicated, and will differ from the realised prices on the sale of the Group’s production due to differences in quotation periods, quality of products, delivery terms and the range of quoted prices that are used for contracting sales in different markets.

Continuing operations


Year ended 30 June	2015 Closing		2014 Closing		2013 Closing		2015 Average		2014 Average		2013 Average
Natural gas Henry Hub⁽¹⁾ (US$/MMBtu)		2.81		4.39		3.73		3.32		4.25		3.44
Natural gas Asian Spot LNG⁽²⁾ (US$/MMBtu)		7.30		11.28		15.40		9.74		16.38		15.14
Crude oil (Brent)⁽³⁾ (US$/bbl)		61.05		111.02		102.46		73.91		109.36		108.64
Ethane⁽⁴⁾ (US$/bbl)		8.40		12.02		9.92		8.56		11.92		12.15
Propane⁽⁵⁾ (US$/bbl)		16.25		44.47		35.52		29.34		48.05		37.31
Butane⁽⁶⁾ (US$/bbl)		23.89		54.39		49.51		36.89		56.70		61.74
Copper (LME cash) (US$/lb)		2.60		3.15		3.06		2.89		3.18		3.48
Iron ore⁽⁷⁾ (US$/dmt)		59.50		93.25		116.25		71.61		122.70		127.23
Metallurgical coal⁽⁸⁾ (US$/t)		88.00		110.50		130.00		102.91		128.40		159.13
Energy coal⁽⁹⁾ (US$/t)		61.66		70.89		78.89		64.37		78.38		89.10
Nickel (LME cash) (US$/lb)		5.30		8.49		6.21		7.02		6.88		7.43

⁽¹⁾	Platts Gas based on Henry Hub – typically applies to gas sales in ~~FY2013~~the US gas market.

⁽²⁾	Platts Liquefied Natural Gas Delivery Ex-Ship (DES) Japan/Korea Marker – typically applies to Asian LNG spot sales.

⁽³⁾	Platts Dated Brent is ~~expected~~a benchmark price assessment of the spot market value of physical cargoes of North Sea light sweet crude oil.

⁽⁴⁾	OPIS Mont Belvieu non-Tet Ethane – typically applies to ~~rise~~ethane sales in the US Gulf Coast market.

⁽⁵⁾	OPIS Mont Belvieu non-Tet Propane – typically applies to ~~US$4.0 billion~~propane sales in the US Gulf Coast market.

⁽⁶⁾	OPIS Mont Belvieu non-Tet Normal Butane – typically applies to butane sales in the US Gulf Coast market.

⁽⁷⁾	Platts 62 per cent Fe Cost and Freight (CFR) China – used for fines.

⁽⁸⁾	Platts Low-Vol hard coking coal Index FOB Australia – representative of high-quality hard coking coals.

⁽⁹⁾	GlobalCOAL FOB Newcastle 6,000kcal/kg NCV – typically applies to coal sales in the ~~program~~Asia Pacific market.

The following summarises the average and closing pricing trends of our most significant commodities for FY2015.

Natural gas Henry Hub: The Platts US Henry Hub natural gas price decreased by 22 per cent during FY2015. The decrease was a result of increased production growth, partially offset by consumption growth in the power sector. Natural gas inventories ended the year at 2,577 Billion cubic feet (Bcf), one per cent above the five-year average and 35 per cent higher year-on-year. The year-end price was 15 per cent below the average for the year. Since 30 June 2015, the US Henry Hub natural gas price decreased five per cent on 31 August 2015.

Natural gas Asian Spot LNG: The Asian liquefied natural gas spot price decreased by 41 per cent during FY2015. The decrease was driven by weaker north Asian end-user demand and ample global supply availability. In turn, this allowed for more spot purchases on lower prices and provided some support for Asian buyers to maintain higher inventory levels. Meanwhile, the drop in crude oil prices has had a lagged negative impact on oil-linked LNG contracts in the second half of FY2015. The year-end price was 25 per cent below the average for the year.

Crude oil: The Platts Dated Brent crude price decreased by 32 per cent during FY2015 following increases in global crude supply, particularly from US production, growing faster than demand. Libyan supply outages returned to market in the latter half of CY2014, and OPEC decided to maintain its production levels. The year-end price was 17 per cent below the average for the year. Since 30 June 2015, the Dated Brent crude price decreased 21 per cent on 28 August 2015.

NGL: A barrel of natural gas liquids consists mainly of ethane and liquefied petroleum gas (propane and butane). The Mont Belvieu ethane and propane price decreased by 28 per cent and 39 per cent, respectively, during FY2015 following increases in ethane and propane supply. Mont Belvieu butane prices decreased by 35 per cent during FY2015 following a decrease in the West Texas Intermediate oil price. The year-end propane and butane prices were 45 per cent and 35 per cent below the average for the year, respectively. Since 30 June 2015, the Mont Belvieu ethane price decreased seven per cent and the Mont Belvieu propane price increased nine per cent on 31 August 2015.

Copper: The London Metal Exchange (LME) copper cash settlement price decreased by nine per cent in FY2015. The copper price trended downwards during the first seven months amid improved supply, weaker than anticipated consumption and the strengthening of the US dollar. The price decreased to a five-year low in mid-January on short-selling by Chinese-backed hedge funds. The price increased in February, impacted by Chilean supply disruption due to flooding, while softening of Chinese demand dampened prices since May. Since 30 June 2015, the copper price decreased 11 per cent on 28 August 2015.

Iron ore: The Platts 62 per cent iron ore CFR China decreased 42 per cent over FY2015 as low-cost seaborne iron ore supply outpaced demand growth. Productivity and cost compression on the supply side also impacted price as mining companies lowered their cost structures in response to the changed environment. The year-end price was 17 per cent below the average price for the year. Since 30 June 2015, the iron ore CFR price decreased six per cent on 31 August 2015.

Metallurgical coal: The Platts Low-Vol Hard Coking Coal Index decreased by 20 per cent during FY2015. While demand from traditional markets recovered steadily, the price decrease was mainly driven by continuing supply growth and weak Chinese demand. The year-end price was 15 per cent below the average price for the year. Since 30 June 2015, the Hard Coking Coal Index decreased eight per cent on 31 August 2015.

Energy coal: The globalCOAL Newcastle FOB price decreased by 18 per cent during FY2015. The decrease was driven by weak Chinese seaborne demand, despite healthy growth from India, and sustained supply from Australia and Indonesia supported by depreciating currencies. Since 30 June 2015, the Newcastle energy coal price decreased seven per cent on 31 August 2015.

Nickel: The LME cash settlement nickel price increased two per cent during FY2015 though the price decreased over the course of the financial year driven by weak demand and adequate supply, as evidenced by rising LME stocks. The year-end price was 25 per cent below the average price for the year. Since 30 June 2015, the nickel price decreased 14 per cent on 28 August 2015.

Discontinued operations


Year ended 30 June⁽¹⁾	2015 Closing		2014 Closing		2013 Closing		2015 Average		2014 Average		2013 Average
Aluminium (LME cash) (US$/t)		1,647		1,851		1,731		1,880		1,764		1,938
Alumina⁽²⁾ (US$/t)		323		312		318		339		321		327
Manganese Alloys⁽³⁾ (US$/t)		821		999		1,038		879		1,020		1,106
Manganese Ores⁽⁴⁾ (US$/dmtu)		2.98		4.20		5.54		3.89		4.95		5.29

⁽¹⁾

Post-demerger BHP Billiton’s results will ~~include drilling~~not be impacted by fluctuations in the prices of commodities (aluminium, alumina, manganese alloys and ~~completion, gas processing facilities~~ores) that no longer form part of post-demerger operations. Refer to section 1.6.4 for more details.

⁽²⁾	Platts PAX Free on Board (FOB) Australia – market price assessment of calcined metallurgical/smelter grade alumina.

⁽³⁾	Bulk FerroAlloy high carbon ferromanganese (HCFeMn) Western Europe DDP.

⁽⁴⁾	Metal Bulletin manganese ore 44 per cent Mn Cost Insurance Freight (CIF).

The FY2015 pricing trends for the commodities that comprise our Discontinued operations were as follows:

Aluminium: The LME cash settlement price increased by seven per cent during FY2015. However, price premiums in Japan, Europe and the United States ended lower, reflecting the market surplus on increasing production from China. The year-end price was 12 per cent below the average for the year.

Alumina: The FOB Australia price increased six per cent during FY2015, supported by a lack of bauxite availability as a result of the Indonesian ore ban, and growing demand from China.

Manganese: The Metal Bulletin manganese ore China CIF price decreased 21 per cent during FY2015. Demand growth slowed and the market was well supplied amid high Chinese inventories. The year-end price was 23 per cent below the average price for the year. The Western Europe spot high carbon ferromanganese price decreased 14 per cent during FY2015, driven by persistent oversupply and the currency depreciation of major producers in India, Australia, South Africa and Europe.

Exchange rates

We remain exposed to exchange rate transaction risk on foreign currency sales and purchases, as we believe active currency hedging does not provide long-term benefits to our shareholders. Operating costs and costs of locally sourced equipment are influenced by fluctuations in local currencies, primarily the Australian dollar and Chilean peso. Foreign exchange gains and losses reflected in operating costs owing to fluctuations in the local currencies relative to the US dollar may potentially offset one another. The majority of our sales are denominated in US dollars and we borrow and hold surplus cash predominately in US dollars; those transactions and balances provide no foreign exchange exposure relative to the US dollar functional currency of the Group.

The US dollar strengthened against our main local currencies during FY2015, resulting in stronger average US dollar rates versus the Australian dollar and Chilean peso. Average and closing exchange rates for current and prior periods are contained within note 42 ‘Functional and presentation currency’ to the Financial Statements.

We are also exposed to exchange rate translation risk in relation to net monetary liabilities, being our foreign currency denominated monetary assets and liabilities, including certain debt and other long-term liabilities. Details of our exposure to foreign currency fluctuations are contained within note 23 ‘Financial risk management’ to the Financial Statements.

Changes in product demand and supply

The global economy grew at a modest rate in FY2015 with a mild improvement in developed economies offsetting a moderation in emerging markets.

In China, a slowdown in the property sector and fixed asset investment led to lower economic growth following policy tightening in CY2014. Consumer spending remained resilient reflecting the continued rebalancing of the economy. A number of interest rate reductions, cuts in bank reserve requirements, boosts to infrastructure spending and administrative measures supporting the property market are likely to buttress growth over the remainder of CY2015. In line with our expectations, the economy is growing more slowly, though off a higher base, as it matures over the medium term and the government’s reform program promotes domestic consumption over investment. We expect near-term volatility to continue as the authorities press ahead with reform in a cautious but sustained manner as they seek to improve the efficiency of capital allocation in the economy while maintaining support for employment. However, our robust longer-term outlook for China remains intact as the economy transitions.

The European Central Bank began a program of quantitative easing in March 2015, which appears to be driving a modest pick-up in economic growth. Activity has improved across the Eurozone, with the exception of Greece, reflecting a broad-based lift in domestic demand and we expect the improvement in growth to continue in FY2016.

Commodity prices generally trended downwards in FY2015, with prices for most of our commodities notably lower going into the new financial year.

Chinese steel production declined by 1.3 per cent in the second half of FY2015 versus the corresponding period in FY2014, triggered largely by a slowing construction sector. New construction starts were lower this year due to considerable levels of existing stock. Although China’s steel exports are at an all-time high, we expect subdued crude steel production growth over the remainder of CY2015 with some upside potential should the construction sector recover. However, with steel stock per capita still well below that of developed nations, we expect moderate but sustainable growth in Chinese steel production over the next decade. An extended view on the life cycle of steel usage has resulted in a lower but longer plateau for crude steel production, peaking between 935 Mt and 985 Mt in the middle of the next decade. The implications for pig iron demand, and therefore iron ore and metallurgical coal, are mitigated in the medium term by lower scrap availability as the scrap cycle in China will take longer to develop. Outside China, steel production growth is improving steadily driven by India, the Middle East and South-East Asia.

The supply of most steelmaking raw materials has grown faster than demand. In iron ore, we estimate that approximately 100 Mt of incremental lower cost seaborne supply will enter the market in CY2015, outweighing demand growth. In this context, higher cost Chinese domestic production, along with high-cost seaborne exports, continues to exit the market. Private mines in China have seen their operating rates fall from approximately 90 per cent in CY2011 to approximately 35 per cent today. Many producers have also cut their costs. As a result, the iron ore cost curve has both flattened and fallen from previous levels.

In metallurgical coal, while uneconomic high-cost supply has slowly withdrawn from the seaborne market, prices remain subdued as industry-wide cost reductions and weaker producer currencies against the US dollar support continued production from marginal suppliers. Recent quality restrictions have also weakened China’s import demand but this was partially offset by growth in traditional markets. The long-term outlook remains robust as the supply of premium hard coking coals becomes scarce.

Depreciating currencies have sustained Indonesian and Australian thermal coal exports, prolonging the weak pricing environment. Despite healthy seaborne demand growth from India, China’s import demand has weakened, limiting prospects for price recovery in the near term.

In copper, prices were affected by weaker than expected consumption and the strengthening US dollar. In the near term, new supply under development is expected to keep the market well supplied. However, a deficit is expected to emerge at the end of this decade as grade decline, rising costs and a scarcity of high-quality future development opportunities are likely to constrain the industry’s ability to meet attractive demand growth.

Global crude oil demand growth was outpaced by supply growth putting pressure on prices throughout the year. Despite strong demand growth, liquids supply exceeded demand by 2.6 MMboe/d in the second half of FY2015. We expect prices to remain range bound in the short term due to available supply capacity from the United States and OPEC. The long-term demand outlook remains healthy, underpinned by the transport sector, notably in the Asian region.

US natural gas prices declined during the year as production growth was only partially offset by increased consumption in the power sector. In the longer term, demand is expected to benefit from increasing industrial use, growth in gas-fired power generation and the start of LNG exports. As core acreage is depleted, less productive and higher cost shale areas will be required to meet growing demand. In the LNG market, weaker North Asian end-user demand and ample supply have kept prices subdued.

We expect modest growth of the global economy. In the longer term, urbanisation and industrialisation will remain the primary drivers of commodity demand. The transition to consumption-led growth in emerging economies should provide particular support for industrial metals, energy and fertilisers.

Capital expenditure

Capital expenditure is important in pursuing our strategy through the development of large-scale resource projects and in sustaining our existing operations. Capital expenditure is disclosed for each Business in section 1.6.3 of this Annual Report.

Operating costs

As the prices for our products are determined by the global commodity markets in which we operate, we do not generally have the ability to offset cost pressures through corresponding price increases; therefore, controlling our operating costs is a key driver of our results. Operating costs for the last three years are set out in section 1.11.1 as well as an analysis of the change in Total expenses. Further analysis of the factors that impacted expenses during FY2015 is set out below and in section 1.15.3.

In discussing the factors that affected Total expenses, we refer to the change in operating cash costs and change in exploration and business development. Collectively we refer to these as change in controllable cash costs. Operating cash costs by definition do not include non-cash costs being depreciation, amortisation, impairments,

movements in deferred stripping balances and movements in provisions. The change in operating cash costs also excludes the impact of exchange rates and inflation on the actual costs incurred in the corresponding period, changes in fuel and energy costs, changes in exploration and business development costs and one-off items. These items are excluded so as to provide a consistent measurement of changes in costs across all the Businesses based on the factors that are within their control and responsibility.

Change in operating cash costs and change in controllable cash costs are not measures that are recognised under International Financial Reporting Standards (IFRS) and they may differ from similarly titled measures reported by other companies. A reconciliation of the movements in Underlying EBIT to the financial statement line items in the Consolidated Income Statement is included in section 2.5 of this Annual Report.

Our focus on reducing operating costs through productivity initiatives saw a decrease in operating cash costs of US$2.7 billion and a reduction in exploration and business development of US$29 million for a combined reduction in controllable cash costs of US$2.7 billion. In addition, the improvement in operating costs was complemented by favourable exchange rate impacts of US$1.7 billion. These improvements were partially offset by inflation of US$433 million and an increase in the production costs associated with higher volumes of US$3.2 billion. With higher depreciation and amortisation charges of US$1.4 billion and higher impairment charges of US$350 million. Total expenses excluding exceptional items of US$3.2 billion decreased from US$36.5 billion to US$33.8 billion.

Exploration and development of resources

Minerals exploration

Over the past six years, brownfield exploration has increased our reserve base around our portfolio of existing assets in large resource basins, which now provide us with growth opportunities. This has allowed us to reduce brownfield exploration expenditure and rationalise our greenfield exploration program.

Greenfield minerals (new sites) exploration is focused on advancing targets within Chile, Peru, southwestern United States and is organised through our Copper Business. Greenfield activities include opportunity identification, application for and acquisition of mineral title, early reconnaissance operations and multi-million dollar delineation drilling programs.

In addition to our activities focused on finding new world-class deposits, several of our Businesses undertake brownfield exploration, principally aimed at delineating and categorising mineral deposits near existing operations, and advancing projects through the development pipeline.

Our expenditure on minerals exploration over the last three financial years is set out below.


Year ended 30 June	2015		2014		2013
Year ended 30 June	US$M		US$M Restated		US$M Restated
Greenfield exploration		55		46		179
Brownfield exploration		194		340		467

Total minerals exploration⁽¹⁾		249		386		646

⁽¹⁾	Excludes minerals exploration from Discontinued operations.

The Group’s minerals exploration expenditure declined by 36 per cent in FY2015 to US$249 million as we sharpened our focus on advancing copper targets within Chile, Peru and southwestern United States.

Petroleum exploration

We have reduced exploration expenditure in Petroleum over recent years with a focus on high-impact liquids opportunities in the Gulf of Mexico, Western Australia and Trinidad and Tobago.

Year ended 30 June

2015
US$M

2014
US$M

2013
US$M

Petroleum exploration

567

600

675

Exploration expense

Exploration expense represents that portion of exploration expenditure that is not capitalised in accordance with our accounting policies, as set out in note 43 ‘Significant accounting policies’ to the Financial Statements.

Exploration expense for each Business over the three-year period is set out below.


Year ended 30 June	2015 US$M		2014 US$M Restated		2013 US$M Restated
Year ended 30 June	2015 US$M		2014 US$M Restated		2013 US$M Restated
Exploration expense^{(1) (2)}
Petroleum and Potash		532		544		709
Copper		90		111		266
Iron Ore		38		56		74
Coal		20		29		32
Group and unallocated items		18		30		47

BHP Billiton Group		698		770		1,128

⁽¹⁾	Excludes exploration expenses from Discontinued operations.

⁽²⁾	Includes US$28 million (2014: US$72 million; 2013: US$102 million) exploration expense previously capitalised, written off as impaired.

Following our focus on productivity and reducing costs, the reduction in the Group’s exploration expense, excluding impairment of exploration expenditure previously capitalised, increased Underlying EBIT in FY2015 by US$28 million.

Interest rates

We are exposed to interest rate risk on our outstanding borrowings and investments. Our policy on interest rate exposure is to pay or receive on a US dollar floating interest rate basis. To achieve this policy, we often use derivative financial instruments, including cross currency and interest rate swaps, to convert an underlying exposure to a US dollar floating rate exposure. Deviation from our policy requires approval from our Financial Risk Management Committee and is managed within our portfolio risk management approach.

Our earnings are sensitive to changes in interest rates on the floating component of the Group’s net borrowings. Our main exposure is to the 3 month US LIBOR benchmark, which increased by 0.010 per cent in FY2015 to an average of 0.252 per cent. Further information, including the Group’s sensitivity to movements in interest rates, can be found in note 23 ‘Financial risk management’ to the Financial Statements.

Health, safety, environment and community

We operate in an industry where many of our activities are highly regulated by laws governing health, safety and the environment. We are committed to compliance with the laws and regulations of the countries in which we

operate and, where applicable, to exceeding legal and other requirements which are less stringent than our own. However, regulatory standards and community expectations are constantly evolving. As a result, we may be exposed to increased litigation, compliance costs and unforeseen environmental rehabilitation expenses, despite our best efforts to work with governments, community groups and scientists to keep pace with regulations, law and public expectations.

Further information about our compliance with HSEC regulations can be found in section 1.14 of this Annual Report.

Insurance

During FY2015, we maintained an insurance program encompassing property damage, business interruption, sabotage and terrorism, marine cargo, construction, directors’ and officers’ liability and public and certain other liabilities. The program includes a combination of self-insurance via subsidiary captive insurance companies, industry mutuals and external market insurance and reinsurance. Mandates are established as to risk retention levels, policy cover and, where applicable, insurance and reinsurance counterparty security. As part of our portfolio risk management approach, we regularly conduct an assessment of maximum foreseeable loss potential, cash flow at risk, loss experience, claims received and insurance premiums paid, and will make adjustments to the balance of self-insurance and external insurance and reinsurance as required.

The Group is largely self-insured for losses arising from property damage and business interruption, sabotage and terrorism, marine cargo, construction, primary public liability and employee benefits. For these risks, we internally insure our Businesses (for wholly owned assets and, where permissible, by local insurance regulation and/or commercial market terms our share of joint venture assets) via our captive insurance companies. Any losses incurred will consequently impact the Financial Statements as they arise.

1.15.2 Application of critical accounting policies

The preparation of the Consolidated Financial Statements requires management to make judgements and estimates and form assumptions that affect the amounts of assets, liabilities, contingent liabilities, revenues and expenses reported in the Financial Statements. On an ongoing basis, management evaluates its judgements and estimates in relation to assets, liabilities, contingent liabilities, revenue and expenses. Management bases its judgements and estimates on historical experience and on other factors it believes to be reasonable under the circumstances, the results of which form the basis of the reported amounts that are not readily apparent from other sources. Actual results may differ from these estimates under different assumptions and conditions.

The Group has identified the following critical accounting policies under which significant judgements, estimates and assumptions are made and where actual results may differ from these estimates under different assumptions and conditions and may materially affect financial results or the financial position reported in future periods:

reserve estimates;

exploration and evaluation expenditure;

development expenditure;

taxation;

property, plant and equipment and intangible assets – recoverable amount; and

provision for closure and rehabilitation.

In accordance with IFRS, we are required to include information regarding the nature of the estimates and judgements and potential impacts on our financial results or financial position in the Financial Statements. This information can be found in note 44 ‘Application of accounting estimates, assumptions and judgements’ to the Financial Statements.

1.15.3 Operating results

The following table describes the approximate impact of the principal factors that affected Underlying EBIT for FY2015 and FY2014. Underlying EBIT is earnings before net finance costs, taxation, Discontinued operations and any exceptional items.


Year ended 30 June	2015 US$M			2014 US$M Restated
Year ended 30 June	2015 US$M			2014 US$M Restated
Underlying EBIT		22,098			21,680
Net price impact:
Change in sales prices		(16,433	)		(2,639	)
Price-linked costs		1,209			(111	)

		(15,224	)		(2,750	)

Change in volumes:
Productivity		1,220			1,029
Growth		1,822			1,929

		3,042			2,958

Change in controllable cash costs:
Operating cash costs		2,678			1,131
Exploration and business development		29			398

		2,707			1,529

Change in other costs:
Exchange rates		1,567			1,188
Inflation on costs		(433	)		(575	)
Fuel and energy		518			(3	)
Non-cash		(1,304	)		(1,737	)
One-off items		(456	)		–

		(108	)		(1,127	)

Asset sales		(72	)		61
Ceased and sold operations		22			(349	)
Share of operating profit from equity accounted investments		(637	)		43
Other		38			53

Underlying EBIT		11,866			22,098

The method of calculation of the factors that affected Underlying EBIT and the Financial Statement line items of Revenue, Other income and Expenses (excluding net finance costs) that are affected by the factors are as follows.


Factor affecting Underlying EBIT	Method of calculation	Financial statement line item affected
Change in sales prices	Change in average realised price for each operation from the corresponding period to the current period, multiplied by current period volumes.	Revenue

Price-linked costs	Change in price-linked costs for each operation from the corresponding period to the current period, multiplied by current period volumes.	Expenses

Volumes – Productivity	Change in volumes for each operation not included in the Growth category from the corresponding period to the current period, multiplied by the prior year Underlying EBIT margin.	Revenue and ~~pipeline infrastructure.~~Expenses

Volumes – Growth	Volume – Growth comprises Underlying EBIT for operations that are new or acquired in the current period minus Underlying EBIT for operations that are new or acquired in the corresponding period, change in volumes for operations identified as a Growth project from the corresponding period to the current period multiplied by the prior year Underlying EBIT margin, and change in volume for Petroleum Business from the corresponding period to the current period multiplied by the prior year Underlying EBIT margin.	Revenue and Expenses

Operating cash costs	Change in total costs, other than price-linked costs, exchange rates, inflation on costs, fuel and energy costs, non-cash costs and one-off items as defined below for each operation from the corresponding period to the current period.	Expenses

Exploration and business development	Exploration and business development expense in the current period minus exploration and business development expense in the corresponding period.	Expenses

Exchange rates	Change in exchange rate multiplied by current period local currency revenue and expenses. The majority of the ~~activity will focus~~Group’s selling prices are denominated in US dollars and so there is little impact of exchange rate changes on Revenue.	Revenue and Expenses

Inflation on costs	Change in inflation rate applied to expenses, other than depreciation and amortisation, price-linked costs, exploration and business development expenses, expenses in ceased and sold operations and expenses in new and acquired operations.	Expenses

Fuel and energy	Fuel and energy expense in the current period minus fuel and energy expense in the corresponding period.	Expenses

Non-cash	Includes non-cash items, mainly depreciation, amortisation and impairments.	Expenses

One-off items	Change in costs exceeding a pre-determined threshold associated with an unexpected event that had not occurred in the last two years and is not reasonably likely to occur within the next two years.	Expenses

Factor affecting
Underlying EBIT
Method of calculation
Financial statement
line item affected
Asset sales
Profit/loss on the ~~liquids-rich Eagle Ford~~sale of assets or operations in the current period minus profit/loss on sale in the corresponding period. Other income
Ceased and ~~Permian fields. Development~~sold operations Underlying EBIT for operations that are ceased or sold operations in the current period minus Underlying EBIT for operations that are ceased or sold in the corresponding period. Revenue, Other income and Expenses
Share of ~~these liquids rich fields complements our traditional project pipeline. Development plans~~operating profit from equity accounted investments Share of operating profit from equity accounted investments for the period minus Share of operating profit from equity accounted investments in the corresponding period. Share of operating profit from equity accounted investments
Other
Variances not explained by the above factors. Revenue, Other income and Expenses

A reconciliation of the movements in Underlying EBIT for FY2015 to the Financial Statement line items in the Consolidated Income Statement is included in section 2.5 of this Annual Report.

The following commentary describes the principal factors outlined in the table above for FY2015 and FY2014.

Prices

Lower realised prices reduced Underlying EBIT by US$16.4 billion in FY2015. A 41 per cent decline in the average realised price of iron ore was the major contributor and reduced Underlying EBIT by US$9.5 billion. Weaker average realised prices for our Petroleum, Copper and Coal Businesses decreased Underlying EBIT by US$4.2 billion, US$1.6 billion and US$1.1 billion, respectively. A reduction in price-linked costs increased Underlying EBIT by US$1.2 billion and primarily reflected lower royalty charges in our Iron Ore Business.

Volumes

Productivity-led volume efficiencies and the ramp up of major projects underpinned a US$3.0 billion increase in Underlying EBIT. Western Australia Iron Ore (WAIO) was the major contributor as the improved performance of our integrated supply chain and the ramp-up of the Jimblebar mining hub supported a US$1.9 billion increase in Underlying EBIT. A doubling of liquids production from both Black Hawk and Permian supported a further US$799 million volume-related increase in Petroleum’s Underlying EBIT.

Controllable cash costs

Operating cash costs

Our focus on best-in-class performance underpinned a US$2.7 billion reduction in operating cash costs during FY2015.

A reduction in labour, contractor and maintenance costs increased Underlying EBIT by US$1.5 billion during the period. This was most evident in WAIO where the standardisation of our equipment and maintenance systems, and the insourcing of third party services facilitated a step change in the performance of our mining operations. Mining-related efficiencies contributed to a further US$580 million reduction in cash costs and largely reflected improved productivity at Escondida.

Exploration and business development

The Group’s exploration and business development expenditure was broadly in line with FY2014. Our exploration program remains focused on greenfield copper targets within Chile, Peru and the southwestern United States, and petroleum liquids opportunities in the Gulf of Mexico, Western Australia and Trinidad and Tobago.

Other costs

Exchange rates

A stronger US dollar increased Underlying EBIT by US$1.6 billion during the period. This included the restatement of monetary items in the balance sheet, which increased Underlying EBIT by US$637 million relative to FY2014. Further information can be found in note 42 ‘Functional and presentation currency’ to the Financial Statements.

Inflation on costs

The impact of inflation reduced Underlying EBIT by US$433 million during the period. This was most notable in Australia and Chile, which accounted for over 85 per cent of the total variance.

Fuel and energy

A reduction in diesel prices across our minerals businesses supported a US$518 million increase in Underlying EBIT.

Non-cash

An increase in non-cash charges reduced Underlying EBIT by US$1.3 billion during the period.

A US$839 million increase in non-cash charges in our Copper Business reflects: higher ore mined which resulted in increased depletion of stripping capitalised at Escondida; increased depreciation following the completion of the Escondida Oxide Leach Area Project; and a US$199 million impairment driven by a lower copper price and permitting uncertainty for the proposed mine life extension at Cerro Colorado.

A US$639 million increase in non-cash charges in our Petroleum Business reflects: US$316 million of higher depreciation and amortisation charges in Onshore US following the ramp-up of liquids production at Black Hawk and the progressive development of our Permian acreage; and US$328 million of impairment charges associated with the divestment of assets in north Louisiana and the Pecos field in the Permian. During the period, a US$79 million impairment of Neptune was also recognised as the fall in near-term oil prices has affected its value due to its short field life.

The decrease in non-cash charges relates to mine site rehabilitation provision charges recognised in FY2014 for the Group’s North American closed mines.

One-off items

One-off items recognised during the period comprise a US$268 million expense related to the mill outage at Olympic Dam and US$188 million costs associated with the implementation of the Escondida Voluntary Redundancy Program.

Asset sales

The contribution of asset sales to Underlying EBIT decreased by US$72 million from FY2014, which included the sale of Liverpool Bay.

Ceased and sold operations

Underlying EBIT from ceased and sold operations increased by US$22 million in FY2015. This largely reflected an unfavourable US$143 million adjustment to the Browse divestment proceeds, due to unitisation changes subsequent to the completion of the sale, offset by the closure of the Nickel West Leinster Perseverance underground mine, both during FY2014.

Share of operating profit from equity accounted investments

Lower average realised prices received by our equity accounted investments decreased Underlying EBIT US$637 million.

Net finance costs

Net finance costs decreased by US$300 million to US$614 million. The decrease reflected foreign exchange gains on finance leases and the early redemption of the Petrohawk Energy Corporation Senior Notes in August 2014, which resulted in a gain on redemption and lower interest expense.

Taxation expense

The Group’s adjusted effective tax rate, which excludes the influence of exchange rate movements, remeasurement of deferred tax assets associated with the Minerals Resource Rent Tax (MRRT) and exceptional items, was 31.8 per cent (30 June 2014: 32.2 per cent).

Total taxation expense, including royalty-related taxation, exceptional items and exchange rate movements, was US$3.7 billion, representing a statutory effective tax rate of 45.5 per cent (30 June 2014: 31.2 per cent).

Government imposed royalty arrangements calculated by reference to profits are reported as royalty-related taxation. An exceptional item of US$698 million tax expense (2014: US$ nil) was recognised on a Continuing operations basis for the derecognition of deferred tax assets upon the repeal of the MRRT legislation in Australia.

Adjusted effective tax rate is not an IFRS measure and is reconciled to the Statutory effective tax rate below:


	2015					2014
						Restated
Year ended 30 June	Profit before tax	Income tax expense	%			Profit before tax	Income tax expense	%
	US$M	US$M				US$M	US$M
Statutory effective tax rate	8,056	(3,666)		45.5	%	21,735	(6,780)		31.2	%
Less:
Exchange rate movements	–	339				–	(34)
Remeasurement of deferred tax assets associated with the MRRT	–	–				–	(170)
Exceptional items	3,196	(250)				(551)	166

Adjusted effective tax rate	11,252	(3,577)		31.8	%	21,184	(6,818)		32.2	%

Other royalty and excise arrangements that are not profit based are recognised as operating costs within Profit before taxation. These amounted to US$1.7 billion during the period (30 June 2014: US$2.4 billion).

Exceptional items


Year ended 30 June 2015	Gross			Tax			Net
	US$M			US$M			US$M
Exceptional items by category
Impairment of Onshore US assets		(2,787	)		829			(1,958	)
Impairment of Nickel West assets		(409	)		119			(290	)
Repeal of Minerals Resource Rent Tax legislation⁽¹⁾		–			(698	)		(698	)

		(3,196	)		250			(2,946	)

⁽¹⁾	Includes amounts attributable to non-controlling interests of US$(12) million.

The Group recognised an impairment charge of US$2.0 billion (after tax benefit) in relation to its Onshore US assets. The gas-focused Hawkville field accounts for the substantial majority of this charge reflecting its geological complexity, product mix, acreage relinquishments and amended development plans. The remainder relates to the impairment of goodwill associated with the Petrohawk acquisition.

On 12 November 2014, the Group announced that the review of its Nickel West business was complete and the preferred option, the sale of the business, was not achieved on an acceptable basis. As a result of operational decisions made subsequent to the conclusion of this process, an impairment charge of US$290 million (after tax benefit) was recognised in FY2015.

The legislation to repeal the MRRT in Australia took effect on 30 September 2014. As a result, the Group derecognised a MRRT deferred tax asset of US$809 million, and corresponding taxation charges of US$698 million related to Continuing operations and US$111 million related to Discontinued operations were recognised in FY2015.

Refer to note 2 ‘Exceptional items’ to the Financial Statements for more information.


Year ended 30 June 2014	Gross		Tax			Net
	US$M		US$M			US$M
Exceptional items by category
Sale of Pinto Valley		551		(166	)		385

		551		(166	)		385

On 11 October 2013, the Group announced it had completed the sale of its Pinto Valley mining operation for cash consideration of US$653 million, after working capital adjustments. A gain on sale of US$385 million (after tax expense) was recognised in FY2014.

Refer to note 2 ‘Exceptional items’ to the Financial Statements for more information. An analysis of exceptional items for FY2013 are included in section 2.5.5 of this Annual Report.

Discontinued operations

South32’s contribution to BHP Billiton’s FY2015 results comprised a US$753 million profit after taxation excluding exceptional items. Exceptional items comprised a tax expense of US$111 million related to the repeal of the MRRT and a net loss on demerger of US$2.2 billion (after tax benefit). This contribution has been included in Attributable loss after taxation from Discontinued operations of US$1.6 billion.

Third party sales

We differentiate sales of our production from sales of third party products due to the significant difference in profit margin earned on these sales. The table below shows the breakdown between our production and third party products.


Year ended 30 June⁽¹⁾	2015 US$M			2014 US$M Restated			2013 US$M Restated
Year ended 30 June⁽¹⁾	2015 US$M			2014 US$M Restated			2013 US$M Restated
Group production
Revenue		43,457			55,045			52,637
Related operating costs		(31,605	)		(32,962	)		(31,021	)

Underlying EBIT		11,852			22,083			21,616
Underlying EBIT Margin		27.3	%		40.1	%		41.1	%

Third party products
Revenue		1,179			1,717			1,223
Related operating costs		(1,165	)		(1,702	)		(1,159	)

Operating profit		14			15			64
Margin on third party products⁽²⁾		1.2	%		0.9	%		5.2	%

⁽¹⁾	Excluding exceptional items and Discontinued operations.

⁽²⁾	Operating profit divided by revenue.

We engage in third party trading for the following reasons:

Production variability and occasional shortfalls from our own assets means that we sometimes source third party materials to ensure a steady supply of product to our customers.

To optimise our supply chain outcomes, we may buy physical product from third parties.

In order to support the development of liquid markets, we will sometimes source third party physical product and manage risk through both the physical and financial markets.

1.15.4 Cash flow analysis

A Consolidated Cash Flow Statement is contained in the Financial Statements. The explanatory notes appear in note 37 ‘Notes to the consolidated cash flow statement’ to the Financial Statements. A summary table has been presented below to show the key sources and uses of cash.


Year ended 30 June	2015 US$M			2014 US$M Restated			2013 US$M Restated
Year ended 30 June	2015 US$M			2014 US$M Restated			2013 US$M Restated
Cash generated from operations		21,620			29,318			27,026
Dividends received		740			1,264			716
Net interest paid		(541	)		(795	)		(848	)
Taxation paid		(4,025	)		(6,147	)		(7,877	)

Net operating cash flows from Continuing operations		17,794			23,640			19,017

Net operating cash flows from Discontinued operations		1,502			1,724			1,137

Net operating cash flows		19,296			25,364			20,154

Purchases of property plant and equipment		(11,947	)		(15,224	)		(21,104	)
Exploration expenditure		(816	)		(986	)		(1,321	)
Exploration expenditure expensed and included in operating cash flows		670			698			1,026
Purchases of intangibles		(98	)		(192	)		(380	)
Investment in financial assets		(15	)		(1,168	)		(455	)
Investment in equity accounted investments		(71	)		(44	)		(84	)
Net proceeds from investing activities		775			1,782			4,697

Net investing cash flows from Continuing operations		(11,502	)		(15,134	)		(17,621	)

Net investing cash flows from Discontinued operations		(1,066	)		(700	)		(1,105	)

Cash disposed on demerger of South32		(586	)		–			–

Net investing cash flows		(13,154	)		(15,834	)		(18,726	)

Net (repayment of)/proceeds from interest bearing liabilities		(728	)		(1,011	)		7,255
Dividends paid		(7,052	)		(6,506	)		(6,945	)
Contributions from non-controlling interests		53			1,435			73
Other financing activities		(346	)		(354	)		(433	)

Net financing cash flows from Continuing operations		(8,073	)		(6,436	)		(50	)

Net financing cash flows from Discontinued operations		(203	)		(32	)		(148	)

Net financing cash flows		(8,276	)		(6,468	)		(198	)

Net (decrease)/increase in cash and cash equivalents from Continuing operations		(1,781	)		2,070			1,346

Net increase/(decrease) in cash and cash equivalents from Discontinued operations		233			992			(116	)

Cash disposed on demerger of South32		(586	)		–			–

Net operating cash flows from Continuing operations after interest and tax decreased by 25 per cent to US$17.8 billion during FY2015. The major contributor was the US$7.7 billion decrease in cash generated from operations (after changes in working capital balances), which was partially offset by a decrease of US$2.1 billion in net taxes paid.

Net investing cash outflows from Continuing operations decreased by US$3.6 billion to US$11.5 billion during FY2015 and reflected a US$3.4 billion reduction in capital and exploration expenditure. Expenditure on growth projects totalled US$9.3 billion, including US$4.5 billion on Petroleum projects and US$4.8 billion on Minerals projects. Sustaining capital expenditure and other items totalled US$2.6 billion. Exploration expenditure was US$816 million, including US$670 million classified within net operating cash flows.

Net financing cash outflows from Continuing operations increased by US$1.6 billion to US$8.1 billion. A decrease in proceeds from interest bearing liabilities of US$2.6 billion, a decrease in contributions fromnon-controlling interests of US$1.4 billion and higher dividends paid to non-controlling interests of US$435 million were partially offset by a decrease in repayments of interest bearing liabilities of US$2.9 billion during FY2015.

1.15.5 Net debt and sources of liquidity

Our policies on debt and liquidity management pursue the following objectives:

a solid ‘A’ credit rating;

gearing to be a maximum of 40 per cent;

diversification of funding sources;

maintain borrowings and excess cash predominantly in US dollars.

Gearing and net debt

Net debt, comprising Interest bearing liabilities less Cash and cash equivalents, was US$24.4 billion, which represented a decrease of US$1.4 billion compared with the net debt position at 30 June 2014. Gearing, which is the ratio of net debt to net debt plus net assets, was 25.7 per cent at 30 June 2015, compared with 23.2 per cent at 30 June 2014. IFRS 5/AASB 5 ‘Non-current Assets Held for Sale and Discontinued Operations’ does not require the Consolidated Balance Sheet to be restated for comparative periods. The FY2014 figures therefore includes assets and liabilities of the Businesses demerged with South32. For information relating to Discontinued operations refer to note 29 ‘Discontinued operations’ to the Financial Statements.

Cash and cash equivalents less overdrafts at 30 June 2015 was US$6.6 billion compared with US$8.8 billion at 30 June 2014. Included within Cash and cash equivalents were short-term deposits of US$5.8 billion compared with US$7.1 billion at 30 June 2014.

Funding sources

During FY2015, we issued the following long-term debt:

In March 2015, we issued an A$1.0 billion 3.000 per cent Australian bond due 2020.

In April 2015, we issued a three tranche Euro bond comprising €600 million Floating Rate Notes due 2020 paying three-month Euribor plus 0.350 per cent, €650 million 0.750 per cent bonds due 2022 and €750 million 1.500 per cent bonds due 2030.

None of our Group-level borrowing facilities are subject to financial covenants. Certain specific financing facilities in relation to specific Businesses are the subject of financial covenants that vary from facility to facility, but which would be considered normal for such facilities.

In addition to the Group’s uncommitted debt issuance programs, we hold the following committed standby facilities.

Facility
available
2015

Drawn
2015

Undrawn
2015

��

Facility
available
2014

Drawn
2014

Undrawn
2014

US$M

Revolving credit facility⁽¹⁾

6,000

–

6,000

–

6,000

Total financing facilities

6,000

–

6,000

–

6,000

⁽¹⁾

The Group’s committed US$6.0 billion revolving credit facility operates as a back-stop to the Group’s uncommitted commercial paper program. The combined amount drawn under the facility or as commercial paper will ~~remain flexible~~not exceed US$6.0 billion. As at 30 June 2015, US$ nil commercial paper was drawn (2014: US$ nil), therefore US$6.0 billion of committed facility was available to use (2014: US$6.0 billion). The revolving credit facility has a five-year maturity with one remaining one-year extension option. A commitment fee is payable on the undrawn balance and ~~aligned~~an interest rate comprising an interbank rate plus a margin applies to any drawn balance. The agreed margins are typical for a credit facility extended to a company with the ~~external environment.~~Group’s credit rating.

Additional information regarding the maturity profile of our debt obligations and details of our standby and support agreements is included in note 23 ‘Financial risk management’ to the Financial Statements.

The Group’s credit ratings are currently A1/P-1 (Moody’s – long-term/short-term) and A+/A-1 (Standard & Poor’s – long-term/short-term). The credit ratings from both agencies remained unchanged in FY2015, however on 4 May 2015 Standard & Poor’s revised the Group’s ratings outlook to negative from stable.

1.15.6 Other information

Quantitative and qualitative disclosures about market risk

We identified our primary market risks in section 1.15.1 of this Annual Report. A description of how we manage our market risks, including both quantitative and qualitative information about our market risk sensitive instruments outstanding at 30 June 2015, is contained in note 23 ‘Financial risk management’ to the Financial Statements.

Off-balance sheet arrangements and contractual commitments

Information in relation to our material off-balance sheet arrangements, principally contingent liabilities, commitments for capital expenditure and commitments under leases at 30 June 2015 is provided in note 34 ‘Commitments’ and note 35 ‘Contingent liabilities’ to the Financial Statements.

Subsidiary information

Information about our significant subsidiaries is included in note 30 ‘Subsidiaries’ to the Financial Statements.

Related party transactions

Related party transactions are outlined in note 33 ‘Related party transactions’ to the Financial Statements.

Significant changes since the end of the year

Significant changes since the end of the year are outlined in note 36 ‘Subsequent events’ to the Financial Statements.

The Strategic Report is made in accordance with a resolution of the Board.

Jac Nasser AO

Chairman

Dated: 10 September 2015

2 Business overview

2.1 Business Groups

2.1.1 Petroleum and Potash Business

Our Petroleum and Potash Business headquartered in Houston, United States, comprises conventional and non-conventional oil and gas operations and a potash project based in Saskatchewan, Canada.

Petroleum

Our Petroleum Business includes exploration, development, production and marketing activities. We have a high-quality resource base concentrated in the United States and Australia. Our core production operations are located in the US Gulf of Mexico, Australia and Trinidad and Tobago (conventional) and Onshore US (unconventional). We produce crude oil and condensate, gas and natural gas liquids (NGLs).

Our overall production for FY2015 was 255.7 million barrels of oil equivalent (MMboe). This was mainly attributable to our US and Australian operations, which produced 162.3 MMboe and 77.7 MMboe, respectively, with the majority of US production coming from Onshore US, which produced 125.7 MMboe. Operations outside Australia and the United States delivered the remaining production volumes. Information relating to our oil and gas reserves is set out in section 2.3.1.

In line with our aim of simplification and a sharper strategic focus, we continue to evaluate our existing portfolio in order to optimise our position around our core business.

United States

Our production operations include the following:

Gulf of Mexico

Onshore US

We produce oil, condensate, gas and NGLs in four shale areas: Eagle Ford, Permian, Haynesville and Fayetteville. Shale reservoirs are characterised by low permeability, so it is necessary to stimulate the reservoir to create additional permeability and, therefore, the flow of liquids and gas to the wellbore. Extracting oil and gas from shale involves hydraulic fracturing, which is a process developed to efficiently access supplies of oil and gas locked inside dense subsurface rock formations, such as shale. Hydraulic fracturing involves the use of water, sand and chemicals to fracture the hydrocarbon-bearing rock formation to allow the well to produce commercial volumes.

Prices for oil, NGLs and gas are based on US regional price indices, including West Texas Intermediate prices for oil, relevant published US regional gas indices for natural gas and Mont Belvieu prices for NGLs.

Eagle Ford

The Eagle Ford production operation is located primarily in the southern Texas counties of DeWitt, Karnes, McMullen and LaSalle. We produce oil, condensate, gas and NGLs from two fields, Black Hawk and Hawkville. The oil and gas produced is sold domestically in the United States, via connections to intrastate and interstate pipelines, and internationally through the export of processed condensate from Black Hawk. The Eagle Ford gathering system consists of 1,602 kilometres of gathering lines that deliver gathered volumes to five central delivery points (CDPs), from where processed volumes are transported to market.

Our Black Hawk acreage comprises 0.1 million net acres and is located primarily in the DeWitt and Karnes Counties in southern Texas. Our ownership interests range from five per cent to 100 per cent. A majority of our interest (50 per cent share) in the Black Hawk is held with Devon Energy. At 30 June 2015, we held an interest in approximately 772 gross wells and approximately 427 net wells. We acted as joint venture operator for approximately 15 per cent of our gross wells.

Our Hawkville acreage comprises 0.2 million net acres and is located primarily in the McMullen and La Salle Counties in southern Texas. Our ownership interests range from nine per cent to 100 per cent. At 30 June 2015, we held an interest in approximately 494 gross wells and approximately 409 net wells. We acted as joint venture operator for approximately 84 per cent of our gross wells.

Permian

The Permian production operation consists of 0.2 million net acres and is primarily located in the western Texas county of Reeves. We produce oil, gas and NGLs. The oil and gas produced is sold domestically in the United States, via connections to intrastate and interstate pipelines. Our ownership interests range from 14 per cent to 100 per cent. At 30 June 2015, we held an interest in approximately 81 gross wells and approximately 75 net

wells. We acted as joint venture operator for approximately 93 per cent of our gross wells. The Permian gathering system consists of 145 kilometres of gathering lines that deliver gathered volumes to third party CDPs, from where processed volumes are transported to market. During FY2015, as part of our continued focus on investing and operating core assets, we sold our interest in our upstream Onshore US Pecos shale operation, located in the Permian Basin, to Silverback Exploration, LLC for a cash consideration of US$75 million. We also sold our Pecos midstream operations to EagleClaw Midstream, LLC for a cash consideration of US$52 million.

Haynesville

The Haynesville production operation is located primarily in northern Louisiana and consists of 0.2 million net acres. We produce gas that is sold domestically in the United States, via connections to intrastate and interstate pipelines. Our ownership interests range from less than one per cent to 100 per cent. At 30 June 2015, we held an interest in approximately 1,045 gross wells and approximately 395 net wells. We acted as joint venture operator for approximately 37 per cent of our gross wells. During FY2015, as part of our continued focus on investing and operating core assets, we sold our interest in our Onshore North Louisiana conventional operations to JW Operating Company for a cash consideration of US$135 million.

Fayetteville

The Fayetteville production operation is located in north central Arkansas and consists of 0.4 million net acres. We produce gas that is sold domestically in the United States, via connections to intrastate and interstate pipelines. Our ownership interests range from less than one per cent to 100 per cent. At 30 June 2015, we held an interest in approximately 4,950 gross wells and approximately 1,070 net wells. We acted as joint venture operator for approximately 20 per cent of our gross wells. The Fayetteville gathering system consists of 763 kilometres of gathering lines that deliver gathered volumes to 14 CDPs, from where processed volumes are transported to market.

Australia

Bass Strait

Minerva

North West Shelf

Pyrenees

Macedon

Stybarrow

Other production operations

~~Exploration and appraisal~~

We focus on capturing and operating large acreage positions primarily in areas that are in proven hydrocarbon basins. We have exploration interests around the world, particularly in the Gulf of Mexico, Australia and the South China Sea. During FY2012, our gross expenditure on exploration was US$1.4 billion, of which US$674 million was expensed. Our major exploration interests are as follows:

~~Australia~~

We have a 55 per cent interest in WA-351-P and in March 2012 we drilled the Tallaganda-1 exploration well. The well encountered hydrocarbons. The well has been plugged and abandoned and is being evaluated to determine development potential.

The North Scarborough-1 well was spud in January 2012 in permit WA-346-P. The well encountered hydrocarbons. The well was plugged and abandoned and is being evaluated to determine development potential. We own a 100 per cent working interest in the permit.

The Argus-2 appraisal well was spud in June 2011 in the AC/RL8 retention lease over the Argus gas field. The well failed to reach the primary objective and was temporarily plugged and abandoned in September 2011. Woodside Browse Pty Ltd operates the AC/RL8 retention lease with a 60 per cent interest while we hold the remaining 40 per cent.

We have a 16.67 per cent interest in the North West Shelf Project with Woodside as Operator. In August 2011, the Seraph-1 well was drilled. It has been plugged and abandoned and expensed as a dry hole. In November 2011, the Tidepole East-1 well was drilled and hydrocarbons were encountered. It has been plugged and abandoned and is being evaluated to determine development potential.

In July 2012, we acquired an additional 6.5 per cent interest in block WA-335-P offshore Western Australia from Apache, taking our total participating interest to 52.5 per cent. We have exercised our right to assume operatorship from Apache (28.6 per cent). Kufpec holds the remaining 18.9 per cent.

In June 2012, we farmed into block WA-389-P in the Northern Carnarvon basin. We acquired a 40 per cent interest, while Woodside (Operator) owns 25 per cent and Cue Energy Resources owns 35 per cent. The Banambu Deep-1 exploration well was spud in May 2012. The well was plugged and abandoned and expensed as a dry hole.

In May 2012, we were awarded three exploration permits following our bids in the October 2011 Gazettal round WA-469-P, WA-470-P, and WA-475-P offshore Western Australia. The minimum exploration program for blocks WA-469-P and WA-470-P includes the acquisition and processing of 3D seismic data. The minimum exploration program for block WA-475-P includes the acquisition and processing of 3D seismic data and the drilling of two exploration wells.

~~United States~~

~~Onshore US~~

BHP Billiton’s Onshore US exploration and appraisal program in FY2012 was US$392 million, primarily focused on the Permian Basin and included land acquisitions and the drilling and completion of seven exploration wells. Initial results from the Permian Basin exploration and appraisal program were positive, with four of the seven exploration wells proving to be productive.

~~Deep Blue – Green Canyon 723~~

We owned a 31.9 per cent interest in the Deep Blue prospect located in the Green Canyon area. Partners in the well were Noble (33.8 per cent), Statoil (15.6 per cent), Samson (9.3 per cent) and Murphy (9.3 per cent). The Deep Blue exploration well-1 was drilled in November 2009 and concluded in May 2010. The well’s original hole was drilled to a total depth of 9,962 metres and encountered hydrocarbons. Sidetrack drilling started in May and was suspended in June 2010 due to the Gulf of Mexico drilling moratorium issued by the US Government. The moratorium was lifted in October 2010 and the sidetrack well recommenced drilling in August 2011. The sidetrack encountered a non-commercial quantity of hydrocarbons and as a result the well was plugged and abandoned and the block relinquished.

~~Gunflint – Mississippi Canyon 948~~

In June 2011, we entered into a Participation Agreement with the Gunflint partnership by consolidating our block (MC 992) with four other blocks in the area. The agreement provided us with an 11.2 per cent interest in the Gunflint prospect with Noble serving as the operator. Our partners include Noble (26.05 per cent), BP (31.50 per cent), Samson (16 per cent) and Marathon (15.25 per cent). The Mississippi Canyon 948 appraisal well was spud in December 2011. The well was plugged and abandoned and the well results are being evaluated.

~~Ness Deep – Green Canyon 507~~

In May 2012, we entered into the Ness Deep prospect by consolidating the interest in our block (Green Canyon 463) with the interest in our partner’s block (Green Canyon 507). We acquired operatorship of the prospect with a 50 per cent interest. The remaining 50 per cent interest is held by our partner Hess. The Green Canyon 507 Ness Deep exploration well spud in June 2012, and is in progress.

~~Knotty Head~~

The Knotty Head project is currently in the earliest phase of project development. The development assumptions for this project consist of a joint wet tree TLP development, production and water injection wells. The operator is Nexen and we hold a 25 per cent interest.

~~Atlantis East – Green Canyon 700~~

The Atlantis East appraisal well was spud in April 2012 and is currently drilling. BP operates the well with a 56 per cent interest, while we hold the remaining 44 per cent. Once the appraisal well has been drilled, a reasonable assessment of commercial hydrocarbon potential will be performed.

~~Mad Dog North – Green Canyon 738~~

The Mad Dog North appraisal well (GC 738) was spud in June 2011. The appraisal program was operated by BHP Billiton using the Transocean Development Driller 1 rig in 1,362 metres of water. Partners in the well are BP (60.5 per cent) and Chevron (15.6 per cent). BHP Billiton’s interest is 23.9 per cent. The primary objective of the program was to evaluate fully the structure on the northern flank of Mad Dog field. The Mad Dog North appraisal well penetrations confirm the existence of economically recoverable hydrocarbons. Additional work is ongoing to better define the recoverable volumes and development options.

~~Other~~

~~Colombia~~

In September 2008, we entered into a technical evaluation of hydrocarbon potential in Block 5 in the Llanos basin onshore Colombia. We operate the project and hold a 71.4 per cent working interest in the joint venture, with SK Energy Co holding the remaining 28.6 per cent interest. The minimum work program includes the acquisition of 1,000 kilometres of 2D seismic plus the drilling of five stratigraphic wells. The airborne survey was completed in January 2010, and 621 kilometres of 2D seismic were acquired from December 2010 to May 2011. In addition, four stratigraphic wells were drilled. Technical analysis and discussions with commercial partners and the Colombian Government continue.

~~India~~

In December 2008, we signed production sharing contracts covering seven blocks located offshore India. We hold a 26 per cent interest in the blocks. Our partner, GVK, holds the remaining 74 per cent interest in the blocks. The minimum exploration program includes the acquisition and processing of 2D seismic data across the seven blocks and a small 3D seismic acquisition in one block. We have a partner option to increase our interest to 50 per cent prior to drilling the first well or within six months of completing final seismic data interpretation.

In June 2010, we signed production sharing contracts covering an additional three blocks located offshore India. We hold a 100 per cent interest in the blocks. The minimum work program associated with the three blocks includes the acquisition and processing of 2D and 3D seismic data.

We are the operator of all 10 blocks and have met the commitment for acquiring the 2D seismic in all blocks. 2D seismic processing is nearly complete, and we are currently interpreting the processed seismic data. The 3D seismic acquisition, processing and interpretation, which will complete the committed exploration work program, will be planned once the 2D seismic data interpretation is completed. Our offshore India blocks are impacted by an access issue related to delays in receiving permits from the Ministry of Defence for the Government of India to conduct necessary exploration activities. BHP Billton and GVK have claimed force majeure as a result of these delays. Discussions aimed at resolving the access issue are ongoing with the Government of India.

~~Malaysia~~

In March 2007, we were awarded offshore Blocks N and Q in Malaysia with a 60 per cent interest and operatorship. Petronas Carigali holds the remaining 40 per cent. The minimum exploration program includes the acquisition and processing of seismic data across the two blocks and the drilling of four Block N exploration wells within the first seven years. The initial seismic acquisition program commenced in June 2008 and was completed in September 2008 for both blocks. Additional seismic acquisition and processing for Block Q is planned for completion by March 2013. The first exploration well was drilled in February 2010 and was plugged, abandoned and expensed as a dry hole. Drilling of the second exploration well was completed in February 2012 and was plugged, abandoned and expensed as a dry hole.

~~Philippines~~

In November 2009, we acquired a 75 per cent interest in Service Contract 59, located offshore Philippines and we assumed operatorship in April 2010. PNOC Exploration Corp owns the remaining 25 per cent interest. As part of the minimum work program, the joint venture completed the acquisition and processing of a 2D seismic survey in April 2010. A 3D seismic acquisition program was completed in January 2011. In addition a 2D seismic acquisition was completed in December 2011 with processing currently ongoing. The remaining obligations on the current work program require us to drill one exploration well prior to January 2014.

In May 2011, we exercised an option to farm-in to the fourth sub phase Service Contract 55, located offshore Philippines to acquire a 60 per cent working interest. In January 2012, the Philippines Department of Energy approved our farm-in and granted us operatorship of the block. The remaining interest is divided between Otto Energy, at 33.18 per cent interest, and Trans-Asia, at 6.82 per cent interest. For the current sub phase a 3D seismic acquisition has been completed in 2011, and we have a one well commitment that is required to be drilled by August 2013.

In August 2009, we exercised our option with partner Mitra Energy (25 per cent) to acquire a 25 per cent non-operating interest in Service Contract 56 located offshore Philippines. ExxonMobil was operator and held the remaining 50 per cent interest in the block. The joint venture completed drilling the first exploration well in December 2009, and the second exploration well in February 2010. Both wells were expensed as dry holes. The drilling of these wells fulfilled our minimum work commitment against the service contract. We exited the block in November 2011 and reassigned our working interest back to Mitra Energy.

~~Vietnam~~

In October 2009, we became operator of Vietnam Blocks 28 and 29/03 located approximately 200 kilometres offshore southern Vietnam. We had a 50 per cent interest in each of the blocks, with Mitra Energy holding the remaining 50 per cent. The minimum work program for the first sub-phase included 2D seismic data and two wells. We also acquired and processed 3D data. The first exploration well was drilled in May 2011 while drilling of the second well commenced in June 2011. Both wells were plugged, abandoned and expensed as dry holes in FY2011. We have exited these two Vietnam blocks and transferred operatorship to Mitra Energy in July 2012.

~~Brunei~~

In September 2010, we entered into a Deed of Amendment with respect to Block CA1 (formerly Block J) following the settlement of the maritime dispute between Brunei and Malaysia. We own a 22.5 per cent interest in the block, with the residual interests held by Total Deep Offshore Borneo (54 per cent and operator), Hess (Borneo Block CA1) Ltd (13.5 per cent), Petronas Carigali (five per cent) and Canam Brunei Oil Ltd (Murphy Oil) (five per cent). The minimum work obligation includes the drilling of seven exploration wells. Julong Center began drilling in September 2011 and was plugged, abandoned and expensed as a dry hole. Julong East began drilling in January 2012 and encountered hydrocarbons. Jagus East began drilling in April 2012 and encountered hydrocarbons. Both wells have been plugged and abandoned and the well results are being evaluated to determine development potential.

~~South Africa~~

In September 2010, we entered into exploration agreements for two blocks offshore South Africa. We own and operate a 60 per cent interest in Block 3A/4A, and a 90 per cent interest in Block 3B/4B. The remaining interest in Block 3A/4A is held by PetroSA (30 per cent) and Sasol Petroleum International (10 per cent). Global Offshore Oil Exploration South Africa holds a 10 per cent interest in Block 3B/4B. The minimum work program includes the drilling of one exploration well within each block.

Trinidad and Tobago

We ~~have a 45~~operate the Greater Angostura field (45 per cent interest in the production sharing contract), an integrated oil and gas development, located offshore, 40 kilometres east of Trinidad. The crude oil is sold on a spot basis to international markets, while the gas is sold domestically under term contracts.

Algeria

Our Algerian operations comprise an effective 38 per cent interest in the ROD Integrated Development, which consists of six satellite oil fields that pump oil back to a dedicated processing train. The oil is sold on a spot basis to international markets. Our interest in ROD is subject to a contractual determination with our joint venture partner ENI, which could result in a future change in our interest under certain conditions.

United Kingdom

We hold a 16 per cent non-operating interest in the Bruce oil and gas field in the North Sea and operate the Keith oil and gas field (31.83 per cent interest), a subsea tie-back. Oil and gas from both fields is processed via the Bruce platform facilities.

Pakistan

We operate the Zamzama gas project (38.5 per cent interest) in the Sindh province of Pakistan. Both gas and condensate are sold domestically under term contracts in accordance with the Pakistan Government’s pricing policies.

During February 2015, BHP Billiton and Tri-Resources Investments Inc. (a subsidiary of the Hashoo Group) signed a share purchase agreement for the acquisition by Tri-Resources of BHP Billiton’s entire interest in BHP Petroleum (Pakistan), which holds a 38.5 per cent interest in the Zamzama Joint Venture. Completion of the transaction is subject to receipt of regulatory approvals and other customary closing conditions.

Information on Petroleum operations

The following table contains additional details of our production operations. This table should be read in conjunction with the production (refer to section 2.2.1) and reserve tables (refer to section 2.3.1).

Operation &
location

Product

Ownership

Operator

Title, leases or options

Nominal production
capacity

Facilities, use & condition

United States

Neptune (Green Canyon 613)

Offshore

deepwater Gulf of Mexico (1,300m)

Oil and gas

BHP Billiton 35%

Marathon Oil 30% W&T Offshore 20%

Maxus US Exploration 15%

BHP Billiton

Lease from US Government as long as oil and gas produced in paying quantities

50 Mbbl/d oil 50 MMcf/d gas

Permanently moored tension leg platform (TLP)

Shenzi (Green Canyon 653)

Offshore

deepwater Gulf of Mexico

(1,310m)

Oil and gas

BHP Billiton 44%

Hess Corporation 28% Repsol 28%

BHP Billiton

Lease from US Government as long as oil and gas produced in paying quantities

100 Mbbl/d oil 50 MMcf/d gas

Stand-alone TLP

Genghis Khan field (part of same geological structure) tied back to Marco Polo TLP

Atlantis (Green Canyon 743)

Offshore

deepwater

Gulf of Mexico

(2,155m)

Oil and gas

BHP Billiton 44%

BP 56%

Lease from US Government as long as oil and gas produced in paying quantities

200 Mbbl/d oil 180 MMcf/d gas

Permanently moored semi-submersible platform

Mad Dog (Green Canyon 782)

Offshore

deepwater

Gulf of Mexico

(1,310m)

Oil and gas

BHP Billiton 23.9%

BP 60.5%

Chevron 15.6%

Lease from US Government as long as oil and gas produced in paying quantities

80 Mbbl/d oil 60 MMcf/d gas

Permanently moored integrated truss spar, facilities for simultaneous production and drilling operations

Operation &
location
Product
Ownership
Operator
Title, leases or options
Nominal production
capacity
Facilities, use & condition
Genesis (Green Canyon 205)
Offshore
deepwater
Gulf of Mexico
(approximately 790m)
Oil and gas
BHP Billiton 4.95%
Chevron 56.67%
ExxonMobil 38.38%
Chevron Lease from US Government as long as oil and gas produced in paying quantities 55 Mbbl/d oil 72 MMcf/d gas Floating cylindrical hull (spar) moored to seabed with integrated drilling facilities
Onshore US
Eagle Ford
Blackhawk / Hawkville
Onshore, southern Texas
Oil, condensate, gas and NGL
Blackhawk – BHP Billiton working interest in wells range from 5% to 100%
BHP Billiton average net working interest is approximately 55%
Largest partners include Devon Energy
Hawkville – BHP Billiton working interest in wells range from 9% to 100%
BHP Billiton average net working interest is approximately 83%
Largest partners include Lewis Energy, Swift Energy & Hunt Oil Company
Blackhawk – BHP Billiton operated approximately 15% of approximately 772 gross wells
Hawkville – BHP Billiton operated approximately 84% of approximately 494 gross wells
Blackhawk – we currently own leasehold interests in approximately 0.1 million net acres
Leases associated with producing wells remain in place as long as oil and gas is produced in paying quantities
Hawkville – we currently own leasehold interests in approximately 0.2 million net acres
Leases associated with producing wells remain in place as long as oil and gas is produced in paying quantities
Blackhawk – average daily production during FY2015 130 MMcf/d gas 82 Mbbl/d oil and condensate
24 Mbbl/d NGL
Hawkville – average daily production during FY2015 168 MMcf/d gas
15 Mbbl/d oil and condensate
17 Mbbl/d NGL
Producing oil and gas wells and associated pipeline and compression facilities
Permian
Permian, western Texas Oil, gas and NGL
BHP Billiton working interest in wells range from 14% to 100%
BHP Billiton average net working interest is approximately 93%
Residual ownership held by multiple partners
BHP Billiton operated approximately 93% of approximately 81 gross wells
We currently own leasehold interests in approximately 0.2 million net acres
Leases associated with producing wells remain in place as long as oil and gas is produced in paying quantities
Average daily production during FY2015
30 MMcf/d gas
10 Mbbl/d oil and condensate
4 Mbbl/d NGL
Producing oil and gas wells with associated gathering systems, processing plant and compression facilities

Operation &
location
Product
Ownership
Operator
Title, leases or options
Nominal production
capacity
Facilities, use & condition
Haynesville
Haynesville, northern Louisiana and eastern Texas Gas
BHP Billiton working interest in wells range from less than 1% to 100%
BHP Billiton average networking interest is approximately 38%
Largest partners include
Chesapeake Energy and Exco Resources
BHP Billiton operated approximately 37% of approximately 1,045 gross wells
We currently own leasehold interests in approximately 0.2 million net acres
Leases associated with producing wells remain in place as long as oil and gas is produced in paying quantities
Average daily production during FY2015
446 MMcf/d gas
Producing gas wells with an associated pipeline owned by a third party and compression infrastructure
Fayetteville
Fayetteville, northern central Arkansas Gas
BHP Billiton working interest in wells range from less than 1% to 100%
BHP Billiton average net working interest is approximately 22%
Largest partners include Southwestern Energy and XTO Energy
BHP Billiton operated approximately 20% of approximately 4,950 gross wells
We currently own leasehold interests in approximately 0.4 million net acres
Leases associated with producing wells remain in place as long as oil and gas is produced in paying quantities
Average daily production during FY2015
379 MMcf/d gas
Producing gas wells with associated pipeline and compression infrastructure
Australia
Bass Strait
Offshore and onshore Victoria Oil and gas
Gippsland Basin Joint Venture (GBJV):
BHP Billiton 50%
Esso Australia (Exxon Mobil subsidiary) 50%
Oil Basins Ltd 2.5% royalty interest in 19 production licences
Kipper Unit Joint Venture (KUJV):
BHP Billiton 32.5%
Esso Australia 32.5%
Santos Offshore Pty Ltd 35%
Esso Australia
20 production licences and 2 retention leases issued by Australian Government
Expire between 2016 and end of life of field
One production licence held with Santos Ltd
200 Mbbl/d oil
1,075 MMcf/d gas
5,150 tpd LPG
850 tpd ethane
20 producing fields with 23 offshore developments (15 steel jacket platforms, 4 subsea developments, 2 steel gravity based mono towers, 2 concrete gravity based platforms)
Onshore infrastructure:
– Longford facility (3 gas plants, liquid processing facilities)
– Interconnecting pipelines
– Long Island Point LPG and oil storage facilities
– Ethane pipeline

Operation &
location
Product
Ownership
Operator
Title, leases or options
Nominal production
capacity
Facilities, use & condition
Minerva
Offshore and onshore Victoria Gas and condensate
BHP Billiton 90%
Santos (BOL) 10%
BHP Billiton Production licence issued by Australian Government expires 5 years after production ceases 150 TJ/d gas 600 bbl/d condensate
2 well completions
Single flow line transports gas to onshore gas processing facility
Gas plant located approximately 4 km inland from Port Campbell
North West Shelf
Offshore and onshore Western Australia
North Rankin Goodwyn
Perseus Angel and Searipple fields
Domestic gas, LPG, condensate,
LNG
North West Shelf Project is an unincorporated JV
BHP Billiton:
8.33% of original domestic gas JV, will ultimately increase to 16.67%
16.67% of Incremental Pipeline Gas (IPG) domestic gas JV 16.67% of original LNG JV
12.5% of China LNG JV 16.67% of LPG JV
Other participants: subsidiaries of Woodside, Chevron, BP, Shell, Mitsubishi/Mitsui and China National Offshore Oil Corporation
Woodside Petroleum Ltd
9 production licences issued by Australian Government
6 expire in 2022 and 3 expire 5 years from end of production
North Rankin Complex: 2,500 MMcf/d gas
60 Mbbl/d condensate
Goodwyn A platform: 1,450 MMcf/d gas 110 Mbbl/d condensate
Angel platform:
960 MMcf/d gas
50 Mbbl/d condensate
Withnell Bay gas plant:
600 MMcf/d gas
5-train LNG plant: 45,000 tpd LNG
Production from North Rankin and Perseus processed through the interconnected North Rankin A and North Rankin B platforms
Production from Goodwyn and Searipple processed through Goodwyn A platform
4 subsea wells in Perseus field tied into Goodwyn A platform
Production from Angel field processed through Angel platform
Onshore gas treatment plant at Withnell Bay processes gas for domestic market
5-train LNG plant
North West Shelf
Offshore Western Australia
Wanaea
Cossack
Lambert and
Hermes fields
Oil
BHP Billiton 16.67%
Woodside 33.34%
BP, Chevron, Japan Australia LNG (MIMI) 16.67% each
Woodside Petroleum Ltd 3 production licences issued by Australian Government in September 2014 expire in 2018, 2033, and 2035 respectively
Production:
60 Mbbl/d
Storage:
1 MMbbl
FPSO unit

Operation &
location
Product
Ownership
Operator
Title, leases or options
Nominal production
capacity
Facilities, use & condition
Pyrenees
Offshore Western Australia
Crosby
Moondyne
Wild Bull
Tanglehead
Stickle and
Ravensworth fields
Oil
WA-42-L permit:
BHP Billiton 71.43%
Apache PVG 28.57%
WA-43-L permit:
BHP Billiton 40%
Apache APG Permits 31.5% Inpex Alpha 28.5%
BHP Billiton Production licence issued by Australian Government expires 5 years after production ceases
Production:
96 Mbbl/d oil
Storage: 920 Mbbl
24 subsea well completions (19 producers, 4 water injectors, 1 gas injector), FPSO
Macedon
Offshore and onshore Western Australia Gas and condensate
WA-42-L permit
BHP Billiton 71.43%
Apache PVG 28.57%
BHP Billiton Production licence issued by Australian Government expires 5 years after production ceases
Production:
200 MMcf/d gas
20 bbl/d condensate
4 well completions
Single flow line transports gas to onshore gas processing facility
Gas plant located approximately 17 km southwest of Onslow
Stybarrow
Offshore Western Australia
Stybarrow and Eskdale fields
Oil and gas
BHP Billiton 50%
Woodside 50%
BHP Billiton Production licence issued by Australian Government expires 5 years after production ceases
Production:
80 Mbbl/d oil
Storage: 900 Mbbl
10 subsea well completions (6 producers, 3 water injectors, 1 gas injector)
Gas production is reinjected
Ceased production in June 2015

Operation &
location
Product
Ownership
Operator
Title, leases or options
Nominal production
capacity
Facilities, use & condition
Other production operations
Trinidad and Tobago
Greater Angostura
Offshore Trinidad and Tobago Oil and gas
BHP Billiton 45%
National Gas Company 30% Chaoyang 25%
BHP Billiton Production sharing contract with the Trinidad and Tobago Government entitles us to operate Greater Angostura until 2026
100 Mbbl/d oil
280 MMcf/d gas
Integrated oil and gas development: central processing platform connected to the Kairi-2 platform and gas export platform with 3 satellite wellhead protector platforms and flow lines
Oil pipeline from processing platform to storage and export at Guayaguayare
Gas supplied to Trinidad and Tobago domestic markets
Algeria
ROD Integrated Development
Onshore Berkine Basin, 900 kilometres southeast of Algiers, Algeria Oil
BHP Billiton 45% interest in 401a/402a production sharing contract
ENI 55%
BHP Billiton effective 38% interest in ROD unitised integrated development
ENI 62%
Joint Sonatrach/ENI entity
Production sharing contract with Sonatrach (title holder)
Expires in 2016 with option for two 5-year extensions under certain conditions specified in the contracts
Approximately 80 Mbbl/d oil
Development and production of 6 oil fields
2 largest fields (ROD and SFNE) extend into neighbouring blocks 403a, 403d
Production through dedicated processing train on block 403

Operation &
location
Product
Ownership
Operator
Title, leases or options
Nominal production
capacity
Facilities, use & condition
United Kingdom
Bruce/Keith
Offshore North Sea, UK Oil and gas
Bruce:
BHP Billiton 16%
BP 37%
Total SA 43.25%
Marubeni 3.75%
Keith:
BHP Billiton 31.83%
BP 34.84%
Total SA 25%
Marubeni 8.33%
Bruce – BP
Keith – BHP Billiton
3 production licences issued by UK Government expire in 2018 and 2046 and end of life of field 920 MMcf/d gas
Integrated oil and gas platform
Keith developed as tie-back to Bruce facilities
Pakistan
Zamzama
Onshore Sindh Province,
Pakistan
Gas and condensate
BHP Billiton 38.5%
ENI Pakistan 17.75% PKP Exploration 9.375% PKP Exploration 2 9.375%
Government Holdings 25%
BHP Billiton 20-year development and production lease from the Pakistan Government expires in 2022 (option to extend 5 years) 500 MMcf/d gas 3,350 bbl/d condensate
10 production wells
4 process trains
2 front end compression
trains

Capital projects

United States

Onshore US

The development phase of an onshore shale operation requires an extensive drilling and completion program, which may include associated gas compression and treatment facilities and connecting pipelines. Shale development has a repetitive, manufacturing-like nature that provides opportunities for increased efficiency. Much of our development of the shale reservoirs utilises horizontal drilling, with average lateral lengths between 1,500 and 1,600 metres. We enter into service contracts with third parties to provide drilling and completion services at our operated sites. At the end of FY2015, we had 10 drilling rigs in operation.

BHP Billiton’s Onshore US drilling and development expenditure in FY2015, which is presented on an accruals basis within this section, was US$3.3 billion (FY2014: US$4.2 billion). The expenditure was primarily related to drilling and completion activities in our liquids-rich Black Hawk and Permian fields, while deferring development in areas that are predominantly gas.

Eagle Ford capital expenditure for FY2015 was US$2.1 billion (FY2014: US$3.1 billion). The expenditure was primarily related to drilling and completion activities, resulting in 188 net development wells completed during the period. Of the US$2.1 billion, approximately US$95 million was spent on the installation of more than 52 kilometres of pipeline infrastructure and additional gas processing facilities. The operated rig count was seven for the year (FY2014: 17).

Our Onshore US capital investment is expected to decrease to US$1.5 billion in FY2016 in response to changes in the global commodity markets. This includes an operated rig count of nine for the period, with shale oil investment accounting for approximately 80 per cent of the investment. Our decision to cut spending will mean deferring gas volumes in the near term with our drilling programs in the Fayetteville and Haynesville areas remaining temporarily suspended. However, we expect to realise greater value by developing our acreage as prices recover.

Australia

Bass Strait Kipper gas field development

32.5 per cent interest in the Kipper Unit Joint Venture, with ~~our partners Total (30~~Esso Australia owning 32.5 per cent ~~interest)~~ and ~~Chaoyang (25~~Santos owning 35 per cent. We own a 50 per cent ~~interest). In July 2011,~~interest in the ~~Canteen North 1 well was drilled within~~Gippsland Basin Joint Venture, with Esso Australia owning the ~~producing Block 2c area. The well encountered hydrocarbons and was plugged and abandoned. The fault block is being evaluated to determine development potential.~~

~~Drilling~~remaining 50 per cent.

The ~~number~~main Kipper gas field facilities were completed in September 2012; however, first production has not yet commenced due to the need to provide for mercury removal. Funding for the installation of ~~wells~~the mercury treatment facilities of US$120 million was approved in March 2014, with completion expected to occur in CY2016. Our share of costs incurred to 30 June 2015 was US$59 million.

Bass Strait Turrum field development

Further expansion of the ~~process~~Gippsland Basin facilities is underway following approval by the Board in July 2008 of ~~being drilled (including temporarily suspended~~the full field development of the Turrum oil and gas field. A supplemental approval of the development was obtained in January 2011. The project consists of five wells and ~~excluding wells drilled~~a new platform, Marlin B, linked by a bridge to the existing Marlin A platform. The Turrum field, which has a capacity of 11 Mbbl/d of oil and ~~completed~~200 MMcf/d of gas, is located 42 kilometres offshore in ~~FY2012)~~approximately 60 metres of water. Our share of development costs is approximately US$1.4 billion, of which US$1.3 billion was incurred as of 30 June ~~2012 was as follows:~~

   Exploratory wells    Development Wells    Total
   Gross    Net ⁽¹⁾    Gross    Net ⁽¹⁾    Gross    Net ⁽¹⁾
Australia
   –       –       –       –       –       –
United States
   4       2       305       136       309       138
Other
   –       –       1       1       1       1
Total
   4       2       306       137       310       139

⁽¹⁾	~~Represents our share of the gross well count.~~

~~Other significant activities~~

~~Australia~~

~~Browse~~2015.

The ~~Browse LNG Development comprises~~Turrum field development operates under the Gippsland Basin Joint Venture, in which we own a 50 per cent interest, with Esso Australia owning the remaining 50 per cent. Initial production of low carbon dioxide gas through the Turrum facilities occurred in June 2013. High carbon dioxide gas production from the Turrum reservoir will come online with completion of the ~~Torosa, Brecknock and Calliance gas fields, which were discovered~~Longford Gas Conditioning Plant in 1971, 1979, and 2000, respectively. The fields are located approximately 440 kilometres north-northwest of Broome, Western Australia in water depths up to 800 metres. Evaluation of the in-place resources continues together with definition of the on and offshore facilities required to extract hydrocarbons and produce and export LNG.CY2016.

~~Woodside is the operator and we own 8.33 per cent of the East Browse resources and 20 per cent of West Browse.~~

Bass Strait Longford Gas Conditioning

The Longford Gas Conditioning Plant (LGCP) Project ~~will~~was approved by the Board in December 2012 to enable the production of Turrum reserves plus the production of Kipper and other undeveloped high carbon dioxide content hydrocarbons. The ~~project~~Project scope includes a carbon dioxide extraction facility, brownfield tie-ins, an electrical upgrade and multiple supporting utilities. Our share of development costs is approximately US$520 million, of which US$356 million was incurred as of 30 June 2015. First gas production is expected in CY2016. Esso Australia is the operator of the LGCP, owning a 50 per cent interest and BHP Billiton owns the remaining 50 per cent.

~~Scarborough~~

Development planning for the large Scarborough gas field offshore Western Australia is in progress. We continue to evaluate development options for a LNG plant and offshore production facilities. Esso is the operator of the WA-1-R lease and we hold a 50 per cent working interest. We are the operator and have a 100 per cent working interest in the WA-346-P block.

North West Shelf Greater Western ~~Flank-A~~Flank–A

The North West Shelf Greater Western ~~Flank-A~~Flank–A (GWF-A) gas project was approved by the Board in November 2011 to recover gas from the ~~near field~~ Goodwyn H and Tidepole fields. The project consists of a five well subsea tie-back of the

Goodwyn H and Tidepole fields to the Goodwyn A platform. The Goodwyn A platform is located in 130 metres of water, approximately 130 kilometres offshore from Karratha on the northwest coast of Australia. ~~The~~Our share of development costs is ~~estimated to have the potential to provide gross sales~~approximately US$400 million, of which US$237 million was incurred as of 30 ~~MMboe (BHP Billiton share), including condensate and liquefied gas.~~June 2015. First gas production is expected in CY2016. Woodside is the operator and we own a 16.67 per cent ~~share.~~interest.

~~NWS Other – (Persephone/Greater Western Flank ‘2’)~~Significant evaluation activities

~~Planning is underway for~~We perform development evaluation activities to determine the ~~development~~technical feasibility and commercial viability of prospective projects after exploration and appraisal. Our significant recent evaluation activities include the Persephone field and Greater Western Flank ‘2’. The Persephone field is located near existing NWS infrastructure, approximately eight kilometres northeast of the North Rankin A platform. Greater Western Flank ‘2’ represents the second phase of development of the core Greater Western Flank fields, behind the GWF-A development, which are located to the southwest of the existing Goodwyn A platform. Woodside is the operator and we own a 16.67 per cent share of both Persephone and Greater Western Flank ‘2’.following:

United States

~~Shenzi Water Injection~~

The Shenzi Water Injection program includes drilling and completion of five water injection wells and provides facilities to inject up to 125 Mbbl/d of water at 7,000 pounds per square inch (psi). The program was approved as part of the original sanctioned Shenzi project which began production in 2009 to supplement aquifer pressure for additional recovery. To date, Water Injector (WI) #1 has been drilled and completed and WI #2 has been drilled. Planning for the completion of WI #2 and drilling of WI #3 is underway.

~~Atlantis South Water Injection~~

The Atlantis South Water Injection project is in the execution phase and involves drilling four subsea water injectors, tying them into the existing infrastructure and commissioning the 75 Mbbl/d of water injection facilities. This water injection project mitigates natural production decline due to low aquifer pressure. BP is the operator and we hold a 44 per cent working interest.

Mad Dog Phase 2

~~In April 2012, we announced approval for US$708 million (BHP Billiton share) in pre-commitment funding for the Mad Dog Phase 2 project.~~ The Mad Dog Phase 2 project is in response to the successful Mad Dog South appraisal well, which confirmed significant hydrocarbons in the southern portion of the Mad Dog field. ~~Mad Dog Phase 2~~The project was sent back to study phase

in 2013, following which a revised development concept was selected by the owners. The revised concept will beundergo further refinement and undertake additional investigations in FY2016. BP is the operator and we hold a ~~spar~~23.9 per cent working interest.

Australia

Scarborough

Development planning for the large Scarborough gas field offshore Western Australia is in progress. Following an assessment, floating LNG has been selected as the preferred development ~~with all subsea production~~option. Further work to optimise the preferred development option is ongoing. Esso is the operator of the WA-1-R lease and ~~injection wells~~we hold a 50 per cent working interest. We are the operator of, and ~~includes water injection capability to provide support~~have a 100 per cent working interest in, the adjacent Thebe discovery and the WA-346-P block.

North West Shelf Other – Greater Western Flank ‘2’

Planning continues for the development of Greater Western Flank ‘2’. Greater Western Flank ‘2’ represents the second phase of development of the core Greater Western Flank fields, behind the GWF-A development, and is located to the ~~east, west and south~~southwest of the ~~field.~~existing Goodwyn A platform. Woodside is the operator and we own a 16.67 per cent share. During FY2015, the project scope was further defined, with a final investment decision expected in CY2015.

Exploration and appraisal

Access

In FY2015, we accessed acreage in the US sector of the Gulf of Mexico and in Trinidad and Tobago and Barbados. In the Gulf of Mexico, we were awarded 14 blocks (100 per cent working interest and operator on all blocks; 315 square kilometres) from Lease Sale 238 held during the September 2014 quarter. In addition, BHP Billiton was also awarded all nine of its high bid leases, totalling 210 square kilometres in Central Lease Sale 235 in the June 2015 quarter. In the Caribbean, we finalised production sharing contracts and joint operating agreements for a 65 per cent interest and operatorship in Trinidad and Tobago Blocks 3 and 7 (totalling 2,096 square kilometres) with BG Group Ltd, and signed exploration licences for Barbados Blocks Bimshire and Carlisle Bay (100 per cent working interest; 5,004 square kilometres).

Exploration program expenditure details

During FY2015, our gross expenditure on exploration was US$567 million, of which US$481 million was expensed.

Exploration and appraisal wells drilled or in the process of drilling during the year:

Well

Location

Target

BHP Billiton
equity

Spud date

Water depth

Total well depth

Status

Shenzi North-2

Gulf of Mexico GC609

Oil

44% (Operator)

9 April 2015

1,309 metres

8,733 metres

Plugged and abandoned; currently sidetracking

Shenzi North-ST1

Gulf of Mexico GC609

Oil

44% (Operator)

14 June 2015

1,309 metres

8,238 metres

Drilling

In the Gulf of Mexico, we drilled the Shenzi North-2 exploration well on Green Canyon Block 609 (44 per cent working interest and operator) during the June 2015 quarter. The lower section of the hole was plugged and abandoned and associated costs expensed. We are currently drilling a sidetrack to further test the opportunity. Significant investment in seismic data acquisition, licensing and reprocessing were also completed in order to evaluate prospectivity in our focus areas.

In Western Australia, we continue to evaluate exploration potential in line with our strategic priorities. To assist this, we are participating in a regional multi-client 3D seismic survey totalling 10,032 square kilometres. The program is anticipated to be completed by the first half of FY2016.

In Trinidad and Tobago, we completed the acquisition of 21,220 square kilometres of 3D seismic data over Blocks 3, 5, 6, 7, 14, 23a, 23b, 28 and 29 by the end of the March 2015 quarter. Evaluation of this information is ongoing. Regional environmental and geological surveys were also carried out during the year, as part of our ongoing assessment programs.

In South Africa, we hold 100 per cent exploration rights to Block 3B/4B off the west coast of South Africa. In FY2014, we completed the processing of the 10,075 square kilometres of 3D seismic survey that was acquired in FY2013. Evaluation of this information is ongoing.

In Brazil, we are planning to acquire 3D seismic data over our two blocks in the deepwater Foz do Amazonas Basin, to fulfil our minimum work commitment.

In Malaysia, we completed the acquisition of 2,941 square kilometres of 3D seismic survey over Block SK-2A and formally assigned our 60 per cent interest and operatorship in Block N to Total during the June 2015 quarter.

In the Philippines, we finalised the re-assignment of our 75 per cent interest and operatorship to PNOC, completing our exit from the region during the June 2015 quarter.

In India, together with the operator BG, we have notified the government of our intent to exit our remaining 50 per cent interest in one deepwater block acquired during the NELP IX licensing round. We are currently awaiting government approval of our exit of nine operated blocks acquired during the NELP VII and VIII licensing rounds and one non-operated block acquired during the NELP IX licensing round.

In Onshore US, we continue to evaluate opportunities aligned with our strategic priorities, leveraging the expertise gained from our production units.

Drilling

The number of wells in the process of drilling and/or completion as of 30 June 2015 was as follows:

Exploratory wells

Development wells

Total

Gross

Net⁽¹⁾

Gross

Net⁽¹⁾

Gross

Net ⁽¹⁾

Australia

–

United States

–

236

108

237

109

Other

–

Total

–

241

109

242

110

⁽¹⁾	Represents our share of the gross well count.

Delivery commitments

We have delivery commitments of ~~natural~~ gas and LNG of approximately ~~3,286~~2,180 billion cubic feet through ~~2031 (72~~FY2031 (82 per cent Australia and 28Asia, eight per cent United States and 10 per cent Other), crude and condensate

commitments of 17.3 million barrels through FY2022 (51 per cent United States, 39 per cent Australia and Asia and 10 per cent Other) and ~~crude, condensate and NGL~~LPG commitments of ~~532.7 million barrels~~332,072 metric tonnes through ~~2023 (94 per cent United States, five per cent Australia, and one per cent Other).~~FY2017. We have sufficient proved reserves and production capacity to fulfil these delivery commitments.

We have obligations for contracted capacity on transportation pipelines and gathering systems on which we are the shipper. In FY2016, volume commitments to gather and transport are 1,123 billion cubic feet of gas (97 per cent Onshore US and three per cent Other) and 42.4 million barrels of oil (51 per cent Onshore US and 49 per cent Offshore US). The agreements with the gas gatherers and transporters have annual escalation clauses.

Potash

Our Potash strategy is to build a material industry position over the long term.

We have progressively explored our permit areas over the past eight years and continue to evaluate their economic development potential. We are converting our exploration permits to long-term mining leases as these permits mature in order to enable further evaluation. To date, we have secured more than 8,000 square kilometres under long-term mining leases.

On the basis of our current projections and subject to Board approval, Jansen is likely to ramp-up production in the decade beginning 2020.

As at 1 August 2015, management of the Jansen Potash Project transferred from the Petroleum Business to BHP Billiton’s Chief Commercial Officer.

2.1.2 Copper Business

Our Copper Business, headquartered in Santiago, Chile, is one of the world’s leading producers of copper concentrate and cathode, uranium oxide, and a producer of zinc concentrate. Our portfolio of mining operations includes the Escondida mine in Chile, a leading producer of copper, and Olympic Dam in South Australia, a major producer of copper and uranium oxide. Our total copper production in FY2015 was 1.7 million tonnes (Mt). Our concentrate production, which represents 60 per cent of total production, results from flotation of sulphide ores mined at our Escondida and Antamina mines. Oxide ores and sulphide ores amenable to leaching are mined and processed into copper cathode, using conventional heap leaching, followed by solvent extraction and electrowinning processes at Escondida, Cerro Colorado and Spence. Copper cathode is also produced at Olympic Dam, where sulphide ores are processed through conventional flotation and the resulting concentrate is further transformed into cathodes through a smelting and refining process.

We market four primary products: copper cathodes, copper concentrates, zinc concentrates and uranium oxide. We sell our copper cathode production to wire rod mills, brass mills and casting plants around the world under contracts with prices at premiums to the London Metal Exchange (LME) or the Commodity Exchange Inc (COMEX) prices. We sell the majority of our uranium oxide to electricity generating utilities, principally in Western Europe, North America and East Asia. Uranium is typically sold under a mix of long-term and short-term contracts. We sell most of our copper and zinc concentrates to smelters located in diversified geographic markets such as China, South America, Japan, India and South Korea. Treatment charges and refining charges (collectively referred to as TCRCs) are negotiated with counterparties on a variety of tenors, trending towards shorter-term, more market-based pricing periods (less than one year). Some of the ores we mine contain quantities of silver and gold, which remain in the base metal concentrates we sell, and are typically subject to payment credits. We sell refined silver and gold from Olympic Dam. Our five operating assets, which are located in South America and Australia, consist of the following:

Americas

Escondida

Our 57.5 per cent owned and operated Escondida mine is a leading producer of copper. Located in the Atacama Desert in northern Chile, Escondida employs approximately 12,000 operational employees and contractors and has the capacity to move in excess of 1.3 Mt of material per day. Its two open-cut pits currently feed three concentrator plants, Laguna Seca, Los Colorados and the recently commissioned Organic Growth Project 1 (OGP1), as well as two leaching operations (oxide and sulphide). The Los Colorados concentrator plant will be placed into care and maintenance once OGP1 ramp-up has been completed as current water source volumes cannot sustain the operation of three concentrators at nominal capacity. Escondida is assessing extending the life of the Los Colorados concentrator plant on the completion of the Escondida Water Supply (EWS) project based on the availability of water and mine stability. All three concentrator plants use grinding and flotation technologies to produce copper concentrate. In FY2015, our share of Escondida production was 526.7 kilotonnes (kt) of payable copper in concentrate and 178.4 kt of copper cathode. Escondida production for FY2016 will be impacted by an anticipated 27 per cent decline in ore grades. This will be partly offset by increased throughput, enabled by the completion of the OGP1 and operational improvements. The reserve life is discussed in section 2.3.2.

The availability of key inputs like power and water at competitive prices is an important focus for our Copper Business. In November 2013, we awarded a long-term energy agreement to a consortium consisting of Korea Southern Power Co. and Samsung Construction & Trading Corp. for the development, operation and maintenance of a 517 megawatt (MW) combined-cycle gas-fired power plant (Kelar power plant) in the town of Mejillones, Chile. The plant, which will be connected to the Northern Interconnected Grid (SING), will supply

the increasing demand for electricity at our operations. Construction work is progressing as planned with (65.4 per cent completed as of 30 June 2015) and production is expected to begin in the October 2017 quarter.

A contract for the supply of natural gas to the Kelar power plant has been secured with Gas Natural Fenosa. First deliveries are scheduled to commence in CY2016, which will tie-in with the commissioning and commercial operation of the Kelar plant.

To address limitations on the availability of water, we desalinate sea water and carefully manage our use and reuse of available water. The EWS project, which involves the construction of a second desalination plant, will reduce our reliance on the region’s aquifers and help meet our environmental commitments. The EWS project is expected to be commissioned in CY2017.

Pampa Norte

Pampa Norte consists of two operations – Spence and Cerro Colorado. Copper cathode is produced at both operations following a leaching, solvent extraction and electrowinning process.

Our wholly owned Spence copper mine is located in the Atacama Desert, 162 kilometres northeast of Antofagasta in Chile. During FY2015, Spence produced 171.4 kt of high-quality copper cathode, using oxide and sulphide ore treatment through leaching, solvent extraction and electrowinning processes. The reserve life is discussed in section 2.3.2.

Our wholly owned Cerro Colorado mine, located in the Atacama Desert, 120 kilometres east of Iquique in Chile, remains a significant producer of copper cathode, although production levels have fallen in recent years as grades have declined. Despite this, production in FY2015 reached 78.2 kt of copper cathode. The reserve life is discussed in section 2.3.2. The extension of the existing environmental and mining licences to continue to enable Cerro Colorado to operate beyond December 2016 is currently pending approval.

Antamina

In FY2015, following the identification of a number of debottlenecking opportunities, Antamina successfully increased nominal milling capacity to 53 million tonnes per annum (Mtpa).

Australia

Olympic Dam

The Svedala mill, which accounts for approximately 60 per cent of Olympic Dam’s production, experienced an electrical failure in January 2015. Repairs were completed by June 2015 and the mill is now operating at full capacity. In FY2015, Olympic Dam produced 124.5 kt of copper cathode, 3.1 kt of uranium oxide,104.8 kilo-ounces (koz) of refined gold and 724 koz of refined silver. The reserve life is discussed in section 2.3.2.

Cannington

In May 2015, our Cannington silver-lead-zinc mine was included in the demerger of South32. Further information can be found in ~~section 2.13.1.~~

~~2.2.3 Aluminium Customer Sector Group~~

~~Our Aluminium CSG is a portfolio of assets at three stages of~~sections 1.3.7, 1.6.4, and 2.1.7 and note 29 ‘Discontinued operations’ to the aluminium value chain: mining bauxite, refining bauxite into alumina, and smelting alumina into aluminium metal. We are the world’s eighth-largest producer of aluminium, with total production in FY2012 of 1.2 million tonnes (Mt) of aluminium. We also produced 12.8 Mt of bauxite and 4.2 Mt of alumina.Financial Statements.

During FY2012, we consumed 34 per cent of our alumina production in our aluminium smelters and sold the balance to other smelters. Our alumina sales are a mixture of long-term contract sales at LME-linked prices and spot sales at negotiated prices. Prices for our aluminium sales are generally linked to prevailing LME prices.

~~Boddington/Worsley~~

Boddington/Worsley is an integrated bauxite mining/alumina refining operation. The Boddington bauxite mine in Western Australia supplies bauxite ore to the Worsley alumina refinery via a 62-kilometre long conveying system. We own 86 per cent of the mine and the refinery. It is our sole integrated bauxite mining/alumina refining asset. Worsley, one of the largest and lowest-cost refineries in the world, is currently in the ramp-up phase of a major expansion (see Development projects below). Our share of Worsley’s FY2012 production was 2.9 Mt of alumina. Worsley’s export customers include our own Hillside, Bayside and Mozal smelters in southern Africa. Boddington has a reserve life of 18 years.

~~Mineração Rio do Norte~~

~~We own 14.8 per cent of Mineração Rio do Norte (MRN), which owns and operates a large bauxite mine in Brazil.~~

~~Alumar~~

Alumar is an integrated alumina refinery/aluminium smelter. We own 36 per cent of the Alumar refinery and 40 per cent of the smelter. Alcoa operates both facilities. The operations, and their integrated port facility, are located at São Luís in the Maranhão province of Brazil. Alumar sources bauxite from MRN. During FY2012, approximately 27 per cent of Alumar’s alumina production was used to feed the smelter, while the remainder was exported. Our share of Alumar’s FY2012 saleable production was 1,235 kilotonnes (kt) of alumina and 170 kt of aluminium.

~~Hillside and Bayside~~

Our Hillside and Bayside smelters are located at Richards Bay, South Africa. Hillside’s capacity of approximately 715 kilotonnes per annum (ktpa) makes it the largest aluminium smelter in the southern hemisphere. Following the mothballing of the potlines B and C in support of a national energy conservation scheme, Bayside has reduced smelting capacity to approximately 95 ktpa since 2009. Hillside imports alumina from our Worsley refinery. Both Hillside and Bayside source power from Eskom, the South African state utility, under long-term contracts with prices linked to the LME price of aluminium (except for Hillside Potline 3, the price of which is linked to the South African and US producer price indices). Potline capacity was impacted as a result of a major unplanned outage in the March 2012 quarter.

~~Mozal~~

We own 47.1 per cent of and operate the Mozal aluminium smelter in Mozambique, which has a total capacity of approximately 563 ktpa. Mozal sources power generated by Hydro Cahora Basa via Motraco, a transmission joint venture between Eskom and the national electricity utilities of Mozambique and Swaziland. Our share of Mozal’s FY2012 production was 264 kt.

Information on ~~Aluminium~~Copper mining operations

The following table contains additional details of our mining operations. This table should be read in conjunction with the production ~~(see~~(refer to section ~~2.3.2)~~2.2.2) and reserve tables ~~(see~~(refer to section ~~2.13.2)~~2.3.2).

Mine & ~~Location~~location

Means of ~~Access~~access

Ownership

Operator

Title, leases or
options

History

~~Title, Leases or~~Mine type &
~~Options~~mineralisation
style

~~History~~Power

source

~~Mine Type~~Facilities, use &
~~Mineralisation~~
~~Style~~condition

Americas

~~Power~~

~~Source~~

~~Facilities, Use &~~
~~Condition~~

~~Bauxite~~

~~Boddington bauxite mine~~

~~Boddington, 123 km southeast of Perth, Western Australia~~

~~Public road~~
~~Ore transported to Worsley alumina refinery by a 62 km conveyor~~

~~BHP Billiton 86%~~

~~Sojitz Alumina~~

~~Japan Alumina Associates 10%~~

~~Ownership structure of operator as per Worsley JV~~

~~BHP Billiton Worsley, Alumina Pty Ltd~~

~~Mining leases from Western Australia Government expire over the period 2014–2032, all with 21-year renewal available~~

~~2 sub-leases from Alcoa of Australia~~

~~Opened 1983~~

~~Significantly extended 2000~~

~~Open-cut~~

~~Surficial gibbsite-rich lateritic weathering of Darling Range rocks~~

~~JV owned powerline connected to Worsley alumina refinery site~~

~~Crushing plant Nominal capacity: 19 mtpa bauxite~~

~~Mineração Rio do Norte~~

~~Porto Trombetas, Pará, Brazil~~

~~Sealed road and rail connects mine area with Porto Trombetas village, accessed by air or river~~

~~BHP Billiton 14.8%~~

~~Alcoa and affiliates 18.2%~~

~~Vale 40%~~

~~Rio Tinto Alcan 12%~~

~~Votorantim 10%~~

~~Hydro 5%~~

~~MRN~~

~~Mining rights granted by Brazilian Government until reserves exhausted~~

~~Production commenced~~

~~1979~~

~~Expanded 2003~~

~~Open-cut~~

~~Lateritic weathering of nepheline syenite occurring primarily as gibbsite in a clay matrix overlain by clay sediments~~

~~On-site fuel oil generators~~

~~Crushing facilities, long distance conveyors, wash plant~~

~~Nominal capacity: 18 mtpa washed bauxite~~

~~Village and airport~~

~~Drying and ship loading facilities near Porto Trombetas~~

~~Information on Aluminium smelters and refineries~~

~~Smelter,~~

~~Refinery or~~

~~Processing~~

~~Plant~~

~~Location~~

~~Ownership~~

~~Operator~~

~~Title, Leases or~~

~~Options~~

~~Product~~

~~Nominal~~
~~Production~~
~~Capacity~~

~~Power Source~~

~~Aluminium and~~

~~alumina~~

~~Hillside~~Copper

~~Aluminium smelter~~

~~Richards Bay, 200 km north of Durban, KwaZulu-Natal province, South Africa~~

~~100%~~

~~BHP Billiton~~

~~Freehold title to property, plant, equipment~~

~~Leases over harbour facilities~~

~~Standard aluminium ingots~~

~~715 ktpa primary aluminium~~

~~Eskom (national power supplier) under long-term contracts~~

~~Contract prices for Hillside 1 and 2 linked to LME aluminium price Prices for Hillside 3 linked to SA and US producer price index~~

~~Bayside~~

~~Aluminium smelter~~

~~Richards Bay, 200 km north of Durban,~~

~~South Africa~~

~~100%~~

~~BHP Billiton~~

~~Freehold title to property, plant, equipment~~

~~Primary aluminium, slab products~~

~~95 ktpa primary aluminium on remaining Potline A~~

~~Eskom, under long-term contract~~

~~Contract price linked to LME aluminium price~~

~~Mozal~~

~~Aluminium smelter~~

~~17 km from Maputo, Mozambique~~

~~BHP Billiton 47.1%~~

~~Mitsubishi 25%~~

~~Industrial Development Corporation of South Africa Ltd 24%~~

~~Mozambique Government 3.9%~~

~~BHP Billiton~~

~~50-year government concession to use the land Renewable for 50 years~~

~~Standard aluminium ingots~~

~~563 ktpa~~

~~Motraco~~

~~Worsley~~

~~Alumina refinery~~

~~55 km northeast of Bunbury, Western Australia~~

~~BHP Billiton 86%~~

~~Sojitz Alumina 4%~~

~~Japan Alumina Associates 10%~~

~~Ownership structure of operator as per Worsley JV~~

~~BHP Billiton Worsley Alumina Pty Ltd~~

~~2,480 ha refinery lease from Western Australian Government Expires 2025~~

~~21-year renewal available~~

~~Metallurgical grade alumina~~

~~4.6 mtpa~~

~~JV owned on-site coal power station, third party on-site gas-fired steam power generation plant~~

~~Alumar~~

~~Alumina refinery and aluminium smelter~~

~~São Luis, Maranhão, Brazil~~

~~Aluminium smelter: BHP Billiton 40%~~

~~Alcoa 60%~~

~~Alumina refinery: BHP Billiton 36%~~

~~Alcoa & affiliates 54%~~

~~Rio Tinto 10%~~

~~Alcoa operates both facilities~~

~~All assets held freehold~~

~~Alumina and aluminium ingots~~

~~Refinery: 3.5 mtpa alumina~~

~~Smelter: 450 ktpa primary aluminium~~

~~Electronorte (Brazilian public power generation concessionaire), 20-year contract~~

~~Development projects~~

~~Worsley Efficiency and Growth project~~

In May 2008, we announced the Board’s approval of an expansion project to increase the capacity of the Worsley refinery from 3.5 million tonnes per annum (mtpa) of alumina to 4.6 mtpa (100 per cent capacity) through expanded mining operations at Boddington, additional refinery capacity and upgraded port facilities. A supplementary approval of the development was obtained in June 2011. The expansion project, with a budgeted capital expenditure of US$3.0 billion, achieved first production in March 2012 and full production is on track to be achieved within the original ramp up schedule of 12–16 months from March 2012. The operations are well placed to achieve a smooth ramp-up due to the extensive commissioning and operating planning that has been put in place. Worsley is already one of the most efficient and productive alumina refineries in the world and its unit cash costs are expected to benefit from the increased scale of production.

~~Guinea Alumina~~

We have a one-third interest in a joint venture that has undertaken a feasibility study into the construction of a 10 mtpa bauxite mine, an alumina refinery with processing capacity exceeding 3.3 mtpa and associated infrastructure approximately 110 kilometres from the port of Kamsar in Guinea. We are seeking to exit the project.

~~2.2.4 Base Metals Customer Sector Group~~

Our Base Metals CSG is one of the world’s premier producers of copper, silver, lead and uranium, and a leading producer of zinc. Our portfolio of large, low-cost mining operations includes the Escondida mine in Chile, the world’s largest single producer of copper, and Olympic Dam in South Australia, already a major producer of copper and uranium with the potential for expansion.

Our total copper production in FY2012 was 1.1 Mt. In addition to conventional mine development, we continue to pursue advanced treatment technologies, such as leaching low-grade chalcopyrite ores, which we believe have the potential to recover copper from ores previously uneconomic to treat.

~~We market five primary products: copper concentrates, copper cathodes, uranium oxide, lead concentrates and zinc concentrates.~~

We sell most of our copper, lead and zinc concentrates to smelters under long-term volume contracts at prices based on the LME price for the contained metal, typically set three or four months after shipment, less treatment charges and refining charges (collectively referred to as ‘TCRCs’) that are negotiated with the smelters mostly on an annual or bi-annual basis. Some of the ores we mine contain quantities of silver and gold, which remain in the base metal concentrates we sell. We receive payment credits for the silver and gold recovered by our customers in the smelting and refining process.

We sell most of our copper cathode production to wire rod mills, brass mills and casting plants around the world under annual contracts with prices at premiums to LME prices. We sell uranium oxide to electricity generating utilities, principally in Western Europe, North America and North Asia. Uranium is typically sold under a mix of longer-term and shorter-term contracts. A significant portion of our uranium production is sold into fixed price contracts, although increasingly sales are based on flexible pricing terms.

~~We have six assets, with Pampa Norte having two operations.~~

~~Escondida~~

Our 57.5 per cent owned and operated Escondida mine is the largest producer in the world. In FY2012, our share of Escondida production was 333.8 kt of payable copper in concentrate and 172.0 kt of copper cathode.

Escondida has a reserve life of 54 years. The increase in reserves from 35 years in FY2011 is predominantly due to OGP1 approval that will deliver double the current flotation capacity that allows improved recovery of lower grade ores with commensurate expansion of the reserves footprint.

The availability of key inputs like power and water at competitive prices is an important focus at Escondida. Escondida’s power demand of approximately 440 MW is currently covered by four contracts: one of which provides 340 MW until 2029; and the balance of which provide 252 MW until 2016.

To address limitations on the availability of water, we desalinate and carefully manage our use and re-use of available water. We are exploring alternative sources, including further desalination of seawater.

~~Olympic Dam~~

Olympic Dam is already a significant producer of copper cathode and uranium oxide and a refiner of smaller amounts of gold and silver bullion. We are exploring a series of staged development options that would make our wholly owned Olympic Dam operation one of the world’s largest producers of copper, the largest producer of uranium and a significant producer of gold (see Development projects below).

Production in FY2012 was lower than that achieved in FY2011. Olympic Dam produced 192.6 kt (FY2011: 194.1 kt) of copper cathode, 3.9 kt (FY2011: 4.0 kt) of uranium oxide, 117.8 kilo-ounces (FY2011: 111.4 kilo-ounces) of refined gold and 907 kilo-ounces (FY2011: 982 kilo-ounces) of refined silver in FY2012.

~~Olympic Dam has a reserve life of 57 years.~~

~~Antamina~~

We own 33.75 per cent of Antamina, a large, low-cost, long-life copper/zinc mine in Peru. Antamina has a reserve life of 16 years. Our share of Antamina’s FY2012 production was 127.0 kt of copper in concentrate, and 57.5 kt of zinc in concentrate. Antamina also produces smaller amounts of molybdenum and lead/bismuth concentrate.

~~Pampa Norte Spence Operation~~

~~Our wholly owned Spence copper mine produces copper cathode. During FY2012, we produced 180.3 kt of copper cathode.~~

~~Spence has a reserve life of 11 years.~~

~~Pampa Norte Cerro Colorado Operation~~

Our wholly owned Cerro Colorado mine in Chile remains a significant producer of copper cathode, although production levels have declined in recent years as grades have declined. Production in FY2012 was 83.4 kt of copper cathode.

~~Cerro Colorado has a reserve life of 10 years.~~

~~Cannington~~

Our wholly owned Cannington mine in northwest Queensland, Australia, is one of the world’s largest producers of silver. In FY2012, Cannington produced concentrates containing 239.1 kt of lead, 54.7 kt of zinc and approximately 34.2 million ounces of silver.

~~Cannington has a reserve life of eight years.~~

~~North America – Pinto Valley~~

As a result of favourable economic conditions in FY2012, in particular copper prices, the decision was made to resume sulphide mining and milling operations at the Pinto Valley located in Arizona, United States. The mine, which will produce copper and molybdenum concentrate, is expected to have annual production capacity of approximately 60 kt of copper in concentrate. The project is expected to resume mining at the end of the CY2012 (FY2013).

~~Copper cathode will also continue to be produced at Pinto Valley and the neighbouring Miami Unit from residual solvent extraction electrowinning (SXEW) operations.~~

~~Pinto Valley has a reserve life of four years.~~

~~Information on Base Metals mining operations~~

~~The following table contains additional details of our mining operations. This table should be read in conjunction with the production (see section 2.3.2) and reserve tables (see section 2.13.2).~~

~~Mine & Location~~

~~Means of~~

~~Access~~

~~Ownership~~

~~Operator~~

~~Title, Leases or~~
~~Options~~

~~History~~

~~Mine Type &~~
~~Mineralisation~~

~~Style~~

~~Power~~

~~Source~~

~~Facilities, Use &~~
~~Condition~~

~~Copper~~

Escondida

Atacama Desert, 170 km southeast of Antofagasta, Chile

Public road

Copper cathode transported by privately owned rail to ports at Antofagasta and Mejillones

Copper concentrate transported by Escondida-owned ~~pipeline~~pipelines to its Coloso port facilities

BHP Billiton 57.5% of Minera Escondida Limitada (MEL)

Rio Tinto 30% JECO Corporation consortium comprising Mitsubishi,

JX Nippon Mining and Metals 10%
~~Jeco 2~~ JECO2 Ltd 2.5%

BHP Billiton

Mining
concession from
Chilean
Government
valid indefinitely ~~(subject~~
(subject to
payment of
annual fees)

Original construction completed in 1990

~~Subsequent expansion projects cost US$3.0 billion (100%)~~

Sulphide ~~Leach~~leach copper ~~project cost US$1.0 billion (100%)~~production commenced in

~~First production~~ 2006

2 open-cut pits: Escondida and Escondida Norte

Escondida and Escondida Norte mineral deposits are adjacent but distinct supergene enriched porphyry copper deposits

~~Escondida owned~~Escondida-owned transmission lines connect to Chile’s northern power grid

Electricity purchased under ~~contract~~contracts expiring 2016 and 2029

23 concentrator plants extract copper concentrate from sulphide ore by flotation extraction process

2 solvent extraction plants produce copper cathode

Nominal capacity: ~~3.2 mtpa copper concentrate 330~~153.7 Mtpa (nominal milling capacity) and 350 ktpa copper cathode (nominal capacity of tank house)

Two 168 km concentrate pipelines

167 km water pipeline Port facilities at Coloso, Antofagasta

Mine & location
Means of access
Ownership
Operator
Title, leases or
options
History
Mine type &
mineralisation
style
Power
source
Facilities, use &
condition
Pampa Norte Spence
Atacama Desert, ~~150~~162 km northeast of Antofagasta, Chile
Public road

Copper cathode transported by rail to ports at Mejillones and Antofagasta
100% BHP Billiton Mining
concession from
Chilean
Government
valid indefinitely ~~(subject~~
(subject to
payment of
annual fees)
Development cost of US$1.1 billion approved in 2004

First copper produced in 2006

Open-cut

~~Supergene enriched~~Enriched and oxidised porphyry copper deposit that ~~includes~~presents dominantly in situ copper oxide ~~ores overlying~~mineralisation that overlies a near-horizontal sequence of supergene sulphide, ~~zone~~transitional sulphide, and lower-most primary (hypogene) sulphide mineralisation

~~Group-owned~~Spence-owned transmission lines connect to Chile’s northern power grid

Electricity purchased under contract

Processing and crushing facilities, separate dynamic (on-off) leach pads, solvent extraction plant, electrowinning plant

Nominal ~~capacity: 200~~capacity of tank house: 179 ktpa copper cathode

Mine & ~~Location~~location

Means of
~~Access~~ access

Ownership

Operator
Title, leases or
options
History

~~Title, Leases or~~Mine type &
~~Options~~mineralisation
style

~~History~~Power
source

~~Mine Type~~Facilities, use &
~~Mineralisation~~condition
~~Style~~
~~Power~~
~~Source~~
~~Facilities, Use &~~
~~Condition~~
Pampa Norte Cerro Colorado
Atacama Desert, 120 km east of Iquique, Chile
Public road

Copper cathode trucked to port at Iquique
100% BHP Billiton Mining concession
from Chilean
Government valid
indefinitely ~~(subject~~
(subject to
payment of
annual fees)
Commercial production commenced in 1994

Expansions in 1996 and 1998

Open-cut

~~Supergene enriched~~Enriched and oxidised porphyry copper deposit that ~~consists~~presents dominantly in situ copper oxide mineralisation that overlies a near-horizontal sequence of asupergene sulphide, ~~enrichment zone overlayed by oxide ore (chrysocolla~~transitional sulphide, and ~~brochantite)~~lower-most primary (hypogene) sulphide mineralisation
Long-term contracts with northern Chile power grid
2 primary, secondary and tertiary crushers, leaching pads, solvent extraction
plant, electrowinning plant

Nominal ~~capacity: 120~~capacity of tank house: 102 ktpa copper cathode
~~Pinto Valley~~
~~125 km east of Phoenix, Arizona, US~~
~~Public road~~
~~As a result of the resumption of the sulphide operations, copper~~Copper and ~~molybdenum concentrate to be trucked~~
~~100%~~ ~~BHP Billiton~~ ~~Freehold title to the land~~
~~Acquired 1996 as part of Magma Copper acquisition~~
~~Sulphide mining and milling operations discontinued 2009 to restart FY2013~~ ⁽¹⁾
~~Residual SXEW production continues~~
~~Pinto Valley: open-pit~~
~~Miami Unit: in-situ leach Porphyry copper deposit of low-grade primary mineralisation~~
~~Salt River Project~~ ~~2 SXEW operations at Pinto Valley and Miami~~
⁽¹⁾ ~~Mining operations previously discontinued in 1998 and restarted in 2007 and again discontinued in 2009.~~

~~Mine & Location~~
~~Means of~~
~~Access~~
~~Ownership~~
~~Operator~~
~~Title, Leases or~~
~~Options~~
~~History~~
~~Mine Type &~~
~~Mineralisation~~
~~Style~~
~~Power~~
~~Source~~
~~Facilities, Use &~~
~~Condition~~
~~Copper Uranium~~
zinc
~~Olympic Dam~~
~~560 km northwest of Adelaide, South Australia~~
~~Public road~~
~~Copper cathode trucked to ports. Uranium oxide transported by road to ports~~
~~100%~~ ~~BHP Billiton~~
~~Mining lease granted by South Australian Government expires 2036~~
~~Right of extension for 50 years~~
~~Acquired 2005 as part of WMC acquisition~~
~~Copper production began 1988~~
~~Throughput raised to 9 mtpa in 1999 Optimisation project completed 2002~~
~~New copper solvent extraction plant commissioned 2004~~
~~Underground~~
~~Large poly-metallic deposit of iron oxide-copper-gold mineralisation~~
~~Supplied via a 275 kV powerline from Port Augusta, transmitted by ElectraNet~~
~~Automated train and trucking network. Crushing, storage and ore hoisting facilities.~~
~~2 grinding circuits to extract copper concentrate from sulphide ore.~~
~~Flash furnace produces copper anodes, which are then refined to produce copper cathodes~~ ⁽²⁾
~~Nominal capacity: 200 ktpa copper cathode~~
⁽²⁾ ~~Electrowon copper cathode and uranium oxide concentrate produced by leaching and solvent extracting flotation tailings.~~

~~Mine & Location~~
~~Means of~~
~~Access~~
~~Ownership~~
~~Operator~~
~~Title, Leases or~~
~~Options~~
~~History~~
~~Mine Type &~~
~~Mineralisation~~
~~Style~~
~~Power~~
~~Source~~
~~Facilities, Use &~~
~~Condition~~
~~Copper Zinc~~
Antamina
Andes mountain range, 270 km north of Lima, ~~north-central~~north central Peru
Public road

Copper and zinc concentrates transported by pipeline to port of Huarmey

Molybdenum and lead/bismuth concentrates transported by truck

BHP Billiton 33.75% of Compañía Minera Antamina
~~S.A.~~ SA

~~Xstrata~~Glencore 33.75%
Teck ~~Cominco~~ 22.5%
Mitsubishi 10%
Compañía Minera Antamina ~~S.A.~~SA Mining rights
from Peruvian
Government held
indefinitely,
subject to
payment of
annual fees and
supply of
information on
investment and
production
Commercial production commenced in 2001

Capital cost US$2.3 billion (100%)

Open-cut

Zoned porphyry and skarn deposit with central ~~Cu-only~~copper-only ores and an outer band of
~~Cu-Zn~~ copper-zinc ore
zone
Long-term contracts with individual power producers
Primary crusher, concentrator, ~~(nominal capacity 130,000 tpd),~~ copper and zinc flotation circuits, bismuth/moly cleaning circuit

Nominal milling capacity 53 Mtpa
300 km concentrate pipeline ~~(design throughput~~
~~2.3 dry mtpa)~~
Port facilities at Huarmey

Mine & location

Means of access

Ownership

Operator
Title, leases or
options
History
Mine type &
mineralisation
style
Power
source
Facilities, use &
condition
~~Silver, Lead and Zinc~~
Australia
~~Cannington~~
~~300 km southeast of Mt Isa, Queensland,~~
~~Australia~~
~~Public road~~Copper and ~~Group-owned airstrip~~
~~Product trucked to Yurbi, then by rail to public port~~
~~100%~~ ~~BHP Billiton~~ ~~Mining leases granted by Queensland Government expire 2029~~ ~~Concentrate production commenced 1997, subsequent projects improved mill throughput and metal recovery~~ ~~Underground Broken Hill-type silver-lead-zinc sulphide deposit~~ ~~On-site power station operated under contract~~
~~Beneficiation plant: primary and secondary grinding circuits, pre-flotation circuits, flotation circuits, leaching circuits, concentrate filtration circuit, paste plant~~
~~Nominal milling capacity: 3.2 mtpa~~

~~Development projects~~

~~Olympic Dam~~

~~The proposed expansion of Olympic Dam would be a progressive development requiring construction activity to increase production up to 750 kt per annum (ktpa) of copper, 19 ktpa of~~ uranium ~~oxide and 800 kilo-ounces of gold. On 10 October 2011, the South Australian Government and Australian Commonwealth Government approved the Environmental Impact Statement for the Olympic Dam Project.~~

We announced on 22 August 2012 that we will not approve the open-pit expansion of our Olympic Dam mine in South Australia in time to meet the Roxby Downs (Indenture Ratification) (Amendment of Indenture) Amendment Act 2011 deadline of 15 December 2012. We will investigate a less capital intensive design of the Olympic Dam open-pit expansion, involving new technologies to substantially improve the economics of the project.

~~Yeelirrie~~

On 27 August 2012, we announced we have signed an agreement to sell our wholly owned Yeelirrie uranium deposit in Western Australia to Cameco Corporation for US$430 million. The sale is subject to relevant approvals from the Australian Foreign Investment Review Board and Government of Western Australia.

~~Escondida~~

Exploration of the Escondida lease and early drilling results have resulted in an announcement of extensive additional mineralisation in close proximity to existing infrastructure and processing facilities, including the Pampa Escondida and Pinta Verde prospects. In FY2012, Escondida has expensed US$104.7 million (US$60.2 million BHP Billiton share) in exploration.

The Escondida Ore Access project provides access to higher-grade ore and commenced the execution phase during FY2011 with first production achieved during the June 2012 quarter. In addition, the Laguna Seca Debottlenecking project, which will provide additional processing capacity, commenced the execution phase in FY2011 and is expected to complete this phase during the second half of CY2012. Organic Growth Project 1 (OGP1), which is the replacement of the Los Colorados concentrator allowing access to higher-grade ore and additional processing capacity, was approved and moved into the execution phase in February 2012. OGP1 is expected to cost US$3.8 billion (US$2.2 billion BHP Billiton share). In February 2012, BHP Billiton also approved the Oxide Leach Area Project (OLAP), which creates a new dynamic leaching pad and mineral handling system that will include several overland conveyers. The new pad is expected to maintain oxide leaching capacity at current levels following the exhaustion of the existing heap leach in CY2014. OLAP is expected to cost US$721 million (US$414 million BHP Billiton share) with commissioning anticipated in the middle of CY2014.

~~Antamina~~

In FY2012, Antamina continued execution of the expansion project. With a total investment of US$1.3 billion (US$435 million BHP Billiton share), the project expands milling capacity by 38 per cent to 130 kt per day (ktpd). The expansion project includes a new SAG mill, a new 55-kilometre power transmission line, an expanded truck shop facility and upgrades to the crushing and tailing systems, flotation circuit and port capacity. Commissioning of the SAG mill and first production was achieved in March 2012. The project is more than 92 per cent complete.

~~Resolution Copper~~

~~We hold a 45 per cent interest in the Resolution Copper project in Arizona, United States, operated by Rio Tinto (55 per cent interest).~~

~~Resolution Copper is undertaking a pre-feasibility study into a substantial underground copper mine and processing facility.~~

~~In FY2012, Resolution Copper continued to advance the sinking of the No. 10 Shaft in order to gain access to the ore deposit for characterisation work of mineralisation and geotechnical conditions.~~

~~Work also continued towards gaining approval from the US Congress for a Federal Land Exchange to access the ore deposit.~~

~~2.2.5 Diamonds and Specialty Products Customer Sector Group~~

Our Diamonds and Specialty Products CSG operates our diamonds business and engages in the exploration and development of a potash business. On 1 February 2012 we announced that we had exercised an option to sell our 37.8 per cent non-operated interest in Richards Bay Minerals to Rio Tinto and will exit the titanium minerals industry. On 7 September 2012, we announced the sale was complete.

~~Diamonds~~

Our diamonds business is comprised of the EKATI Diamond Mine in the Northwest Territories of Canada. EKATI has produced on average almost three million carats per year of rough diamonds over the last five years. The grade of ore we process fluctuates from year to year, resulting in variations in carats produced. In addition, the proportion of our production consisting of high-value carats (larger and/or higher-quality stones) and low-value carats (smaller and/or lower-quality stones) fluctuates from year to year. EKATI has a reserve life of three years.

Our interest in EKATI consists of an 80 per cent interest in the Core Zone Joint Venture, comprising existing operations and a 58.8 per cent interest in the Buffer Zone Joint Venture, primarily focusing on exploration targets.

Annual sales from EKATI (100 per cent terms) represented approximately two per cent of current world rough diamond supply by weight and approximately six per cent by value in FY2012. We sell most of our rough diamonds to international diamond buyers through our Antwerp sales office.

On 30 November 2011, we announced that we are reviewing our diamonds business, comprising our interests in the EKATI Diamond Mine and the Chidliak exploration project in Canada. This review is examining whether a continued presence in the diamonds industry is consistent with our strategy and evaluating the potential sale of all or part of the diamonds business. On 20 December 2011, we confirmed that we agreed to sell our 51 per cent interest in the Chidliak diamonds exploration project on Baffin Island, Canada, to our joint venture partner, Peregrine Diamonds Ltd.

~~Potash~~

Our potash strategy is to build a material industry position over the long term. We continue advancing the Jansen Project, a greenfield potash project in Saskatchewan, Canada. Jansen progressed into the feasibility study phase (an advanced stage of our project approvals process) in February 2011. Approved spending for Jansen is US$1.1 billion.

~~Jansen is designed ultimately to produce approximately eight mtpa of agricultural grade potash.~~

We are also continuing to study other potential projects in the Saskatchewan potash basin, including Young, Boulder and Melville, and are progressing these projects in the context of our development portfolio.

We are conducting a potash exploration program, including 3D seismic survey and drilling programs. We have approved spending of almost US$2 billion (including Jansen and other acquisitions) in respect of developing our potash business. Our permit positions for potash extend over 14,500 square kilometres in the Saskatchewan basin.

~~Titanium minerals~~

Our principal interest in titanium minerals consists of our 37.8 per cent economic interest in Richards Bay Minerals (RBM). RBM is a major producer of titania slag, high-purity pig iron, rutile and zircon from mineral sands. Approximately 90 per cent of the titanium dioxide slag produced by RBM is suitable for the chloride process of titanium dioxide pigment manufacture and is sold internationally under a variety of short-, medium- and long-term contracts.

On 1 February 2012, we announced that we exercised an option to sell our non-operated interest in RBM to Rio Tinto and will exit the titanium minerals industry. On 7 September 2012, we announced the sale was complete. The sale price was US$1.9 billion before adjustments.

~~Information on Diamonds and Specialty Products mining operations~~

~~The following table contains additional details of our mining operations. This table should be read in conjunction with the production (see section 2.3.2) and reserve tables (see section 2.13.2).~~

~~Mine & Location~~

~~Means of~~

~~Access~~

~~Ownership~~

~~Operator~~

~~Title, Leases or~~
~~Options~~

~~History~~

~~Mine Type &~~
~~Mineralisation~~

~~Style~~

~~Power~~

~~Source~~

~~Facilities, Use &~~
~~Condition~~

~~Diamonds~~

Olympic Dam

~~EKATI Diamond Mine~~

~~310~~560 km ~~northeast~~northwest of ~~Yellowknife, Northwest Territories, Canada~~

~~Aircraft~~

~~Ice road open approximately 10 weeks per year~~

~~Core Zone JV~~

~~BHP Billiton 80%~~

~~Buffer Zone JV BHP Billiton 58.8%~~

~~Remaining interest held by 2 individuals~~

~~BHP Billiton~~

~~Mining leases granted by Canadian Government until 2022~~

~~Production began1997~~

~~Mine and processing plant began operating 1998~~

~~Ownership increased with acquisition of Dia Met Minerals in 2001~~

~~Fox: open-cut~~

~~Koala and Koala North: underground~~

~~Eocene age kimberlite pipes – dominantly volcaniclastic infill~~

~~JV owned and operated diesel power station~~

~~Crushers, washers/scrubber and grinder and heavy media separator~~

~~Magnetics and X-ray sorters for diamond recovery~~

~~Fuel storage~~

~~Titanium minerals~~

~~Richards Bay Minerals~~

~~10-50 km north of Richards Bay, KwaZulu-Natal,~~Adelaide, South ~~Africa~~Australia

Public road

~~Product transported by public rail~~Copper cathode trucked to ~~port~~

~~BHP Billiton 37.8% economic interest through 50% interest in the 2 legal entities that comprise RBM, Richards Bay Mining (Pty) Ltd and Richards Bay Titanium (Pty) Ltd~~ports

~~RBM functions as a single economic entity~~

~~Rio Tinto~~

~~Long-term renewable mineral leases from South African Government subject to South African Mining Charter~~

~~RBM formed 1976~~

~~Fifth mine added 2000~~

~~One mining plant decommissioned in 2008~~

~~Announced exercise of option to sell interest in RBM on 1 February 2012 and completion of the sale on 7 September 2012~~

~~Dune sand dredging~~

~~Quaternary age coastal dune deposits – heavy mineral sands concentrated by wave and wind action~~

~~Eskom (national utility company)~~

~~4 dune sand dredge mines, minor supplementary dry mining~~

~~Gravity separation produces heavy mineral concentrate which is trucked to central processing plant to produce rutile, zircon and ilmenite~~

~~Nominal titanium slag capacity~~⁽¹⁾ ~~1.05 mtpa~~

⁽¹⁾	~~Smelter processes ilmenite to produce titanium dioxide slag and high-purity iron.~~

~~Development projects~~

~~Jansen Potash Project~~

On 24 June 2011, we approved US$488 million of pre-commitment spending to fund early-stage site preparation for surface construction, procurement of long lead time items and the first sections of the production and service shafts. On 30 June 2011, the Saskatchewan Ministry of Environment approved our Environmental Impact Statement for the development of the Jansen project.

We are currently executing a ground freezing program in which the ground will be frozen using a closed system of refrigeration pipes through which brine is circulated. Excavation of shafts is also under way with shaft collars completed and shaft sinking due to begin by the end of CY2012. Sinking headframes and hoists are also being installed. The eventual depth of the service and production shafts will be approximately one kilometre.

~~Diamonds~~

On 9 May 2011, we approved the Misery open-pit project at the EKATI Diamond Mine in the Northwest Territories of Canada. This project consists of a pushback of the existing Misery open-pit, which was mined from 2001 to 2005. Stripping operations began in September 2011, with ore production expected to begin in late 2015 and final production from Misery expected in mid-2017. The estimated capital expenditure required to complete the execution phase is US$323 million (BHP Billiton share).

~~2.2.6 Stainless Steel Materials Customer Sector Group~~

Our Stainless Steel Materials CSG is primarily a supplier of nickel to the stainless steel industry. Nickel is an important component of the most commonly used types of stainless steel. We also supply nickel to other markets, including the specialty alloy, foundry, chemicals and refractory material industries. We are the world’s fifth-largest producer of nickel and we sell our nickel products under a mix of long-term, medium-term and spot volume contracts, with prices linked to the LME nickel price.

~~Our nickel business comprises two Assets:~~

~~Nickel West~~

Nickel West is the name for our wholly owned Western Australian nickel Asset, which consists of an integrated system of mines, concentrators, a smelter and a refinery. We mine nickel-bearing sulphide ore at our Mt Keith, Leinster and Cliffs Operations north of Kalgoorlie. We operate concentrator plants at Mt Keith and at Leinster, which also concentrate ore from Cliffs. Leinster and Mt Keith have reserve lives of eight and 13 years, respectively, both have options for further expansion. The Mt Keith Talc Redesign project, which enables the processing of talc bearing ore, was successfully commissioned in December 2011. Cliffs is a high-grade underground mine with a reserve life of three years.

We also operate the Kambalda concentrator south of Kalgoorlie, where we source ore through tolling and concentrate purchase arrangements with third parties in the Kambalda region. We also have purchase agreements in place for the direct purchase of concentrate, which we re-pulp, dry and blend with other concentrate processed at Kambalda.

We transport concentrate from Leinster, Mt Keith and Kambalda to our Kalgoorlie smelter, where it is processed into nickel matte, containing approximately 67 per cent nickel. In FY2012, we exported approximately 48 per cent of our nickel matte production. We processed the remaining nickel matte at our Kwinana nickel refinery, which produces nickel metal in the form of LME grade briquettes, and nickel powder together with a range of saleable by-products.

~~Nickel West production in FY2012 was 109 kt of contained nickel.~~

During FY2012 the Nickel West Kwinana hydrogen plant was successfully commissioned, following a restriction in hydrogen supply which impacted production of nickel metal from the Kwinana nickel refinery.

~~Cerro Matoso~~

Cerro Matoso, our 99.94 per cent owned nickel Asset in Colombia, combines a lateritic nickel ore deposit with a ferronickel smelter. Cerro Matoso is the world’s second-largest producer of ferronickel and is one of the lowest-cost producers of ferronickel. The smelter produces high-purity, low-carbon ferronickel granules. Cerro Matoso has an estimated current reserve life of 32 years. Production in FY2012 was 48.9 kt of nickel in ferronickel form following the successful early completion of the planned furnace replacement.

Cerro Matoso operates under mining concessions that are due to expire on 30 September 2012 and has applied, in accordance with the law and its contracts, for an extension of these mining concessions. If this extension is not granted, Cerro Matoso has an underlying agreement with the Colombian Government that grants it the rights to continue mining and producing through to 2029 under a mining arrangement, with a further extension of 15 years possible.

~~Information on Stainless Steel Materials mining operations~~

~~The following table contains additional details of our mining operations. This table should be read in conjunction with the production (see section 2.3.2) and reserve tables (see section 2.13.2).~~

~~Mine & Location~~

~~Means of~~

~~Access~~

~~Ownership~~

~~Operator~~

~~Title, Leases or~~
~~Options~~

~~History~~

~~Mine Type &~~

~~Mineralisation~~

~~Style~~

~~Power~~

~~Source~~

~~Facilities, Use &~~
~~Condition~~

~~Nickel~~

~~Mt Keith~~

~~Western Australia~~

~~Private road~~

~~Nickel concentrate~~Uranium oxide transported by road to ~~Leinster nickel operations for drying and on-shipping~~ports

100%

BHP Billiton

~~Leases over the land from Western~~ Mining lease
granted by South
Australian
Government

expires in 2036

~~Key leases expire 2013 – 2033~~

~~Renewals at government discretion~~Right of
extension for
50 years (subject
to remaining
mine life)

~~Officially commissioned 1995 by WMC~~

~~Mt Keith was acquired~~Acquired in 2005 as part of ~~acquisition of~~ WMC ~~in 2005~~

~~Open-cut~~acquisition

~~Disseminated textured magmatic nickel-sulphide mineralisation, associated with a metamorphosed ultramafic intrusion~~

~~On-site third party gas-fired turbines~~Copper production began in 1988

~~Natural gas sourced and transported under separate long-term contracts~~

~~Concentration plant with a nominal capacity: 11.5 mtpa of ore~~

~~Leinster~~

~~Western Australia~~

~~Public road~~Nominal milling capacity raised to 9 Mtpa in 1999

~~Nickel concentrate shipped by road and rail to Kalgoorlie nickel smelter~~

~~100%~~

~~BHP Billiton~~

~~Leases over the land from Western Australian Government~~Optimisation project completed in 2002

~~Key leases expire 2013 – 2031~~

~~Renewals at government discretion~~

~~Production commenced 1979~~

~~Leinster was acquired as part of acquisition of WMC~~New copper solvent extraction plant commissioned in ~~2005~~

~~Underground and open-cut~~

~~Steeply dipping disseminated and massive textured nickel-sulphide mineralisation, associated with metamorphosed ultramafic lava flows and intrusions~~

~~On-site third party gas-fired turbines~~

~~Natural gas sourced and transported under separate long-term contracts~~

~~Concentration plant with a nominal capacity: 3 mtpa of ore~~

~~Cliffs~~

~~Western Australia~~

~~Private road~~

~~Nickel ore transported by road to Leinster nickel operations for further processing~~

~~100%~~

~~BHP Billiton~~

~~Leases over the land from Western Australian Government Key leases expire 2025 – 2028~~

~~Renewals at government discretion~~

~~Production commenced 2008~~

~~Cliffs was acquired as part of acquisition of WMC in 2005~~2004

Underground

~~Steeply dipping massive textured nickel-sulphide~~Large poly-metallic deposit of iron oxide-copper-uranium-gold mineralisation ~~associated with metamorphosed ultramafic lava flows~~

Supplied via 275 kV power line from ~~Mt Keith~~

~~Mine site~~

~~Mine & Location~~
Port Augusta, transmitted by ElectraNet
~~Means of~~
~~Access~~
~~Ownership~~
~~Operator~~
~~Title, Leases or~~
~~Options~~
~~History~~
~~Mine Type &~~
~~Mineralisation~~
~~Style~~
~~Power~~
~~Source~~
~~Facilities, Use &~~
~~Condition~~
~~Cerro Matoso~~
~~Montelibano, Córdoba, Colombia~~ ~~Public road~~
~~BHP Billiton 99.94%~~
~~Employees~~Underground automated train and ~~former employees 0.06%~~
~~BHP Billiton~~
Existing mining concessions either renewable as of 1 October 2012 with 30-year extension until 2042 or, in absence of extension, to be automatically incorporated on 1 October 2012 into a larger area mining lease with a term until 2029
~~with the possibility of an extension for a further 15 years~~
~~Mining commenced 1980~~
~~Nickel production started 1982~~
~~Ownership increased to 53% in 1989~~trucking network feeding crushing, storage and ~~to 99.94% in 2007~~
~~Expansion project to double installed capacity completed 2001~~
~~Open-cut~~ore hoisting facilities

~~Nickel-laterite mineralisation formed from residual weathering of ophiolitic peridotite~~
~~National electricity grid under contracts expiring December 2014~~
~~Domestic natural gas for drier and kiln operation supplied by pipeline from national grid~~
~~Gas supply contracts expiring December 2021~~
~~Ferronickel smelter and refinery integrated with the mine~~
~~Beneficiation plant: primary and secondary crusher~~2 grinding circuits

Nominal milling capacity: ~~50 ktpa of nickel in ferronickel form~~10.3 Mtpa

~~Actual capacity depends on nickel grade from the mine~~Flash furnace produces copper anodes, then refined to produce copper cathodes
Electrowon copper cathode and uranium oxide concentrate produced by leaching and solvent extracting flotation tailings

~~Information on Stainless Steel Materials smelters, refineries~~Development projects

Americas

Escondida

The Organic Growth Project 1 (OGP1) is a new concentrator with a 152 kilotonnes per day (ktpd) plant. We expect this project to provide additional processing capacity and ~~processing plants~~allow access to high-grade ore. OGP1 was approved in February 2012 with budgeted expenditure of US$3.8 billion (US$2.2 billion BHP Billiton share). A US$361 million increase in the budget of OGP1 to US$4.2 billion (US$ 2.4 billion BHP Billiton share) was approved in October 2014 following challenges associated with contractor’s progress. The Project was completed in May 2015 and is currently in the commissioning and ramp-up phase.

~~Smelter, Refinery or~~
~~Processing Plant~~

~~Location~~

~~Ownership~~

~~Operator~~

~~Title, Leases or Options~~

~~Product~~

~~Nominal Production~~
~~Capacity~~

~~Power source~~

~~Nickel~~

~~Kambalda~~

~~Nickel concentrator~~

~~56 km south of Kalgoorlie, Western Australia~~

~~100%~~

~~BHP Billiton~~

~~Mineral leases over the land from Western Australian Government expire 2028~~

~~Renewals at government discretion~~

~~Concentrate containing approximately 14% nickel~~

~~1.6 mtpa ore~~

~~Ore sourced through tolling~~The Escondida Water Supply (EWS) project was approved in July 2013 and ~~concentrate purchase arrangements with third parties in Kambalda region~~

~~On-site third party gas-fired turbines~~

~~Natural gas sourced and transported under separate long-term contracts~~

~~Kalgoorlie~~

~~Nickel smelter~~

~~Kalgoorlie, Western Australia~~

~~100%~~

~~BHP Billiton~~

~~Freehold title over the property~~

~~Matte containing approximately 67% nickel~~

~~110 ktpa nickel matte~~

~~On-site third party gas-fired turbines~~

~~Natural gas sourced and transported under separate long-term contracts~~

~~Kwinana~~

~~Nickel refinery~~

~~30 km south of Perth, Western Australia~~

~~100%~~

~~BHP Billiton~~

~~Freehold title over the property~~

~~LME grade nickel briquettes, nickel powder~~

~~Also intermediate products, including copper sulphide, cobalt-nickel-sulphide, ammonium-sulphate~~

~~65 ktpa nickel metal~~

~~A combination of power generated by Southern Cross Energy and distributed via Western Power’s network and power sourced from other generators on the Western Power network~~

~~Development projects~~

~~Cerro Matoso expansion options~~

~~Cerro Matoso has undertaken conceptual studies on options for expanding production. A feasibility study is in progress for the Cerro Matoso Heap Leach project.~~

~~2.2.7 Iron Ore Customer Sector Group~~

~~Our Iron Ore CSG~~ consists of ~~our Western Australia Iron Ore (WAIO) interests~~a new 2,500 litres per second sea water desalination facility. This project will provide an alternative water supply to Escondida, as water usage increases upon completion of the 152 ktpd OGP1 copper concentrator. Construction of the new desalination facility commenced in July 2013 and includes the development of two pipelines, four high-pressure pump stations, a reservoir at the mine site and high-voltage infrastructure to support the system. The new facility is expected to be commissioned in CY2017 at a cost of US$3.4 billion (US$2.0 billion BHP Billiton share).

The Oxide Leach Area Project (OLAP) was completed in November 2014 and now in production. The Project involved the creation of a new dynamic leaching pad and mineral handling system that included several overland conveyors. The new pad is expected to maintain oxide leaching capacity at current levels. OLAP was approved in February 2012 with budgeted expenditure of US$721 million (US$414 million BHP Billiton share) and a US$212 million increase in the budget of OLAP to US$933 million (US$536 million BHP Billiton share) was approved in March 2014. Expected final cost is US$899 million (US$517 million BHP Billiton share).

Pampa Norte

The Spence Growth Option (SGO) project, currently at pre-feasibility phase, endeavours to maximise Spence’s value by exploiting the large and expandable hypogene resource with associated molybdenum sulphide by building a 95 ktpd concentrator. This would increase the mine life by approximately 50 years beyond the current FY2025 closure date. The proposed investment is approximately US$3.2 billion and the project is scheduled to commence at the end of the November 2019 quarter. The hypogene ore underlies the supergene reserves currently being exploited and therefore eliminates the need for pre-stripping and additional mine maintenance infrastructure. The option to maximise the use of existing heap leach infrastructure, to recover copper from the lower-grade chalcopyrite ores, is being developed as a complementary process to the concentrator (CPY leach project). The implementation of both the SGO and CPY leach projects will enable Spence to achieve a total copper production of approximately 260 kt on average during the first 10 years of operation.

Olympic Dam

The focus at Olympic Dam is to transform the existing operation to materially lower the cost of production safely and sustainably. We are progressing a pre-feasibility study to examine potential future optimisation and expansion opportunities.

During FY2015, we received approval from the Australian and South Australian Governments to construct a site-based heap leaching demonstration plant, as part of our efforts to identify an alternative, less capital-intensive process for extracting metals from ore mined underground. Construction of the demonstration plant is subject to ongoing, off-site demonstration and test work outcomes and Board approvals.

Resolution Copper

We hold a 45 per cent interest in the ~~Samarco Joint Venture~~Resolution Copper project in ~~Brazil. We are~~the US state of Arizona, a project which is operated by Rio Tinto (55 per cent interest). Resolution Copper is among the top 10 largest undeveloped copper projects in the world and could eventually become the largest copper producer in North America.

In FY2014, Resolution Copper completed a pre-feasibility study into a 120 ktpd underground panel cave operation and processing facility. Further opportunities to economically optimise the project and minimise any technical risks have been identified, and the project plans to continue to study these opportunities. Additionally, a General Mine Plan of Operations was submitted to the US Forest Service in November 2013. In December 2014, President Obama signed legislation that will allow the US Federal Government to exchange 2,400 acres of federally owned land immediately adjacent to Resolution’s operational site, for 5,300 acres of important wildlife habitat, conservation and recreational land owned by Resolution. Both the land exchange and proposed mine plan will now undergo a comprehensive environmental and regulatory review that includes an assessment under the US National Environmental Policy Act. This process will include public input, government-to-government consultation with Arizona Native American tribes, and a US Federal Government appraisal of the exchange lands.

In November 2014, Resolution Copper completed construction of the No#10 Shaft to a final depth of 2,116 metres. Our share of project expenditure for FY2015 was US$55 million.

Exploration activities

2.1.3 Iron Ore Business

Our Iron Ore Business, headquartered in Perth, Australia, is one of the leading iron ore producers in the world. We sell lump and fines ~~product~~products produced in Australia and produce pellets from our operations in Brazil.

Our two assets consist of the following:

Western Australia Iron Ore

~~WAIO’s operations~~Operations at Western Australia Iron Ore (WAIO) involve ~~a complex~~an integrated system of mines and more than 1,000 kilometres of rail infrastructure and port facilities in the Pilbara region of northern Western ~~Australia.~~Australia, with our headquarters located in Perth. Our ~~strategy~~focus is to safely maximise output through operating our mines and utilising available infrastructure at our disposal.

Since 2001, we have expanded our WAIO operations in response to increasing demand for iron ore, particularly from China. We have completed eight expansion projects during this period to increase our mine, rail and port capacity. This includes the recent completion of a number of expansion projects and ongoing debottlenecking of the supply chain to underpin potential further growth in capacity to 290 Mtpa (100 per cent basis). Our share of FY2015 production was 218.0 Mt of ore, which is expected to increase in FY2016 to 233 Mtpa. The reserve lives for our WAIO operations are discussed in section 2.3.2.

WAIO operations

Our WAIO operations consist of ~~three~~four main joint ventures: Mt Newman, Yandi, ~~and~~ Mt Goldsworthy and ~~our 100 per cent interest in~~ Jimblebar. Our interest in ~~these~~the joint ventures is 85 per ~~cent.~~cent, with Mitsui and ITOCHU ~~own~~owning the remaining 15 per cent. The joint ventures are unincorporated, except Jimblebar.

The Mt Newman Joint Venture (JV) consists of a number of orebodies joined by conveyors and spur lines to a mining hub at Mt Whaleback. Ore is crushed, beneficiated (where necessary) and blended to create lump and fine products. The ore is then transported to port using Mt Newman JV-owned rail facilities. The Yandi JV comprises the Yandi mine where ore is crushed and screened and then transported by rail on the Newman main line. The Mt Goldsworthy JV consists of the Area C mine in the central Pilbara and the Yarrie mine in northern Pilbara. Ore is crushed and screened at Area C and transported by rail to Port Hedland. Production at the Yarrie mine in the northern Pilbara has been suspended since 25 February 2014, following improved productivity at our other mining operations. The Jimblebar operation comprises the Jimblebar mine, located 40 kilometres east of Newman. Jimblebar delivered first production in the September 2013 quarter and produced 17 Mt during FY2015. The Jimblebar mining hub ramped-up to a production rate exceeding 45 Mtpa during FY2015. All ore is transported by rail on the Mt Newman JV and Mt Goldsworthy JV rail lines to our port facilities. A typical train configuration consists of two locomotives per 124 ore cars, called a rake, with two rakes per train. Each individual ore car carries approximately 132 tonnes of iron ore. Our rail operations are controlled from Perth via our integrated remote operations centre, which co-locates rail control, port production control, mine dispatch control and mine fixed plant control.

Along with the other joint venture ~~participants,~~partners, we have entered into marketing agreements in the form of joint ventures with ~~certain~~some customers. These customer joint ventures, JW4, Wheelarra and POSMAC, involve subleases of part of WAIO’s existing mineral ~~leases whereby~~leases. The ore is sold to the existing joint ventures with contractual terms applying to the customers’ share. As a consequence, we are entitled to 85 per cent of production from these subleases and the customer joint ventures are ~~accounted~~not joint operations for accounting purposes.

WAIO Ore Reserves are reported for the Pilbara as ~~marketing arrangements rather than as jointly controlled assets.~~

~~We have been expanding~~a whole by ore type, to reflect our ~~WAIO operations in response to increasing demand for iron ore. Since 2001, we have completed six expansion projects to increase our system~~ production ~~capacity from 69 mtpa to 190 mtpa (100 per cent basis). Our share of FY2012 production was 148.1 Mt of ore. We now have additional projects in various stages~~ of the ~~project life cycle (including construction) to further increase system capacity (see Development projects below).~~

Our Pilbara reserve base is relatively concentrated, allowing us to plan our development around a series of integrated ‘mining hubs’ joined to the orebodies by conveyors or spur lines. This approach enables us to maximise the value of installed infrastructure by using the same processing plantNewman Blend lump product and ~~rail infrastructure for a number of orebodies. Blending ore at the hub gives us greater flexibility to respond to changing customer requirements~~fines, as well as ~~changing properties in the ore being mined~~our single logistics chain and ~~reduces the risk of port bottlenecks.~~

associated management system. The reserve lives of our Western Australian mines ~~range from 14 years at Yandi to 44 years at Jimblebar.~~are discussed in section 2.3.2.

~~Acquisition of HWE Mining Subsidiaries~~

On 30 September 2011, BHP Billiton completed its acquisition of HWE Mining Subsidiaries from Leighton Holdings. The acquisition relates to the mining equipment, people and related assets that service the Area C, Yandi and Orebody 23 and 25 Operations. These operations collectively account for almost 70 per cent of WAIO’s total material movement. The amount paid was US$710 million (A$725 million) representing purchase consideration of US$449 million and settlement of pre-existing obligations of US$241 million and US$20 million for transitional services to be provided post acquisition.

Samarco

We are a ~~50 –~~ 50–50 joint venture partner with Vale at the Samarco ~~Operation~~operation in Brazil. Samarco is currently ~~comprised of~~comprises a mine and ~~two~~three concentrators located in the ~~State~~state of Minas Gerais, and ~~three~~four pellet plants and a port, located in Anchieta in the ~~State~~state of Espirito Santo. ~~Two 396 kilometre~~Three 400-kilometre pipelines connect the mine site to the pelletising facilities.

Pellets are independently marketed by Samarco and sold to steelmakers in 19 countries, with prices generally linked to market indices.

In ~~FY2012,~~FY2015, our share of production was ~~10.7~~14.5 Mt of pellets. ~~Samarco’s total ore~~The reserve life for Samarco is ~~about 2.1 billion tonnes.~~discussed in section 2.3.2.

Information on Iron Ore mining operations

Mine & ~~Location~~location

Means of

~~Access~~access

Ownership

Operator

Title, ~~Leases~~leases or
~~Options~~

options

History

Mine ~~Type~~type &
~~Mineralisation~~mineralisation

~~Style~~style

Power

~~Source~~source

Facilities, ~~Use~~use &
~~Condition~~condition

Iron ore

Mt Newman JVJoint Venture

Pilbara region, Western Australia

Mt Whaleback

Orebodies 18, 23, 24, 25, 29, 30 and 3035

Private road

Iron ore ~~shipped~~transported by Mt Newman ~~JV owned~~JV-owned rail to ~~JV’s Nelson Point shipping facilities and Mt Goldsworthy JV’s Finucane Island shipping facilities,~~ Port Hedland (427 km)

BHP Billiton 85%

Mitsui ITOCHU Iron 10% ITOCHU Minerals and Energy of Australia 5%

BHP Billiton:

Mt Whaleback Orebodies 18, 23, 24, 25, 29, 30 and ~~30 Orebodies 23 and 25 (since October 2011)~~35

~~Independent contractors:~~Operatorship of Orebody 18 ~~Orebodies 23 and 25 (until October 2011)~~transitioned to BHP Billiton in July 2014

Mining lease under the Iron Ore (Mt Newman) Agreement Act 1964 expires in 2030 with right to successive renewals of 21 years

Production began at Mt Whaleback orebody in 1969

Production from ~~orebodies~~Orebodies 18, 23, 24, 25, 29, 30 and 3035 complements production from Mt Whaleback

First ore from Newman Hub as part of RGP4 construction delivered in 2009

Open-cut

Bedded ore types classified as per host Archaean or Proterozoic iron formation, which are Brockman and Marra Mamba ~~and Nimingarra~~

From May 2014

Yarnima power

station started

supplying

approximately

two thirds of

power, with a

supplementary

contract with

Alinta ~~Dewap’s~~ Dewap

Newman ~~gas-fired~~ power

station ~~via Mt Newman JV owned power lines~~for the remaining amount

Newman Hub: primary and secondary crushing and screening plants (nominal capacity ~~53 mtpa)~~63 Mtpa); heavy media beneficiation plant, stockyard blending facility, single cell rotary car dumper, train-loading facility

Orebody ~~23/~~25: primary and secondary crushing and screening plant (nominal capacity ~~10 mtpa)~~

~~Yandi JV~~

~~Pilbara region, Western Australia~~

~~Private Road~~

~~Iron ore shipped by JV owned rail to Finucane Island and Nelson Point shipping facilities, Port Hedland~~

~~Our railway spur links Yandi mine to Newman main line~~

~~BHP Billiton 85%~~

~~Mitsui Iron Ore Corporation 7% ITOCHU Minerals and Energy of Australia 8%~~

~~BHP Billiton (since October 2011)~~

~~Previously operated by independent contractors~~

~~Mining lease under the Iron Ore (Marillana Creek) Agreement Act 1991 expires 2033 with one renewal right to a further 21 years~~

~~Development began 1991~~

~~First shipment 1992~~

~~Capacity expanded between 1994 – 2011~~

~~Open-cut~~

~~Channel Iron Deposits are Cainozoic fluvial sediments~~

~~Alinta Dewap’s Newman gas-fired power station via Mt Newman JV owned power lines~~

~~Three processing plants, primary crusher and overland conveyor (normal capacity 75 mtpa)~~

~~Ore delivered to two train-loading facilities~~

~~Mine & Location~~
~~Means of~~
~~Access~~
~~Ownership~~
~~Operator~~
~~Title, Leases or~~
~~Options~~
~~History~~
~~Mine Type &~~
~~Mineralisation~~
~~Style~~
~~Power~~
~~Source~~
~~Facilities, Use &~~
~~Condition~~13 Mtpa)
~~JW4 JV~~
Yandi Joint Venture
Pilbara region, Western Australia
Private road

Iron ore transported by Mt Newman JV-owned rail to Port Hedland (316 km)
Yandi JV’s railway spur links Yandi mine to Newman main line
BHP Billiton 85%
Mitsui Iron Ore Corporation 7% ITOCHU Minerals and Energy of Australia 8%
BHP Billiton Mining lease under the Iron Ore (Marillana Creek) Agreement Act 1991 expires in 2033 with one renewal right to a further 21 years
Development began in 1991
First shipment in 1992
Capacity expanded between 1994 and 2013
Open-cut
Channel Iron Deposits are Cainozoic fluvial sediments
From May 2014 Yarnima power station started supplying approximately two thirds of power, with a supplementary contract with Alinta Dewap Newman power station
Three processing plants, primary crusher and overland conveyor (nominal capacity 80 Mtpa)
Ore delivered to two train-loading facilities

Mine & location
Means of
access
Ownership
Operator
Title, leases or
options
History
Mine type &
mineralisation
style
Power
source
Facilities, use &
condition
JW4 Joint Venture
Pilbara region, Western Australia
Private road
Iron oreon-sold to Yandi JV, then transported via rail to Finucane Island and Nelson Point shipping facilities, Port Hedland

BHP Billiton 68%

ITOCHU Minerals and Energy of Australia 6.4%,
Mitsui Iron Ore Corporation 5.6%,
JFE Steel Australia 20%
Sublease agreement over JW4 deposit

BHP Billiton ~~(since October 2011)~~
~~Previously operated by independent contractors~~
Sublease ~~from Yandi JV, with~~over part of the mining lease under the Iron Ore (Marillana Creek) Agreement Act 1991 expires in 2033 with one renewal right for a further 21 years
Operations began in April 2006

Ore currently being produced is sold to Yandi JV and blended with Yandi ore

Open-cut

Channel Iron Deposits are Cainozoic fluvial sediments
~~Alinta Dewap’s Newman gas-fired~~From May 2014 Yarnima power station ~~via Mt~~started supplying approximately two thirds of power, with a supplementary contract with Alinta Dewap Newman ~~JV owned~~ power ~~lines~~station ~~Mine site~~
JW4 processes ore through Yandi
Jimblebar operation
Pilbara region, Western Australia Private road
BHP Billiton ~~100%~~85%
ITOCHU Minerals and Energy of ~~the Jimblebar lease~~Australia 8%, Mitsui Iron Ore Corporation 7%
~~New mine is currently under construction which~~ BHP Billiton ~~will operate~~ Mining lease under the Iron Ore (McCamey’s Monster) Agreement Authorisation Act 1972 expires in 2030 with rights to successive renewals of 21 years
Production at Jimblebar began in March 1989

From 2004, production was transferred to Wheelarra as part of the Wheelarra sublease agreement
First ore from newly commissioned Jimblebar mine was delivered in September 2013

Open-cut

Bedded ore types classified as per host Archaean or Proterozoic banded iron formation, which are Brockman and Marra Mamba
~~Alinta Dewap’s Newman gas-fired~~From May 2014 Yarnima power station ~~via Mt~~started supplying approximately two thirds of power, with a supplementary contract with Alinta Dewap Newman ~~JV owned~~ power ~~lines~~station ~~Primary~~Two primary and secondary ~~crusher are in the commissioning phase~~crushers, ore handling plant, stockyards and supporting mining hub infrastructure (nominal capacity ~~35 mtpa at full capacity in FY2014)~~
55 Mtpa)

Mine & ~~Location~~location

Means of
~~Access~~access

Ownership

Operator

Title, ~~Leases~~leases or
~~Options~~
options

History

Mine ~~Type~~type &
~~Mineralisation~~mineralisation
~~Style~~style

Power
~~Source~~source

Facilities, ~~Use~~use &
~~Condition~~condition
Wheelarra Joint Venture
Pilbara region, Western Australia
Private road

Iron ore ~~shipped by Mt Newman JV owned rail~~is transported via conveyor to ~~Port Hedland via 32 km spur line linking to Newman main line~~Jimblebar mine (6 km)

BHP Billiton 51%

ITOCHU Minerals and Energy of Australia 4.8%, Mitsui Iron Ore Corporation 4.2%, Maanshan Iron & Steel Australia 10%, Shagang Australia 10%, Hebei Iron & Steel Australia 10%,
Wugang Australia 10%
Sublease agreement over Wheelarra deposit

~~Operated by~~
~~independent~~
~~contractors~~
BHP Billiton
Sublease agreement over the Wheelarra deposit of Jimblebar lease with ITOCHU Minerals and Energy of Australia, Mitsui Iron Ore and four separate subsidiaries of Chinese ~~Steelmakers~~steelmakers
~~As a consequence of this~~
This arrangement, ~~we are entitled~~entitles us to 85% of ~~the~~ production from the Wheelarra sublease consistent with BHP Billiton ownership in Mt Newman JV

Wheelarra JV produces iron ore from Wheelarra deposit of Jimblebar ~~lease.~~lease

Ore ~~currently being~~ produced is processed and blended with Jimblebar ore at Jimblebar mine and then sold to Mt Newman JV ~~and blended with ore produced from Mt Whaleback and satellite orebodies 18, 23 and 25 to create Mt Newman blend~~

Open-cut

Bedded ore types classified as per host Archaean or Proterozoic banded iron formation, which ~~are~~is Brockman ~~and Marra Mamba~~
~~Alinta Dewap’s Newman gas-fired~~From May 2014 Yarnima power station ~~via Mt~~started supplying approximately two thirds of power, with a supplementary contract with Alinta Dewap Newman ~~JV owned~~ power ~~lines~~station ~~Primary crushing plant (nominal capacity 14.5 mtpa)~~Wheelarra processes ore through the Jimblebar hub

Mine & location
Means of
access
Ownership
Operator
Title, leases or
options
History
Mine type &
mineralisation
style
Power
source
Facilities, use &
condition
Mt Goldsworthy JVJoint Venture
Pilbara region, Western Australia

Area C Yarrie
Nimingarra

Private road

~~Iron~~Yarrie and Nimingarra iron ore ~~shipped~~transported by Mt Goldsworthy ~~JV owned~~JV-owned rail to ~~JV’s Finucane Island and~~Port Hedland (218 km)
Area C iron ore transported by Mt Newman ~~JV’s Nelson Point shipping facilities,~~JV-owned rail to Port Hedland (360 km)

Mt Goldsworthy JV railway spur links Area C mine to ~~Newman main line~~Yandi railway spur

BHP Billiton 85%

Mitsui Iron Ore Corporation 7% ~~and~~
ITOCHU Minerals and Energy of Australia 8%

BHP Billiton ~~(since October 2011)~~
~~Previously operated by independent contractors~~

4 mineral leases under the Iron Ore (Mt Goldsworthy) Agreement Act 1964 and the Iron Ore (Goldsworthy ~~–Nimingarra)~~– Nimingarra) Agreement Act 1972, expire between 2014 and 2028, with rights to successive renewals of 21 years

A number of smaller mining leases granted under the Mining Act 1978 expire in 2026

Operations commenced at Mt Goldsworthy in 1966 and at Shay Gap in 1973

Original Goldsworthy mine closed in 1982

Associated Shay Gap mine closed in 1993

Mining at Nimingarra mine ceased in 2007, ~~has since~~then continued from adjacent Yarrie area

Opened Area C mine in 2003
Yarrie mine suspended operations in February 2014

~~Open-cut mine includes~~ Area C, Yarrie and Nimingarra all open-cut

Bedded ore types classified as per host Archaean or Proterozoic iron formation, which are Brockman, Marra Mamba and Nimingarra

~~Yarrie and Nimingarra: Alinta Dewap’s Port Hedland gas-fired~~From May 2014 Yarnima power station ~~under long-term contracts~~
~~Area C:~~started supplying approximately two thirds of power, with a supplementary contract with Alinta ~~Dewap’s Port~~Dewap Newman ~~gas-fired~~ power station ~~under long-term contracts~~

~~Area C: ore~~Ore processing plant, primary crusher and overland conveyor
(nominal ~~capacity: 50 mtpa)~~capacity 60 Mtpa)
~~Yarrie: mobile in-pit crushing plant (nominal capacity: 2 mtpa)~~
~~Primary crushers at Yarrie and Nimingarra in care and maintenance~~

Mine & ~~Location~~location

Means of
~~Access~~access

Ownership

Operator

Title, ~~Leases~~leases or
~~Options~~
options

History

Mine ~~Type~~type &
~~Mineralisation~~mineralisation
~~Style~~style

Power
~~Source~~source

Facilities, ~~Use~~use &
~~Condition~~condition
POSMAC JVJoint Venture
Pilbara Region, Western Australia
Private ~~Road~~road

Iron ore on-sold to Mt Goldsworthy JV, it is then transported via ~~Goldsworthy-owned~~Mt Goldsworthy JV-owned rail ~~to JV’s Finucane Island~~ and ~~Nelson Point shipping facilities,~~Mt Newman JV-owned rail to Port Hedland

BHP Billiton 65%

ITOCHU Minerals and Energy of Australia 8%, Mitsui Iron Ore Corporation 7%,
POSCO 20%
Sublease agreement over POSMAC deposit

BHP Billiton ~~(since October 2011)~~
~~Previously operated by independent contractors~~
Sublease over part of ~~the~~ mineral lease held by Mt Goldsworthy JV under the Iron Ore (Mt Goldsworthy) Agreement Act 1964 with rights to successive renewals of 21 years
Operations commenced in October 2003

~~The~~Iron ore currently being produced is sold to ~~the~~Mt Goldsworthy JV and blended with Area C ore

Open-cut

Bedded ore types classified as per host Archaean or Proterozoic iron formation, which ~~are Brockman,~~is Marra Mamba ~~and Nimingarra~~
~~Alinta Dewap’s Newman gas-fired~~From May 2014 Yarnima power station ~~under long-term contracts~~started supplying approximately two thirds of power, with a supplementary contract with Alinta Dewap Newman power station ~~Mine site~~
POSMAC processes through Mt Goldsworthy
Samarco

Southeast Brazil
Public road

Conveyor belts transport iron ore to beneficiation plant

~~Two~~Three slurry pipelines transport concentrate to pellet plants on coast

Iron pellets exported via port facilities

BHP Billiton 50% of Samarco Mineração SA

Vale SA 50%
Samarco Mining concessions granted by Brazilian Government as long as Alegria complex mined according to agreed plan
Production began at Germano mine in 1977 and at Alegria complex in 1992

~~Two expansions completed with a second~~Second pellet plant built in 1997 ~~and a third~~
Third pellet plant, second concentrator and second pipeline built in 2008

~~In April 2011, Samarco’s shareholders approved the fourth~~Fourth pellet plant, third concentrator and third pipeline built in 2014

Open-cut

Itabirites (metamorphic quartz-hematite rock) and friable hematite ores

Samarco holds interests in 2 hydroelectric power plants which supply ~~18%~~14.5% of its electricity

~~Additional power is acquired~~Power supply contract with Cemig Geração e Transmissão expires in ~~the market~~
~~Contracts will expire by the end of 2014 and their extension is under negotiation~~2022
Facilities with capacity to process and pump ~~24 mtpa~~32 Mtpa ore concentrate and produce and ship ~~22.2 mtpa~~30.5 Mtpa pellets (100% basis)

Development projects

Western Australia Iron Ore

InWAIO has been executing a number of expansion projects in recent years. These projects, approved in March 2011 ~~we announced approval~~for a total of ~~an additional~~ US$7.4 billion ~~(BHP~~(US$6.6 billion BHP Billiton ~~share US$6.6 billion) of capital expenditure to continue production growth in our WAIO operations. This investment is the final approval of projects initiated in 2010, with~~share) plus pre-commitment funding of US$2.3 billion ~~(BHP~~(US$2.1 billion BHP Billiton ~~share US$2.1 billion). It is expected~~share), were designed to deliver an integrated operation with a minimum capacity of 220 ~~mtpa~~Mtpa (100 per cent basis)~~, with first production expected from Jimblebar early in CY2014.~~.

~~This additional investment includes:~~These projects, each of which is substantially complete, included:

~~US$3.4 billion (BHP Billiton share US$3.3 billion)~~the Jimblebar Mine Expansion project to develop the Jimblebar mine and rail links, and procure mining equipment and rolling stock in order to deliver ~~an initial~~a capacity of 35 ~~mtpa, expandable to 55 mtpa. Work on this~~Mtpa. Initial production was achieved in the September 2013 quarter. The project ~~was 34 per cent complete~~costs as at 30 June ~~2012;~~

2015 amounted to US$~~2.3~~3.5 billion (BHP Billiton ~~share~~share). Final costs are expected to be delivered below the revised budget of US$~~1.9 billion) to~~ 3.6 billion;

further ~~develop~~development of Port Hedland, including two additional berths and ~~shiploaders,~~ship loaders, a car dumper, connecting conveyor ~~routes~~route, and associated rail works and rolling stock. ~~Work on this~~Initial production was achieved in the December 2012 quarter. The project ~~was 59 per cent complete~~costs as at 30 June ~~2012;~~

2015 amounted to US$~~1.7~~1.8 billion (BHP Billiton ~~share~~share). Final costs are expected to be delivered below the revised budget of US$~~1.4 billion) for~~ 1.9 billion;

port blending facilities and rail yards to enable ore ~~blending, expand resource life and establish options for future growth of~~blending. Initial production was achieved in the ~~business beyond the Inner Harbour. Work on this~~December 2013 quarter. The project ~~was 22 per cent complete~~costs as at 30 June ~~2012.~~

~~Western Australia Iron Ore – Dual Harbour Strategy~~

~~In February 2012, we announced approval~~2015 amounted to US$0.9 billion (BHP Billiton share). Final costs are expected to be delivered below the revised budget of US$~~917 million (BHP Billiton share US$779 million) in pre-commitment funding for~~1.0 billion.

Our plan to continue to grow production following the ~~construction~~recent completion of ~~an Outer Harbour facility associated with our WAIO operations.~~

On 24 August 2012, we announced that the Western Australia Minister for Transport and Port Hedland Port Authority has granted WAIO the right, subject to the State approvals processes, to develop two additional berths in the Inner Harbour. We also announced work on the Outer Harbour Development has been slowed while our focus has shifted to maximising our potential capacity from the Inner Harbour. Developmenta number of expansion projects includes ongoing debottlenecking of the ~~Outer Harbour remains attractive~~supply chain to underpin potential further growth in ~~the long term.~~capacity to 290 Mtpa (100 per cent basis).

Western Australia Iron Ore – Orebody 24 mine

In ~~November 2011, we announced approval~~FY2014, WAIO completed execution of ~~a US$822 million (BHP Billiton share US$698 million) investment for the~~its development of the Orebody 24 mine, located approximately 10 kilometres northeast of ~~Newman, Western Australia,~~Newman. Orebody 24 is a sustaining mine to maintain iron ore production output from the Mt Newman JV operations. ~~Orebody 24 is expected to have a capacity of 17 mtpa~~The project was approved in November 2011 and ~~will include~~included the construction of an ore crushing plant, train loadout facility, rail spur and other associated support facilities. ~~Initial mining is expected~~The project costs as at 30 June 2015 amounted to ~~begin in the second half of CY2012.~~

~~Samarco~~

~~During FY2011, Samarco shareholders approved a~~ US$~~3.5~~0.6 billion (BHP Billiton ~~share~~share). Final costs are expected to be delivered below the revised budget of US$~~1.75 billion) expansion~~0.7 billion.

Exploration activities

Western Australia

WAIO has a substantial existing reserve base supported by considerable additional mineralisation, all within a 250-kilometre radius of our existing infrastructure. This concentration of orebodies also gives WAIO the flexibility to add growth tonnes to existing hub infrastructure and link brownfield developments to our existing mainline rail and port facilities. The total area covered by exploration and mining tenure amounts to 6,500 square kilometres. This excludes crown leases, and general purpose and miscellaneous licences, which are used for infrastructure space and access.

The majority of deposits are located on five main lease areas held by BHP Billiton and our joint venture partners, as appropriate. Iron ore mineralised materials fall mainly within the Hamersley Ranges of the Pilbara district, with a minor component of the inventory lying within the Pilbara Craton of northwest Western Australia.

In FY2015, exploration activity was completed over multiple project areas and deposits. The total drilling carried out amounts to approximately 486.7 kilometres, composed of reverse circulation drilling of 445.5 kilometres, diamond drilling of 25.1 kilometres and hydrology drilling of 16.2 kilometres, consisting of ~~a fourth pellet plant, a new concentrator and a third slurry pipeline. The project is expected~~approximately 4,500 drill holes. Total exploration expenditure in FY2015 amounted to ~~expand Samarco’s iron ore pellet production capacity from 22.2 mtpa to 30.5 mtpa. First pellet production is expected in the first half of CY2014.~~

~~West Africa~~

~~We are carrying out exploration activities in Guinea and Liberia, West Africa.~~US$118 million.

Guinea Iron Ore

BHP Billiton ~~currently~~ has a 41.3 per cent interest in a joint venture that holds the Nimba Mining Concession and four iron ore prospecting permits in southeast Guinea. ~~The joint venture is undertaking a pre-feasibility study~~

On 29 July 2014, BHP Billiton and ArcelorMittal signed an agreement for the ~~development~~acquisition by ArcelorMittal of BHP Billiton’s 43.5 per cent stake in Euronimba Limited, which holds an effective 95 per cent interest in the ~~Concession and associated transport infrastructure. Once developed, it is envisaged that~~Mount Nimba iron ore project in Guinea.

In May 2015, ArcelorMittal terminated the ~~mine~~transaction following failure to meet the conditions to closing by the agreed deadline.

We will ~~deliver a high-grade direct shipping~~continue to assess our options for the Mount Nimba iron ore ~~to market.~~project.

Liberia Iron Ore

BHP Billiton ~~currently~~ has a 100 per cent interest in a Mineral Development Agreement with the Government of Liberia. This enables the further exploration and development of our Liberian iron ore mineral ~~leases, each~~leases.

On 25 August 2014, BHP Billiton and Cavalla Resources signed a sale and purchase agreement for the acquisition by Cavalla Resources of ~~which are proximate to existing rail and port infrastructure. Exploration and development of these leases continues, with drilling conducted on select targets.~~

~~2.2.8 Manganese Customer Sector Group~~

Our Manganese CSG produces a combination of ores and alloys from sites in South Africa and Australia. We are the world’s largest producer of manganese ore and one of the top global producers of manganese alloy. Manganese alloy is a key input into the steelmaking process. Manganese high-grade ore is particularly valuable to alloy producers because of the value in use differential over low-grade ore, which is the degree to which high-grade ore is proportionately more efficient than low-grade ore in the alloying process.

Our strategy is to focus on upstream resource businesses. Manganese alloy smelters are a key conduit of manganese units into steelmaking and enable us to access markets with an optimal mix of ore and alloy, optimise production to best suit market conditions and give us technical insight into the performance of our ores in smelters.

~~Approximately 80 per cent of ore production is sold directly to external customers and the remainder is used as feedstock in our alloy smelters.~~

We own and manage all manganese mining operations and alloy plants through joint ventures with Anglo American. We own 60 per cent of the joint ventures. Our joint venture interests are held through Samancor Manganese, which operates our global Manganese assets. In South Africa, Samancor Manganese (Pty) Ltd owns 74 per cent of Hotazel Manganese Mines (Pty) Ltd (HMM) andBHP Billiton’s 100 per cent ~~of the Metalloys division. This gives BHP Billiton an effective~~ interest ~~of 44.4 per cent~~ in HMM and 60 per cent in Metalloys. The remaining 26 per cent of HMM is owned under the terms of South African Black Economic Empowerment (BEE) legislation, which reflects our commitment to economic transformation in South Africa. In Australia, we own 60 per cent of Groote Eylandt Mining Company Pty Ltd (GEMCO) and we have an effective interest of 60 per cent in Tasmanian Electro Metallurgical Company Pty Ltd (TEMCO) through GEMCO, which owns 100 per cent of TEMCO.

In response to challenging market conditions in the manganese alloy industry, we announced the temporary suspension of production at TEMCO, Australia, and the cessation of production of energy-intensive silicomanganese at the Metalloys South plant, South Africa, during the March 2012 quarter. After extensive stakeholder consultation and the identification of significant cost reduction opportunities, in May 2012, we announced our decision to restart TEMCO, which is currently in progress and planned to complete in CY2012.

~~Mines~~

~~HMM~~

~~HMM owns the Mamatwan open-cut mine and the Wessels underground mine. Manganese high-grade~~its Liberia iron ore ~~is particularly valuable to alloy producers because of the ‘value in use differential’ over low-grade ore, which is the~~

degree to which high-grade ore is proportionately more efficient than low-grade ore in the alloying process. The ore from these mines only requires crushing and screening to create saleable product. In FY2012, the total manganese ore production was 3,625 kt, 21 per cent higher than FY2011 production. Wessels has a reserve life of 46 years and Mamatwan has a reserve life of 21 years.

~~GEMCO~~

As a result of its location near our port facilities and its simple, open-cut mining operation, GEMCO is one of the world’s lowest-cost manganese ore producers. These simple operations, combined with its high-grade ore and relative proximity to Asian export markets, make GEMCO unique among the world’s manganese mines. FY2012 production of manganese ore was 4,306 kt, five per cent higher than FY2011 production. GEMCO has a reserve life of 12 years.

~~Alloy Plants~~

~~Metalloys~~

The Samancor Manganese Metalloys alloy plant is one of the largest manganese alloy producers in the world. Due to its size and access to high-quality feedstock from Hotazel operations, it is also one of the lowest-cost alloy producers of medium-carbon ferromanganese. Metalloys only produces high- and medium-carbon ferromanganese, after silicomanganese production ceased due to the permanent closure of the energy intensive Metalloys South plant in January 2012. The annual production capacity of silicomanganese was 120 ktpa.

~~TEMCO~~

~~TEMCO is a medium-sized producer of high-carbon ferromanganese, silicomanganese and sinter using ore shipped from GEMCO, primarily using hydroelectric power.~~

~~Information on Manganese mining operations~~

~~The following table contains additional details of our mining operations. These tables should be read in conjunction with the production (see section 2.3.2) and reserve tables (see section 2.13.2).~~

~~Mine & Location~~

~~Means of~~

~~Access~~

~~Ownership~~

~~Operator~~

~~Title, Leases or~~
~~Options~~

~~History~~

~~Mine Type &~~
~~Mineralisation~~

~~Style~~

~~Power~~

~~Source~~

~~Facilities, Use &~~

~~Condition~~

~~Manganese ore~~

~~Hotazel Manganese Mines (Pty) Ltd (HMM)~~

~~Kalahari Basin, South Africa~~

~~Mamatwan and~~

~~Wessels mines~~

~~Public road~~

~~Most ore and sinter products transported by rail~~

~~Approximately 33% of ore beneficiated locally, balance exported via Port Elizabeth, Richards Bay, Durban~~

~~BHP Billiton~~

~~44.4%~~

~~Anglo American 29.6%~~

~~Ntsimbintle 9%~~

~~NCAB 7%~~

~~Iziko 5% HMM Education Trust 5%~~

~~BHP Billiton~~

~~Existing New Order Rights valid until 2035~~

~~Mamatwan commissioned 1964~~

~~Wessels commissioned 1973~~

~~Mamatwan: open-cut~~

~~Wessels: underground~~

~~Banded Iron Manganese ore type~~

~~Eskom~~

~~(national power supplier)~~

~~Mamatwan beneficiation plant: primary, secondary and tertiary crushing with associated screening plants~~

~~Dense medium separator and sinter plant (capacity 1 mtpa sinter)~~⁽¹⁾

~~Wessels: primary and secondary crushing circuits with associated screening~~⁽¹⁾

⁽¹⁾~~Capacity: Mamatwan – approximately 3.5 mtpa of ore; Wessels – approximately 1 mtpa of ore.~~

~~Groote Eylandt Mining Company Pty Ltd (GEMCO)~~

~~Groote Eylandt, Northern Territory, Australia~~

~~Ore transported from concentrator by road train to port at Milner Bay~~

~~BHP Billiton 60%~~

~~Anglo American 40%~~

~~BHP Billiton~~

~~All leases on Aboriginal land held under Aboriginal Land Rights (Northern Territory) Act 1976 Valid until 2031~~

~~Commissioned 1965~~

~~Open-cut~~

~~Sandstone claystone sedimentary Manganese ore type~~

~~On-site diesel power generation~~

~~Beneficiation process: crushing, screening, washing and dense media separation~~

~~Produces lump and fines products Capacity: 4.2 wet mtpa~~

~~Information on Manganese smelters, refineries and processing plants~~

~~Smelter, Refinery or~~

~~Processing Plant~~

~~Location~~

~~Ownership~~

~~Operator~~

~~Title, Leases or Options~~

~~Product~~

~~Nominal Production~~
~~Capacity~~

~~Power source~~

~~Manganese alloy~~

~~Metalloys~~

~~Manganese alloy plant~~

~~(division of Samancor Manganese (Pty) Ltd)~~

~~Meyerton, South Africa~~

~~BHP Billiton 60%~~

~~Anglo American 40%~~

~~BHP Billiton~~

~~Freehold title over property, plant and equipment~~

~~Manganese alloys including high-carbon ferromanganese, refined (medium-carbon ferromanganese) alloy~~

~~400 ktpa high-carbon ferromanganese (including hot metal) 90 ktpa medium-carbon ferromanganese~~

~~Eskom~~

~~30 MW of internal power generated from furnace off-gases~~

~~Tasmanian Electro Metallurgical Company Pty Ltd (TEMCO)~~

~~Manganese alloy plant~~

~~Bell Bay, Tasmania, Australia~~

~~BHP Billiton 60%~~

~~Anglo American 40%~~

~~BHP Billiton~~

~~Freehold title over property, plant and equipment~~

~~Ferroalloys, including high-carbon ferromanganese, silicomanganese and sinter~~

~~130 ktpa high-carbon ferromanganese 125 ktpa silicomanganese 350 ktpa sinter~~

~~Aurora Energy On-site energy recovery unit generates 11 MW for internal use~~

~~Development projects~~

~~GEMCO expansion~~

The partners in Samancor Manganese approved the second expansion of the GEMCO Operation in the Northern Territory of Australia in July 2011. This follows the successful commissioning of the GEMCO expansion phase 1 (GEEP1) project in April 2009. The US$279 million GEEP2 project (BHP Billiton share US$167 million) has commenced and will increase GEMCO’s beneficiated product capacity from 4.2 mtpa to 4.8 mtpa through the introduction of a dense media circuit by-pass facility. The project is expected to be completed in late CY2013. The expansion will also address infrastructure constraints by increasing road and port capacity to 5.9 mtpa, creating 1.1 mtpa of additional capacity for future expansions.

~~HMM~~

Due to subsurface challenges experienced, which impacted progress and budget, the central block development project at Wessels was re-phased. The US$92 million Phase 1 project will be completed in FY2014. It will comprise the construction of the ventilation shaft and development of the associated underground ventilation network. Phase 2 of the project is in the feasibility phase and will comprise the completion of the underground crusher and mobile workshops. Upon completion of Phases 1 and 2, the Wessels mine capacity will increase from 1 mtpa to 1.5 mtpa.

~~Metalloys~~

The High-Carbon Ferromanganese (HCFeMn) furnace M14 at the Metalloys West Plant was approved for execution in November 2010 with a total approved investment of US$91 million (US$54.6 million BHP Billiton share). This furnace will add an additional 130 ktpa capacity (100 per cent or about 78 ktpa BHP Billiton share) of HCFeMn and replace the closed South Plant silicomanganese (capacity of 120 ktpa), to take Metalloys capacity to 500 ktpa. The M14 furnace will contribute to power efficiency at the Metalloys site as it will add to the site’s own generation capacity utilising the furnace off-gases.project. Completion of the ~~furnace is expected during FY2013.~~transaction remains subject to the receipt of regulatory approval and other customary closing conditions.

~~Samancor Gabon Manganese project~~

A feasibility study for the establishment of a new 300 ktpa mine in Franceville, Gabon, commenced in July 2010. The project has experienced delays in concluding key agreements and has been placed under review.

~~2.2.9 Metallurgical~~2.1.4 Coal ~~Customer Sector Group~~Business

Our ~~Metallurgical~~ Coal ~~CSG~~Business, headquartered in Brisbane, Australia, is the world’s largest supplier of seaborne metallurgical ~~coal. Metallurgical~~ coal, ~~along with iron ore and manganese, is~~ a key input in steel production. Our Coal Business is also a large supplier of seaborne energy coal (also known as thermal or steaming coal) and a domestic energy coal supplier in the ~~production of steel.~~countries where our mines are located.

Our export metallurgical coal customers are steel producers around the ~~world.~~world, principally in China, India, Japan and Europe. In ~~FY2012, most~~FY2015, the majority of our metallurgical coal sales contracts were based on annual ~~or long-term volume contracts~~volumes, with prices largely index-linked (with negotiated differentials for quality) or on a ~~quarterly or monthly~~spot basis.

We ~~have~~are a domestic supplier of energy coal to the electricity generation industry in Australia and the United States. Our domestic energy sales are generally made to nearby power stations under long-term fixed price or cost plus arrangements. Export sales are delivered to power generators and industrial users principally in China, India and Japan, under contracts that are generally index-linked or short-term fixed.

Total metallurgical coal production in FY2015 was 42.6 Mt and total energy coal production in FY2015 was 41.0 Mt.

Our assets, located in ~~two major resource basins:~~Australia, Colombia and the United States, consist of both open-cut and underground mines. At our open-cut mines, overburden is removed after blasting, using either draglines or truck and shovel. Coal is then extracted using excavators or loaders and loaded onto trucks to be taken to stockpiles or directly to our beneficiation facility. At our underground mines, coal is extracted by either longwall or continuous miner. The coal is then transported to stockpiles on the surface by conveyor. Coal from stockpiles is then crushed, and for a number of the operations, washed and processed through the coal preparation plant. Domestic coal is transported to nearby customers via conveyor, truck or rail. Export coal is transported to the port via trains, and as part of this coal supply chain both single and multi-user rail and port infrastructure is used.

Our assets consist of the following:

Queensland Coal

Queensland Coal comprises the BHP Billiton Mitsubishi Alliance (BMA) and BHP Billiton Mitsui Coal (BMC) Assets in the Bowen Basin in Central Queensland, ~~Australia, and the Illawarra region of New South Wales,~~ Australia.

~~Bowen Basin~~

We ~~also~~ have access to key infrastructure in the Bowen Basin, including a modern, ~~integrated electric~~multi-user rail network and our own coal loading terminal at Hay Point, located near the city of Mackay. ~~This~~We also have contracted capacity at three other multi-user port facilities, including the Port of Gladstone (RG Tanna Coal Terminal), Dalrymple Bay Coal Terminal and Abbot Point Coal Terminal.

BHP Billiton Mitsubishi Alliance

BMA comprises two unincorporated joint ventures – Central Queensland Coal Associates Joint Venture (CQCA) and Gregory Joint Venture. We share 50–50 ownership with Mitsubishi Development.

BMA owns and operates open-cut and underground metallurgical coal mines in the Bowen Basin and also owns and operates the Hay Point Coal Terminal. The terminal consists of coal inloading dump stations, stacker reclaimers and two ship loaders, capable of loading 44 Mtpa of coal. The terminal has been undergoing expansion to increase its capacity to 55 Mtpa through the addition of a third berth and ship loader. The terminal expansion is near completion and first coal was loaded through the expanded terminal in January 2015. The terminal infrastructure enables us to ~~maximise throughput and blending of~~blend products from multiple mines of BMA to optimise the value of our production and to satisfy customer requirements.

~~Our Bowen Basin mines are owned through a series of joint ventures. We share 50–50 ownership with Mitsubishi Development Pty Ltd in BHP Billiton Mitsubishi Alliance (BMA), which~~BMA operates the Goonyella Riverside, Broadmeadow, Daunia, Caval Ridge, Peak Downs, Saraji, Gregory Crinum and Blackwater mines. In May 2012, production ceased at Norwich Park ~~(production ceased), Blackwater and~~mine, following a review of the mine’s viability. In October 2012, production also ceased at the Gregory open-cut mine, part of the Gregory Crinum ~~mines, together~~complex. During the year, BMA announced the ramping down of the Crinum underground mine as it approaches the end of its economic reserve life, with longwall production expected to cease in the ~~Hay Point Coal terminal through the Central Queensland Coal Associates (CQCA) joint venture and the Gregory joint venture.~~ March 2016 quarter.

Our share of total production in FY2015 was 33.9 Mt. Production figures for BMA include some energy coal (less than three per cent). The reserve lives are discussed in section 2.3.2.

BHP Billiton Mitsui Coal ~~(BMC) asset operates South Walker Creek and Poitrel mines.~~

BMC is a subsidiary company owned by BHP Billiton (80 per cent) and Mitsui and Co (20 per cent).

BMC owns and operates South Walker Creek and Poitrel, both open-cut metallurgical coal mines in the Bowen Basin. Total production in FY2015 was 8.7 Mt. The reserve lives ~~of our mines range from four years at Gregory Crinum to 40 years at Saraji. Total attributable production~~are discussed in FY2012 was approximately 25.3 Mt compared with 25.7 Mt in FY2011. Production in FY2012 was largely constrained by industrial action and severe wet weather. Additionally, in April 2012, BMA announced the intention to cease production at Norwich Park mine indefinitely, following a review of the mine’s viability. On 10 September 2012, BMA announced its intention to cease production at its Gregory open-cut mine, part of the Gregory Crinum complex, from 10 October 2012.section 2.3.2.

~~Production figures for the Bowen Basin include some energy coal (less than five per cent).~~

~~Illawarra~~New Mexico Coal

We own and operate ~~three underground~~the San Juan energy coal ~~mines~~mine located in the ~~Illawarra~~US state of New Mexico. The mine transports its production directly to the nearby San Juan Generating Station (SJGS). Production for FY2015 was 5.1 Mt. The reserve life is discussed in section 2.3.2, which is the life of the current customer contract.

We also operate the nearby Navajo mine, located on Navajo Nation land in New Mexico. Full ownership of the Navajo Coal Company transferred to the Navajo Transitional Energy Company (NTEC), an entity of the Navajo Nation, effective 30 December 2013. New Mexico Coal and NTEC entered into a Mine Management Agreement where New Mexico Coal will continue as mine operator until 31 December 2016, at which time control will pass to a new mine manager. The reserve life is discussed in section 2.3.2.

Navajo mine transports its production directly to the nearby Four Corners Power Plant. Navajo mine reduced capacity during FY2015 from 5.4 Mtpa to 4.8 Mtpa in response to reduced customer demand. Production for FY2015 was 4.9 Mt. As we retain control of the mine until full consideration is paid, production continues to be reported by the Group.

New South Wales Energy Coal

Our wholly owned New South Wales Energy Coal Asset owns and operates the Mt Arthur Coal open-cut energy coal mine in the Hunter Valley region of New South Wales, Australia. New South Wales Energy Coal produced 19.7 Mt in FY2015. The reserve life is discussed in section 2.3.2. In FY2015, we delivered approximately six per cent of Mt Arthur’s production to a local power station and exported the rest, predominantly to Japan and China, via the port of Newcastle.

We own a 35.5 per cent interest in the Newcastle Coal Infrastructure Group, which operates the Newcastle Third Port export coal loading facility. The facility currently has a port expansion project in execution (refer to Development projects). We also have a 1.75 per cent interest in Port Waratah Coal Services Limited, which operates two coal loading facilities at the port of Newcastle.

Cerrejón

We have a one-third interest in Cerrejón, which owns, operates and markets one of the world’s largest open-cut export energy coal mines, located in the La Guajira province of Colombia. Cerrejón also owns and operates integrated rail and port facilities through which the majority of production is exported to European, Asian, North and South American customers. In FY2015, our share of Cerrejón production was approximately 11.3 Mt. The reserve life is discussed in section 2.3.2.

In FY2012, Cerrejón commenced an expansion project (P40), which is expected to increase our share of production to 13.3 Mtpa (BHP Billiton share). The P40 project scope includes a second berth and dual quadrant ship loader at Cerrejón’s 100 per cent owned and operated Puerto Bolivar, along with necessary mine, rail and associated supply ~~metallurgical coal~~chain infrastructure. The project was completed during the December 2014 quarter. However, operational issues are expected to constrain capacity to 11.7 Mtpa (BHP Billiton share) in the medium term (refer to Development projects).

Illawarra Coal and Energy Coal South Africa

In May 2015, our Illawarra Coal mines and our 90 per cent interest in Energy Coal South Africa mines were included in the demerger of South32. Information relating to the ~~nearby BlueScope Port Kembla steelworks,~~South32 demerger can be found in sections 1.3.7, 1.6.4 and ~~other domestic~~2.1.7 of this Annual Report and ~~export markets. Total production in FY2012 was approximately 7.9 Mt compared with 6.9 Mt in FY2011. The reserve lives~~note 29 ‘Discontinued operations’ of ~~our mines range from four years at West Cliff to 31 years at Appin.~~

~~Production figures for Illawarra include some energy coal (less than 17 per cent).~~the Financial Statements.

Information on ~~Metallurgical~~ Coal mining operations

The following table contains additional details of our mining operations. The tables should be read in conjunction with the production ~~(see~~(refer to section ~~2.3.2)~~2.2.2) and reserves tables ~~(see~~(refer to section ~~2.13.2)~~2.3.2).

Mine & ~~Location~~location

Means of
~~Access~~ access

Ownership

Operator

Title, ~~Leases~~leases or

~~Options~~options

History

Mine ~~Type~~type &
~~Mineralisation~~
~~Style~~mineralisation

style

Power

~~Source~~ source

Facilities, ~~Use~~use &
~~Condition~~condition

~~Metallurgical coal~~

Australia

Central Queensland Coal Associates ~~(CQCA) joint venture~~Joint Venture

Bowen Basin, Queensland, Australia

Goonyella Riverside, Broadmeadow

Daunia

Caval Ridge

Peak Downs

Saraji ~~Norwich Park,~~

Blackwater and ~~Broadmeadow~~Norwich Park mines

Public road

Coal transported by rail to Hay Point, Gladstone, Dalrymple Bay and ~~Gladstone~~Abbot Point ports

Distances between the mines and port are between 160 km and 315 km

BHP Billiton 50%

Mitsubishi Development 50%

BMA

Mining leases, including undeveloped tenements, expire between ~~2012–2037,~~2015 and 2043, renewable for further periods as Queensland ~~Government/~~Government legislation allows

Mining is permitted to continue under the legislation during the renewal application ~~period. Applications have been lodged to renew mining leases expiring in 2012~~period

Goonyella mine commenced in 1971, merged with adjoining Riverside mine in 1989 Operates as Goonyella Riverside

Production ~~commenced:~~commenced at:

Peak Downs in 1972

Saraji in 1974 Norwich Park in 1979

Blackwater in 1967

Broadmeadow (longwall operations) in 2005

Daunia in 2013 and

Caval Ridge in 2014

Production at Norwich Park ceased in May 2012

All open-cut except Broadmeadow: longwall underground

Bituminous coal is mined from the Permian Moranbah and Rangal Coal measures

Products range from ~~premium-quality,~~premium quality, low volatile, high vitrinite, hard coking coal to medium volatile hard coking coal, to weak coking coal, some pulverised coal injection (PCI) coal and ~~some~~ medium ash thermal coal as a ~~by-product~~secondary product

Queensland electricity grid connection is under long-term contracts and power source is under 5-year contracts

On-site beneficiation processing facilities

Combined nominal capacity: in excess of ~~53.5 mtpa~~61 Mtpa

~~Hay Point Coal terminal~~

Mine & ~~Location~~location

Means of
~~Access~~ access

Ownership

Operator

Title, ~~Leases~~leases or
~~Options~~options

History

Mine ~~Type~~type &
~~Mineralisation~~
~~Style~~mineralisation
style

Power
~~Source~~ source

Facilities, ~~Use~~use &
~~Condition~~condition
Gregory ~~joint venture~~Joint Venture
Bowen Basin, Queensland, Australia

Gregory and Crinum mines

Public road

Coal transported by rail to Hay Point and Gladstone ports
Distances between the mines and port are between 310 km and 370 km

BHP Billiton 50%

Mitsubishi Development 50%
BMA
Mining leases, including undeveloped tenements, expire between ~~2014 – 2027,~~2018 and 2035, renewable for further periods as Queensland ~~Government/~~Government legislation allows
Mining is permitted to continue under the legislation during the renewal application period

Production ~~commenced:~~commenced at:
Gregory in 1979
Crinum mine (longwall) commenced in 1997

Production at Gregory open-cut mine ~~to cease from 10~~ceased in October 2012

Gregory: open-cut

Crinum: longwall underground

Bituminous coal is mined from the Permian German Creek Coal measures

Product is a high volatile, low ash hard coking coal ~~and a medium ash thermal coal~~
Queensland electricity grid connection is under long-term contracts and power source is under 5-year contracts
On-site beneficiation processing facility

Nominal capacity: in excess of ~~5 mtpa~~6 Mtpa
BHP Billiton Mitsui Coal ~~Pty Limited~~
Bowen Basin, Queensland, Australia

South Walker Creek and Poitrel mines

Public road

Coal transported by rail to Hay Point and Dalrymple Bay ports
Distances between the mines and port are between 135 km and 165 km

BHP Billiton 80%

Mitsui and Co 20%
BMC
Mining leases, including undeveloped tenements expire ~~in 2020,~~between 2015 and 2034, and are renewable for further periods as Queensland ~~Government/~~Government legislation allows
Mining is permitted to continue under the legislation during the renewal application period

South Walker Creek commenced in 1996
Poitrel commenced in 2006

Open-cut

Bituminous coal is mined from the Permian Rangal Coal measures

Produces a range of coking coal and pulverised coal injection (PCI) coal ~~and thermal coal products with medium to high phosphorus and ash properties~~
Queensland electricity grid
South Walker Creek coal beneficiated on-site

Nominal capacity: in excess of ~~3.5 mtpa~~5 Mtpa

Poitrel mine has Red Mountain joint venture with adjacent Millennium Coal mine to share processing and rail loading facilities

Nominal capacity: in excess of 3 ~~mtpa~~Mtpa

Mine & ~~Location~~location

Means of
~~Access~~ access

Ownership

Operator

Title, ~~Leases~~leases or
~~Options~~options

History

Mine ~~Type~~type &
~~Mineralisation~~
~~Style~~mineralisation
style

Power
~~Source~~ source

Facilities, ~~Use~~use &
~~Condition~~condition
Mt Arthur Coal
��
Approximately 126 km northwest of Newcastle,
New South Wales, Australia
Public road
Domestic coal transported by conveyor to Bayswater Power Station
Export coal transported by third party rail to Newcastle port
100% BHP Billiton
Various mining leases and licences expire between 2015 and 2032
Renewal is being sought for expired mining leases
The original approvals permit mining and other activities to continue during renewal application
Production commenced in 2002
Government approval permits extraction of up to 36 Mtpa of run of mine coal from underground and open-cut operations, with open-cut extraction limited to 32 Mtpa
Open-cut
Produces a medium rank bituminous thermal coal (non-coking)
Local energy providers
Beneficiation facilities: coal handling, preparation, washing plants
Nominal capacity: in excess of 23 Mtpa
~~Illawarra Coal~~United States
~~Illawarra,~~
San Juan
25 km west of Farmington, New ~~South Wales, Australia~~
~~Dendrobium, Appin and West Cliff mines~~
Mexico, US
Public road

Coal transported by ~~road or rail~~truck and conveyor to ~~BlueScope Steel’s Port Kembla steelworks or Port Kembla for export~~San Juan Generating Station
100% BHP Billiton
Mining leases ~~expire between 2012–2026, renewable for further periods as NSW Government/legislation allows~~from federal and state governments

~~Mining is permitted to continue under the legislation during the application period~~
~~Applications lodged to renew mining leases expiring in 2012 and 2013~~Leases viable as long as minimum production criteria achieved

~~Production commenced:~~Surface mine operations commenced in 1973
~~Appin 1962 (longwall operations 1969)~~
~~West Cliff 1976~~
~~Dendrobium 2005~~Development of underground mine to replace open-cut mine approved in 2000

Underground

~~Bituminous coal is mined from the Permian Illawarra Coal Measures~~
Produces ~~premium-quality hard coking coal and some~~a medium rank bituminous thermal coal ~~from~~(non-coking suitable for the ~~Wongawilli and Bulli seams~~domestic market only)
~~New South Wales electricity grid~~San Juan Generating Station
~~2 beneficiation facilities~~Coal sized and blended to meet contract quantities and specification

Nominal capacity: ~~approximately 9 mtpa~~6 Mtpa
Navajo
40 km southwest of Farmington, New Mexico, US
Public road
Coal transported by rail to Four Corners Power Plant
BHP Billiton 0%
Navajo Transitional Energy Company 100%
BHP Billiton Lease held by Navajo Transitional Energy Company
Production commenced in 1963
Divested in FY2014
BHP Billiton continues as operator
Open-cut
Produces a medium rank bituminous thermal coal (non-coking suitable for the domestic market only)
Four Corners Power Plant
Stackers and reclaimers used to size and blend coal to meet contract quantities and specification
Nominal capacity: 4.8 Mtpa

Mine & location
Means of access
Ownership
Operator
Title, leases or
options
History
Mine type &
mineralisation
style
Power source
Facilities, use &
condition
Colombia
Cerrejón
La Guajira province, Colombia
Public road
Coal exported by company-owned rail to Puerto Bolivar (150 km)
BHP Billiton 33.33%
Anglo American 33.33% Glencore 33.33%
Cerrejón Mining leases expire in 2034
Original mine began producing in 1976
BHP Billiton interest acquired in 2000
Open-cut
Produces a medium rank bituminous thermal coal (non-coking, suitable for the export market)
Local Colombian power system
Beneficiation facilities: crushing plant with capacity of 35 Mtpa and washing plant
Nominal capacity: 3 Mtpa

Development projects

~~Bowen Basin Expansions~~

In November 2011, approval was given for the development of the Caval Ridge mine project and expansion of the Peak Downs mine in the Bowen Basin in Central Queensland, Australia. In response to the challenging external environment, the Group has chosen to delay indefinitely the 2.5 mtpa (100 per cent basis) expansion of Peak Downs that is associated with the Caval Ridge mine development. The 5.5 mtpa (100 per cent basis) Caval Ridge mine remains on schedule to deliver first production in CY2014.

~~The Caval Ridge mine will be an open-cut dragline and truck and shovel operation, with coal railed to the BMA~~ Hay Point Coal ~~terminal.~~Terminal Expansion Stage 3

In March 2011, ~~approval was given for three key metallurgical coal projects located in~~we approved the ~~Bowen Basin in Central Queensland, Australia. The projects are expected to add 4.9 Mt of annual mine capacity (100 per cent basis) through development~~third expansion of the ~~Daunia Operation and a new mining area at Broadmeadow. In addition,~~Hay Point Coal Terminal. The expansion of the terminal will deliver an additional 11 Mt of annual port capacity (100 per cent basis) ~~will be developed at the Hay Point Coal terminal. These projects are ongoing with~~. The project investment has a budget of US$1.5 billion (BHP Billiton share). In January 2015, first coal ~~expected from the Daunia mine in 2013, completion of the Broadmeadow expansion expected in 2013 and the first shipments from~~was loaded through the expanded terminal and the project was 97.6 per cent complete at 30 June 2015.

Cerrejón P40 Project

In August 2011, we announced a US$437 million (BHP Billiton share) investment in the expansion of Cerrejón, known as the P40 Project, which is expected to increase Cerrejón’s thermal coal production by 8 Mtpa to approximately 40 Mtpa (100 per cent basis). The project scope includes a second berth and dual quadrant ship loader at Cerrejón’s 100 per cent owned and operated Puerto Bolivar, along with necessary mine, rail and associated supply chain infrastructure. Construction commenced in ~~FY2015.~~CY2011 and the project handled its first coal in the December 2013 quarter. However, operational issues are expected to constrain capacity to approximately 35 Mtpa (100 per cent basis) in the medium term. The final cost was US$376 million (BHP Billiton share) and the project was completed during the December 2014 quarter.

Newcastle Port Third Phase Expansion

IndoMet Coal Project ~~(Indonesia)~~

IndoMet Coal comprises seven coal contracts of work ~~(CCoWs)~~ covering a large metallurgical coal resource in Central and East Kalimantan, Indonesia, which was discovered by BHP Billiton in the 1990s. Following an assessment of the importance of local participation in developing the project, in 2010 we sold a 25 per cent interest in the project to a subsidiary of PT Adaro Energy TBK. We retain 75 per cent of the project and hold management ~~responsibility for the project.~~responsibility.

~~Study work is underway to identify development options across our CCoWs and early work on~~During FY2015, IndoMet completed infrastructure development ~~has commenced.~~and received an operating permit to commence mining at Haju mine. Production is expected to commence from the 1 Mtpa Haju mine in Indonesia during FY2016.

~~Appin Area 9 Project~~2.1.5 Other assets

~~In June 2012, approval was given to invest US$845 million to sustain~~Nickel West

Our wholly owned Nickel West Asset in Western Australia consists of an integrated system of mines, concentrators, a smelter and a refinery. We mine nickel-bearing sulphide ore at our Mt Keith and Cliffs operations, located north of Kalgoorlie. The reserve lives are discussed in section 2.3.2.

We operate concentrator plants at ~~Illawarra Coal, in southern New South Wales, Australia, by establishing a replacement mining area~~Mt Keith and at Appin mine. The replacement area will have a production capacity of 3.5 mtpa and will sustain Illawarra Coal’s production capacity at 9 mtpa. Appin Area 9 will be operational in 2016 and will replaceLeinster, which also concentrate ore from Cliffs. On 31 October 2013, production at the Nickel West ~~Cliff mine. The project includes roadway development, new ventilation infrastructure, new and reconfigured conveyors and other~~Leinster Perseverance underground mine ~~services.~~

~~2.2.10 Energy Coal Customer Sector Group~~

~~Our Energy Coal CSG is one~~was suspended following a significant seismic event. A subsequent review of the ~~world’s largest producers~~incident determined it was unsafe to resume operations.

We also operate the Kambalda concentrator south of Kalgoorlie, where we source ore through tolling and ~~marketers~~concentrate purchase arrangements with third parties in the Kambalda region. We also have purchase agreements in place for the direct purchase of ~~export energy coal (also known as thermal or steaming coal)~~concentrate, which we re-pulp, dry and blend with other concentrate processed at Kambalda.

Ore from our Mt Keith mine is ~~also a domestic supplier~~concentrated at Mt Keith and then transported by road approximately 110 kilometres to Leinster for drying. Ore from the ~~electricity generation industry in Australia, South Africa~~Cliffs and ~~the United States. Our global portfolio~~Leinster mines is concentrated and dried at Leinster. Dry nickel concentrate is then transported via road and rail approximately 375 kilometres to our Kalgoorlie smelter. Concentrate from Kambalda is transported via rail approximately 60 kilometres to our Kalgoorlie smelter.

Small volumes of ~~energy coal assets and our insights~~concentrate are sold into the ~~broader energy market through our sales~~external market; however, the majority of other fuels (gas, uranium and oil) provide our business with substantial advantages as a supplier. We generally make our domestic sales under long-term fixed price or cost plus contracts with nearby power stations. We make export sales to power generators and some industrial users in Asia, Europe and the United States, usually under contracts for delivery of a fixed volume of coal. Pricing is index-linked or fixed; where pricing is fixed, financial instrumentsvolumes are ~~used to swap exposure to market index basis.~~

We operate three assets: a group of mines and associated infrastructure collectively known as BHP Billiton Energy Coal South Africa; our New Mexico Coal operations in the United States; and our New South Wales Energy Coal operations in Australia. We also own a 33.33processed into nickel matte, containing approximately 65 per cent ~~share of the Cerrejón Coal Company, which operates a coal mine in Colombia.~~

~~BHP Billiton Energy Coal South Africa~~

BHP Billiton Energy Coal South Africa (BECSA) operates four coal mines being Khutala, Klipspruit, Middelburg and Wolvekrans in the Witbank region of Mpumalanga province of South Africa, which in FY2012 producednickel. In FY2015, we exported approximately ~~33 Mt. The reserve lives of our mines range from eight years at Khutala and Klipspruit to 29 years at Middelburg.~~

~~In FY2012, BECSA sold approximately 57~~30 per cent of ~~its production~~our nickel matte production. The remaining nickel matte is transported, principally by rail, to ~~Eskom,~~our Kwinana nickel refinery, a distance of approximately 650 kilometres. The nickel matte is processed into nickel metal in the ~~government-owned electricity utility in South Africa~~form of LME grade briquettes and ~~exported the rest via the Richards Bay Coal Terminal (RBCT), in which we own a 22 per cent share.~~

~~During FY2012, BECSA entered into an empowerment transaction~~nickel powder, together with a ~~black-owned consortium, which will effectively hold an eight per cent equity interest~~range of saleable by-products.

Nickel West production in ~~BECSA once~~FY2015 was 90 kt of contained nickel.

On 14 May 2014, we announced we were reviewing the ~~transaction is completed. The shareholders~~long-term future of ~~BECSA have also approved~~Nickel West, including considering the ~~implementation~~sale of an Employee Share Ownership Plan (ESOP) in which participating employees will hold a beneficial interest of two per cent equity in BECSA for a vested period. The empowerment transaction and the introductionsome or all of the ~~ESOP are expected to be completed in FY2013.~~

~~New Mexico Coal~~

We own and operate the Navajo mine, located on Navajo Nation land in New Mexico, and the nearby San Juan mine located in the state of New Mexico. Each mine transports its production directly to a nearby power station. The reserve lives of our mines are four years at Navajo mine and six years at San Juan Mine, being the lifeasset. Having carefully considered all of the ~~current customer contracts. New Mexico Coal produced approximately 9.4 Mt in FY2012.~~

~~New South Wales Energy Coal~~

~~New South Wales Energy Coal’s operating asset is the Mt Arthur Coal open-cut mine in the Hunter Valley region~~options available to us, on 12 November 2014, we announced that Nickel West will remain part of ~~New South Wales, which produced approximately 17 Mt in FY2012~~BHP Billiton, and ~~has a reserve life of 45 years. In FY2012,~~that we ~~delivered approximately 10 per cent of Mt Arthur’s production~~will continue to ~~a local power station and exported the rest via the port of Newcastle. During FY2012, the RX1 project achieved first production ahead of schedule. This project is expected~~operate it to increase run-of-mine thermal coal production by approximately four mtpa. We are a 35.5 per cent shareholder in Newcastle Coal Infrastructure Group, a jointly controlled entity that is operating the Newcastle Third Port export coal loading facility and currently has a project in execution (see Development projects below). We also have a 1.75 per cent interest in Port Waratah Coal Services Limited which operates two coal loading facilities at the port of Newcastle.

~~Cerrejón Coal Company~~

We have a one-third interest in Cerrejón Coal Company, which owns and operates one of the largest open-cut export coal mines in the world in La Guajira province of Colombia, as well as integrated rail and port facilities through which the majority of production is exported to European, Middle Eastern, North American and Asian customers. In FY2012, Cerrejón commenced its expansion project (P40), which will increase BHP Billiton’s share of saleable production from 10.7 mtpa to 13.3 mtpa (see Development projects below). Cerrejón has a current production capacity of 32 mtpa (100 per cent terms) and has a reserve life of 21 years.process our known ore reserves.

Information on ~~Energy Coal~~Nickel mining operations

The following table contains additional details of our mining operations. ~~The~~This table should be read in conjunction with the production ~~(see~~(refer to section ~~2.3.2)~~2.2.2) and ~~reserves~~reserve tables ~~(see~~(refer to section ~~2.13.2)~~2.3.2).

Mine & ~~Location~~location

Means of

~~Access~~ access

Ownership

Operator

Title, ~~Leases~~leases or
~~Options~~

options

History

Mine ~~Type~~type &
~~Mineralisation~~
~~Style~~mineralisation

style

Power

~~Source~~ source

Facilities, ~~Use~~use &
~~Condition~~condition

~~South Africa Khutala~~Australia

~~100 km east of Johannesburg, Gauteng Province,~~

~~South Africa~~

~~Public road~~

~~Domestic coal transported by overland conveyor to Kendal Power Station~~

~~100%~~

~~BHP Billiton~~

~~BECSA holds a 100% share of Converted Mining Right, which was granted on 11 October 2011~~

~~Production commenced 1984~~

~~Open-cut operations 1996~~

~~Commenced mining thermal/metallurgical coal for domestic market 2003~~

~~Combination open-cut and underground~~

~~Produces a medium rank bituminous thermal coal (non-coking)~~

~~Eskom (national power supplier) under long-term contracts~~

~~Crushing plant for energy coal~~

~~Nominal capacity: 18 mtpa~~

~~Smaller crusher and wash plant to beneficiate metallurgical coal Nominal capacity: 0.6 mtpa~~

~~Middelburg/Wolvekrans~~Nickel

Nickel West

Mt Keith

485 km ~~southeast~~north of ~~Witbank, Mpumalanga Province, South Africa~~Kalgoorlie, Western Australia

Private road

Nickel concentrate transported by road to Leinster nickel operations for drying and on-shipping

100%

BHP Billiton

Mining leases granted by Western Australia Government

Key leases expire between 2029 and 2036

Renewals at government discretion

Commissioned in 1995 by WMC

Acquired in 2005 as part of WMC acquisition

Open-cut

Disseminated textured magmatic nickel-sulphide mineralisation associated with a metamorphosed ultramafic intrusion

On-site third party gas-fired turbines

Contracts expire in December 2023

Natural gas sourced and transported under separate long-term contracts

Concentration plant with a nominal capacity:

11 Mtpa of ore

Leinster

375 km north of Kalgoorlie, Western Australia

Public road

~~Export coal transported~~Nickel concentrate shipped by road and rail to ~~RBCT by rail~~

~~Domestic coal transported by conveyor to Duvha Power Station~~Kalgoorlie nickel smelter

100%

~~Previous JV (84:16) with~~

~~Xstrata Plc (through Tavistock Collieries Pty Limited) was amended in February 2008~~

BHP Billiton

~~BECSA~~Mining leases granted by Western Australia Government

Key leases expire between 2019 and ~~Tavistock are joint holders of 3 Converted Mining Rights in the previous JV ratio (84:16).~~2034

~~BECSA is the 100% holder of a fourth Converted Mining Right~~

~~All 4 Rights comprise the Middelburg Mine Complex~~ ⁽¹⁾

~~The Converted Mining Rights were granted during October and December 2011~~⁽²⁾Renewals at government discretion

Production commenced ~~1982~~in 1979

~~Middelburg Mine Services (MMS) and Duvha Opencast became one operation~~Acquired in ~~1995~~2005 as part of WMC acquisition

~~Douglas-Middelburg Optimisation project completed in July 2010~~

~~During FY2011 the~~Perseverance underground mine ~~was split into Middelburg and Wolvekrans~~ceased operations during 2013

Open-cut

~~Produces a medium rank bituminous thermal coal, most of which can be beneficiated for the European or Asian export markets~~Steeply dipping disseminated and massive textured nickel-sulphide mineralisation associated with metamorphosed ultramafic lava flows and intrusions

~~Eskom~~

On-site third party gas-fired turbines

Contracts expire in December 2023

Natural gas sourced and transported under separate long-term contracts

~~Beneficiation facilities: tips and crushing plants, 2 export wash plants, middlings wash~~Concentration plant ~~de-stone plant~~

~~Nominal~~with a nominal capacity: ~~43.3 mtpa~~

⁽¹⁾ ~~This includes the Wolvekrans and Middelburg collieries and excludes the portion Tavistock obtained as a result~~3 Mtpa of ~~the amendment of the Douglas-Tavistock Joint Venture agreement.~~

⁽²⁾ JV agreement has been amended such that upon the Department of Mineral Resources amending the Converted Mining Rights, the mining area will be divided into an area wholly owned and operated by Tavistock and an area wholly owned and operated by BECSA as the new Douglas-Middelburg mine.

ore

Information on Nickel smelters, refineries and processing plants

Smelter, refinery or
processing plant

~~Beneficiation facilities: tip and crushing plant, export wash plant~~Location

Ownership

Operator

Title, leases or

options

Product

Nominal production
capacity

Power source

Nickel

Kambalda

Nickel concentrator

56 km south of Kalgoorlie, Western Australia

100%

BHP Billiton

Mining leases granted by Western Australia Government

~~Nominal capacity Phola Coal Processing Plant: 16 mtpa~~Key leases in 2028

Renewals at government discretion

Concentrate containing approximately 13% nickel

1.6 Mtpa ore

Ore sourced through tolling and concentrate purchase arrangements with third parties in Kambalda region

On-site third party gas-fired turbines supplemented by access to grid power

Contracts expire in December 2023

Natural gas sourced and transported under separate long-term contracts

~~Australia~~

~~Mt Arthur Coal~~

Kalgoorlie

~~Approximately 125 km from Newcastle,~~

~~New South Wales, Australia~~Nickel smelter

~~Public road~~

~~Domestic coal transported by conveyor to Bayswater Power Station~~

~~Export coal transported by rail to Newcastle port~~

Kalgoorlie, Western Australia

100%

BHP Billiton

~~Various mining leases and licences expire 2010–2032~~

~~Renewal is being sought for expired mining leases~~

~~The original approvals permit mining and other activities to continue during renewal application~~

Freehold title over the property

Matte containing approximately 65% nickel

110 ktpa matte

~~Production commenced 2002~~On-site third party gas-fired turbines supplemented by access to grid power

~~Government approval permits extraction of up to 36 Mt of run of mine coal from underground and open-cut operations, with open-cut extraction limited to 32 mtpa~~

~~Open-cut~~Contracts expire in December 2023

~~Produces a medium rank bituminous thermal coal (non- coking)~~

~~Local energy providers~~

~~Beneficiation facilities: coal handling, preparation, washing plants~~

~~Nominal capacity: in excess of 16 mtpa~~Natural gas sourced and transported under separate long-term contracts

~~Navajo~~

Kwinana

~~30 km southwest of Farmington, New Mexico, US~~

Nickel refinery

~~Public road~~

~~Coal transported by rail to Four Corners Power Plant (FCPP)~~

30 km south of Perth, Western Australia

100%

BHP Billiton

~~Long-term lease from Navajo Nation continues for as long as coal can be economically produced and sold in paying quantities~~

~~Production commenced 1963~~Freehold title over the property

~~Open-cut~~LME grade nickel briquettes, nickel powder

~~Produces a medium rank bituminous thermal coal (non-coking suitable for the domestic market only)~~Also intermediate products, including copper sulphide, cobalt-nickel-sulphide, ammonium-sulphate

~~Four Corners Power Plant~~70 ktpa nickel matte

~~Stackers and reclaimers used to size and blend coal to~~Power is sourced from the local grid, which is supplied under a retail contract ~~specifications~~

~~Nominal capacity: 7.4 mtpa~~

~~Mine & Location~~
~~Means of~~
~~Access~~
~~Ownership~~
~~Operator~~
~~Title, Leases or~~
~~Options~~
~~History~~
~~Mine Type &~~
~~Mineralisation~~
~~Style~~
~~Power~~
~~Source~~
~~Facilities, Use &~~
~~Condition~~
~~San Juan~~
~~25 km west of Farmington, New Mexico, US~~
~~Public road~~
~~Coal transported by truck and conveyor to San Juan Generating Station (SJGS)~~
~~100%~~ ~~BHP Billiton~~
~~Mining leases from federal and state governments~~
~~Leases viable as long as minimum production criteria achieved~~
~~Surface mine operations commenced 1973~~
~~Development of underground mine to replace open-cut mine approved 2000~~
~~Underground~~
~~Produces a medium rank bituminous thermal coal (non-coking suitable for the domestic market only)~~
~~San Juan Generation Station~~
~~Coal sized and blended to contract specifications using stockpiles~~
~~Nominal capacity: 5.6 mtpa~~
~~Colombia~~
~~Cerrejón Coal Company~~
~~La Guajira province, Colombia~~
~~Public road~~
~~Coal exported by rail to Puerto Bolivar~~
~~BHP Billiton 33.33%~~
~~Anglo American 33.33%~~
~~Xstrata 33.33%~~
~~Cerrejón Coal Company~~ ~~Mining leases expire 2034~~
~~Original mine began producing in 1976~~
~~BHP Billiton interest acquired in 2000~~
~~Open-cut~~
~~Produces a medium rank bituminous thermal coal (non-coking, suitable for the export market)~~
~~Local Colombian power system~~
~~Beneficiation facilities: crushing plant with capacity of 32 mtpa and washing plant~~
~~Nominal capacity: 3 mtpa~~

~~Development projects~~2.1.6 Marketing

~~Cerrejón Coal P40 Project~~Marketing supports the Group’s strategy by:

~~On 18 August 2011,~~

securing sales of BHP Billiton product;

realising the full value of our products;

managing the supply chain from resources to markets;

supporting strategic decision-making by providing market insights;

minimising operating costs and optimising working capital.

Marketing’s responsibilities, activities and organisational structure are designed to give effect to this purpose.

The Marketing organisation is accountable for managing the Group’s revenue line. Marketing adds value by leveraging the intrinsic value of our products, customer relationships and the Group’s broader value proposition relative to other market participants to maximise realised sales prices, minimising the cost of raw materials inputs, optimising freight and other distribution costs, minimising overheads, enabling the Businesses to maximise upstream resource value, managing market-related risks, and ensuring the Group’s long-run view of markets is well informed and insightful. This allows the Businesses to focus on safety, production and cost, while Marketing focuses on optimising realised prices and sales outcomes.

Marketing is organised into trading and marketing units (TMUs) that are specialised in marketing particular commodities, to enable tailored strategies for the differences and features of each of the markets for BHP Billiton’s products. Even within a specific commodity type, the markets can be quite different (e.g. the market for copper cathode is quite different to the market for copper concentrates).

Each TMU is responsible for forming strong partnerships with our customers and placing the right product with the right customer at the right time. A solid understanding of both the intrinsic value of our products and the technical requirements of each customer is reflected in the fair value of our products.

Marketing also engages in technical collaboration with many customers to enhance mutual understanding of customer perceptions and requirements and how BHP Billiton products will better serve such requirements by:

developing a solid understanding of the technical requirements of a customer’s individual production processes and specific product requirement;

assisting in ensuring customers are able to make optimal use of BHP Billiton’s products.

Consistent with our philosophy of locating our major units close to their main activities, the primary hub for our marketing activities is Singapore, where we ~~announced~~employ approximately 480 people, while our marketing of oil and gas is headquartered in Houston, United States. The two Marketing hub offices incorporate all the functions required to manage sales and distribution from our Businesses to our customers. In addition, we have regional marketers located close to our customers in nine cities across the world. Having our primary marketing hub in Singapore ensures that we are close to our major customers with Asian commodity flows, which increasingly dominate world flows. Sixty-eight per cent of BHP Billiton’s sales are in Asia.

Singapore not only provides a ~~US$437 million (BHP Billiton share)~~highly skilled work force, but also provides for a stable and transparent regulatory framework that supports trade and investment. Furthermore, Singapore is a world leader in logistic capabilities and provides a base for world-class connectivity with an effective transportation network. Singapore’s workforce also gives us access to staff that speak the languages of our key customers in Asia. The high living standards in Singapore attract the highly qualified mobile people we need to manage our continuously evolving business.

The consolidation of commercial accountabilities through a centralised model presents one face to markets and customers across multiple commodities, and allows our assets to focus on their key priorities of maximising production safely at a low cost of production. The model enables the optimisation of BHP Billiton’s sales positions, provides greater value to distribution activities, and ensures more effective governance and risk management, which improves commercial capability thereby maximising sales prices for our commodities benefitting the Group as a whole and our production assets specifically. Marketing also utilises a structured, rigorous and consistent framework to identify, plan and execute productivity improvement opportunities.

Co-location of TMUs ensures that market insights can be leveraged across products. Based on these shared insights, our marketers have been able to drive major value accretive initiatives and efficiencies within the Group, as well as across the wider industry. For example, BHP Billiton’s cross-industry engagement and leadership in the drive towards improved liquidity and transparency in the markets for many of the Group’s products through support of and investment in, centrally located transparent multilateral electronic physical transaction platforms, such as globalORE, globalCOAL and the ~~expansion~~China Beijing International Mining Exchange.

Freight and distribution costs account for approximately 80 per cent of ~~Cerrejón Coal, known~~the total costs managed by Marketing. Marketing has a centralised ocean freight team that manages in-house freight requirements for the Group. The objective of the freight business is to create a competitive advantage through the procurement of safe, sustainable shipping solutions, which both maximise production throughput and minimise costs through the Group’s supply chains.

BHP Billiton is one of the largest global shippers of bulk commodities. The Group’s key role in the market allows us to drive safety and best practice via our interactions and usage of the highest quality freight service providers and ship owners. The scope and scale of our commodity portfolio and extensive fleet of hire chartered vessels allows the Group to arbitrage and optimise positions to minimise freight costs. This includes flexibility in diverting tonnages between markets, maximising tonnages for both inbound and outbound journeys, and parcelling of commodities.

BHP Billiton’s market insight is enhanced by the Group’s proximity to customers and the flow of information through the centralised structure. Marketing analyses the fundamentals of demand and supply to inform our long-run views of commodity markets. We consider various global scenarios in our modelling, and regularly monitor ‘signposts’ in the market to ensure an in-depth understanding of evolving trends.

Our commodity price forecasts support asset and portfolio level investment decisions, strategic planning and capital management. Marketing’s outlook on the global economy, the resource industry and each of the commodities in our portfolio also serve to inform broader organisational priorities, such as our position on climate change.

2.1.7 Discontinued operations

The assets that were demerged from BHP Billiton to form South32 (now Discontinued operations) are summarised below. The information below reflects the ~~P40 Project,~~assets as at 25 May 2015. For further information on the demerger, see sections 1.3.7 or 1.6.4 of this Annual Report or note 29 ‘Discontinued operations’ to the Financial Statements.

Alumina

Worsley Alumina

Worsley Alumina is an integrated bauxite mining and alumina refining operation located in Western Australia. At the time of separation, Bauxite ore mined near Boddington was conveyed to the Worsley Alumina refinery, located near Bunbury. Alumina was then railed from the refinery to Bunbury for export to Worsley Alumina’s export customers, including South32’s Hillside and Mozal Aluminium smelters in southern Africa.

Aluminium

South Africa Aluminium

South Africa Aluminium comprises the Hillside smelter near Richards Bay, South Africa. Hillside imported alumina from the Worsley Alumina refinery. At the time of separation, approximately 80 per cent of Hillside’s aluminium production was exported through Richards Bay Port with the balance of Hillside’s aluminium production trucked to the Bayside casthouse or to domestic customers.

Mozal Aluminium

Mozal Aluminium is an aluminium smelter located near Maputo, Mozambique. At the time of separation, alumina was supplied to Mozal Aluminium from the Worsley Alumina refinery, which ~~will enable Cerrejón Coal’s saleable thermal coal production~~is now majority owned by South32. Most of Mozal Aluminium’s aluminium was exported to ~~increase by 8.0 mtpa to approximately 40 mtpa. We have a one-third~~Europe through Matola, the port of Maputo.

Brazil Aluminium

Brazil Aluminium comprises an interest in ~~Cerrejón Coal.~~the Mineração Rio do Norte (MRN) Mine, as well as its interests in the Alumar alumina refinery and Alumar aluminium smelter, together with some interests in ancillary facilities

and lands. The ~~expansion project~~MRN Mine is ~~expected~~located in the Trombetas region in the state of Para, Brazil and Alumar is located at Sao Luis in the state of Maranhao, Brazil. At the time of separation, the majority of the bauxite produced from the MRN Mine was sold to ~~increase our share~~its shareholders and related parties. Bauxite produced from the MRN Mine was previously supplied to the Alumar refinery, where most of ~~saleable~~the alumina produced was exported via the nearby Sao Marcos Bay facilities, with a small portion transferred to the Alumar smelter. All of Alumar’s aluminium production ~~from 10.7 mtpa~~was trucked to ~~13.3 mtpa. Construction commenced~~domestic customers.

Coal

South Africa Energy Coal

South Africa Energy Coal operates four energy coal mines in ~~CY2011 with completion expected~~the Witbank region, located in ~~CY2013. The project scope includes a second berth and dual quadrant ship loader at Cerrejón’s 100~~the Mpumalanga province of South Africa. At the time of separation, approximately 55 per cent ~~owned~~of coal produced was sold domestically and ~~operated Puerto Bolivar, along with necessary mine, rail and associated supply chain infrastructure.~~the remainder was exported through the Richards Bay Coal Terminal (RBCT).

~~Newcastle Port Third Phase Expansion~~Illawarra Metallurgical Coal

~~On 31 August 2011, we announced a US$367 million (BHP Billiton share) investment~~Illawarra Metallurgical Coal operates three underground metallurgical coal mines near Wollongong in the third stage development of the Newcastle Coal Infrastructure Group’s coal handling facility in Newcastle, Australia. The port expansion project will increase total capacity at the coal terminal from 53 mtpa to 66 mtpa. This will increase New South Wales, ~~Energy Coal’s allocation by a further 4.6 mtpa~~Australia. At the time of separation, metallurgical coal was trucked to ~~19.2 mtpa. First coal~~Port Kembla Coal Terminal or to BlueScope Steel Limited’s Port Kembla steelworks.

Manganese

Australia Manganese

Australia Manganese comprises the GEMCO open-cut manganese mine and the TEMCO manganese alloy plant. At the time of separation, GEMCO, which is ~~scheduled~~located in the Northern Territory, Australia, exported approximately 90 per cent of its ore product to ~~occur~~customers through port facilities at Milner Bay and the balance of the ore was shipped to the TEMCO manganese alloy plant in ~~FY2014,~~Bell Bay, Tasmania, Australia. The majority of TEMCO’s alloy production was exported to customers in Asia and North America, with the ~~terminal expected~~balance of TEMCO’s production being sold to ~~operate~~steel customers in Australia and New Zealand.

South Africa Manganese

South Africa Manganese comprises the Hotazel Mines, being the Mamatwan open-cut mine and the Wessels underground mine, and the Metalloys plant. The Hotazel Mines are located near the town of Kuruman, South Africa. At the time of separation, approximately 75 per cent of the ore was processed at ~~full capacity within~~ the ~~following 12 months.~~mine resulting in export saleable product. The remainder of the ore was converted to alloy at the Metalloys plant, which is located near Johannesburg, South Africa.

Nickel

Cerro Matoso

Cerro Matoso is an open-cut lateritic nickel mine and ferronickel smelter, located near Montelibano, in the Cordoba Department in northern Colombia, which produces high-purity, low-carbon ferronickel granules. At the time of separation, the product was transported approximately 260 kilometres by road to Cartagena.

Silver

Cannington

Cannington is a silver, lead and zinc underground mine and concentrator operation located approximately 200 kilometres southeast of Mount Isa in northwest Queensland, Australia. At the time of separation, concentrate produced at Cannington was trucked to the Yurbi rail loading facility and then railed approximately 800 kilometres to the Port of Townsville for export to customers mainly located in northeast Asia, Europe and Canada.

~~2.3~~2.2 Production

~~2.3.1~~2.2.1 Petroleum

The table below details Petroleum’s historical net crude oil and condensate, natural gas and natural gas liquids production, primarily by geographic segment, for each of the three years ended 30 June ~~2012, 2011~~2015, 2014 and ~~2010.~~2013. We have shown volumes of marketable production after deduction of applicable royalties, fuel and flare. We have included in the table average production costs per unit of production and average sales prices for oil and condensate and natural gas for each of those periods.


	BHP Billiton Group share of production Year ended 30 June						BHP Billiton Group share of production Year ended 30 June
	2012		2011		2010		2015		2014		2013
Production volumes
Crude oil and condensate(’000 of barrels)
Australia		31,145		40,447		31,540		21,397		23,645		25,922
United States		30,824		30,157		41,522		71,626		53,964		38,724
Other		9,232		9,987		11,325
Other ⁽⁵⁾								5,559		6,452		7,866

Total crude oil and condensate		71,201		80,591		84,387		98,582		84,061		72,512

Natural gas(billion cubic feet)
Australia		249.97		274.74		259.65		294.8		287.5		276.13
United States		456.69		49.09		17.68		431.7		460.2		489.03
Other		115.60		81.23		91.24
Other⁽⁵⁾								60.1		91.6		109.11

Total natural gas		822.26		405.06		368.57		786.6		839.3		874.27

Natural Gas Liquids⁽¹⁾ (’000 of barrels)
Australia		7,943		7,962		8,652		7,214		8,448		7,927
United States		5,744		1,980		2,545		18,681		13,620		9,575
Other		398		1,341		1,552
Other ⁽⁵⁾								101		18		37

Total NGL⁽¹⁾		14,085		11,283		12,749		25,996		22,086		17,539

Total petroleum products production(million barrels of oil equivalent)⁽²⁾
Total production of petroleum products(million barrels of oil equivalent)⁽²⁾
Australia		80.75		94.20		83.47		77.74		80.01		79.87
United States		112.69		40.32		47.01		162.26		144.28		129.80
Other		28.90		24.86		28.08
Other ⁽⁵⁾								15.68		21.74		26.09

Total petroleum products production(million barrels of oil equivalent)⁽²⁾		222.34		159.38		158.56
Total production of petroleum products								255.68		246.03		235.76

Average sales price
Crude oil and condensate(US$ per barrel)
Australia		114.33		96.32		74.12		76.30		111.88		110.83
United States		106.22		90.01		71.55		64.77		97.57		102.33
Other		113.26		90.69		75.57
Other ⁽⁵⁾								72.90		108.13		107.46

Total crude oil and condensate		110.66		93.29		73.05		67.68		102.47		105.91

Natural gas(US$ per thousand cubic feet)
Australia		4.62		4.21		3.52		4.88		5.20		4.73
United States		2.82		3.48		4.80		3.27		4.10		3.29
Other		4.13		3.92		3.05
Other ⁽⁵⁾								4.00		3.92		4.42

Total natural gas		3.40		4.00		3.43		3.77		4.35		3.76

Natural Gas Liquids(US$ per barrel)
Australia		61.61		58.05		48.20		63.26		63.12		63.13
United States		45.72		49.79		39.51		18.35		30.28		30.41
Other		55.06		59.54		49.40
Other ⁽⁵⁾								29.55		32.00		28.61

Total NGL		54.85		56.77		46.47		44.72		42.28		45.70

Total average production cost(US$ per barrel of oil equivalent)⁽³⁾
Total average production cost(US$ per barrel of oil equivalent)^{(3) (4)}
Australia		7.95		5.75		5.59		7.08		8.18		8.23
United States		5.91		6.45		5.62		7.73		7.80		6.27
Other		7.84		8.39		7.48
Other ⁽⁵⁾								13.32		9.58		8.45

Total average production cost(US$ per barrel of oil equivalent)⁽³⁾		6.90		6.34		5.93
Total average production cost								7.88		8.08		7.18

⁽¹⁾	LPG and ethane are reported as Natural Gas Liquids (NGL).

⁽²⁾	Total barrels of oil equivalent (boe) conversion is based on the following: 6,000 ~~scf~~standard cubic feet (scf) of natural gas equals 1one boe.

⁽³⁾	Average production costs include direct and indirect costs relating to the production of hydrocarbons and the foreign exchange effect of translating local currency denominated costs into US dollars, but excludes ad valorem and severance taxes.

~~2.3.2~~

⁽⁴⁾

Total average production costs reported here do not include the costs to transport our produced hydrocarbons to the point of sale. Total production costs, including transportation costs, but excluding ad valorem and severance taxes, were US$11.09 per boe, US$11.70 per boe, and US$10.85 per boe for the years ended 30 June 2015, 2014 and 2013, respectively.

⁽⁵⁾	Other is comprised of Algeria, Pakistan, Trinidad and Tobago, and the United Kingdom.

2.2.2 Minerals

The table below details our mineral and derivative product production for all ~~CSGs~~Businesses except Petroleum for the three years ended 30 June ~~2012, 2011~~2015, 2014 and ~~2010. Production shows~~2013. Unless otherwise stated, the production numbers represent our share ~~unless otherwise stated.~~of production and include the proportional share of production from which profit is derived from our equity accounted investments. Production information for equity accounted investments is included to provide insight into the operational performance of these entities. For discussion of minerals pricing during the past three years, refer to section ~~3.4.1.~~1.15.1.

   BHP Billiton
Group interest
%    BHP Billiton Group share of production
Year ended 30 June
          2012            2011            2010
Aluminium

Alumina

Production (’000 tonnes)

Worsley, Australia
   86.0       2,917       2,902       3,054
Paranam, Suriname⁽¹⁾
   45.0       –       –       78
Alumar, Brazil
   36.0       1,235       1,108       709






Total alumina
      4,152       4,010       3,841






Aluminium

Production (’000 tonnes)

Hillside, South Africa
   100.0       621       711       710
Bayside, South Africa
   100.0       98       97       98
Alumar, Brazil
   40.0       170       174       174
Mozal, Mozambique
   47.0       264       264       259






Total aluminium
      1,153       1,246       1,241






Base Metals⁽²⁾

Copper

Payable metal in concentrate (’000 tonnes)

Escondida, Chile
   57.5       333.8       390.5       448.1
Antamina, Peru
   33.8       127.0       97.8       98.6






Total copper concentrate
      460.8       488.3       546.7






Cathode(’000 tonnes)

Escondida, Chile
   57.5       172.0       179.1       174.2
Pampa Norte, Chile⁽⁴⁾
   100.0       263.7       272.2       244.8
Pinto Valley, United States⁽³⁾
   100.0       5.4       5.7       6.2
Olympic Dam, Australia
   100.0       192.6       194.1       103.3






Total copper cathode
      633.7       651.1       528.5






Total copper concentrate and cathode
      1,094.5       1,139.4       1,075.2






Lead

Payable metal in concentrate (’000 tonnes)

Cannington, Australia
   100.0       239.1       243.4       245.4
Antamina, Peru
   33.8       0.8       1.2       3.0






Total lead
      239.9       244.6       248.4


	BHP Billiton Group interest %		BHP Billiton Group share of production ⁽¹⁾ Year ended 30 June
	BHP Billiton Group interest %		2015		2014		2013
Copper Business⁽²⁾
Copper
Payable metal in concentrate (’000 tonnes)
Escondida, Chile⁽³⁾		57.5		916.1		844.7		831.5
Antamina, Peru⁽⁴⁾		33.75		107.7		143.5		139.7
Pinto Valley, United States⁽⁵⁾		100		–		12.5		16.6

Total copper concentrate				1,023.8		1,000.7		987.8

Copper cathode(’000 tonnes)
Escondida, Chile⁽³⁾		57.5		310.4		308.0		297.9
Pampa Norte, Chile⁽⁶⁾		100		249.6		233.1		232.6
Pinto Valley, United States⁽⁵⁾		100		–		0.9		4.9
Olympic Dam, Australia		100		124.5		184.4		166.2

Total copper cathode				684.5		726.4		701.6

Total copper concentrate and cathode				1,708.3		1,727.1		1,689.4

Lead
Payable metal in concentrate (’000 tonnes)
Antamina, Peru⁽⁴⁾		33.75		2.1		1.5		1.0

Total lead				2.1		1.5		1.0

Zinc
Payable metal in concentrate (’000 tonnes)
Antamina, Peru⁽⁴⁾		33.75		66.4		52.0		71.9

Total zinc				66.4		52.0		71.9

   BHP Billiton
Group interest
%    BHP Billiton Group share of production
Year ended 30 June
          2012            2011            2010
Zinc

Payable metal in concentrate (’000 tonnes)

Cannington, Australia
   100.0       54.7       60.7       62.7
Antamina, Peru
   33.8       57.5       91.5       135.6






Total zinc
      112.2       152.2       198.3






Gold

Payable metal in concentrate (’000 ounces)

Escondida, Chile
   57.5       50.9       84.7       76.4
Olympic Dam, Australia (refined gold)
   100.0       117.8       111.4       65.5






Total gold
      168.7       196.1       141.9






Silver

Payable metal in concentrate (’000 ounces)

Escondida, Chile
   57.5       1,921       2,849       2,874
Antamina, Peru
   33.8       4,272       3,600       4,712
Cannington, Australia
   100.0       34,208       35,225       37,276
Olympic Dam, Australia (refined silver)
   100.0       907       982       500






Total silver
      41,308       42,656       45,362






Uranium oxide

Payable metal in concentrate (tonnes)

Olympic Dam, Australia
   100.0       3,885       4,045       2,279






Total uranium oxide
      3,885       4,045       2,279






Molybdenum

Payable metal in concentrate (tonnes)

Antamina, Peru
   33.8       2,346       1,445       813






Total molybdenum
      2,346       1,445       813






Diamonds and Specialty Products

Diamonds

Production (’000 carats)

EKATI^TM, Canada
   80.0       1,784       2,506       3,050






Total diamonds
      1,784       2,506       3,050






Titanium minerals⁽⁵⁾

Production (’000 tonnes)

Titanium slag

Richards Bay Minerals, South Africa⁽⁶⁾
   37.8       384       366       317
Rutile

Richards Bay Minerals, South Africa⁽⁶⁾
   37.8       38       32       34
Zircon

Richards Bay Minerals, South Africa⁽⁶⁾
   37.8       100       83       83






Total titanium minerals
      522       481       434






Stainless Steel Materials

Nickel

Production (’000 tonnes)

Cerro Matoso, Colombia
   99.9       48.9       40.0       49.6
Yabulu, Australia⁽⁷⁾
   100.0       –       –       2.8
Nickel West, Australia
   100.0       109.0       112.7       123.8






Total nickel
      157.9       152.7       176.2






   BHP Billiton
Group interest
%    BHP Billiton Group share of production ⁽¹⁾
Year ended 30 June
          2015            2014            2013
Gold

Payable metal in concentrate (’000 ounces)

Escondida, Chile⁽³⁾
   57.5       81.5       72.9       71.5
Pinto Valley, United States⁽⁵⁾
   100       –       0.1       –
Olympic Dam, Australia (refined gold)
   100       104.8       121.3       113.3






Total gold
      186.3       194.3       184.8






Silver

Payable metal in concentrate (’000 ounces)

Escondida, Chile⁽³⁾
   57.5       4,786       4,271       2,960
Antamina, Peru⁽⁴⁾
   33.75       3,826       4,359       3,952
Olympic Dam, Australia (refined silver)
   100       724       972       880
Pinto Valley, United States⁽⁵⁾
   100       –       41       59






Total silver
      9,336       9,643       7,851






Uranium

Payable metal in concentrate (tonnes)

Olympic Dam, Australia
   100       3,144       3,988       4,066






Total uranium
      3,144       3,988       4,066






Molybdenum

Payable metal in concentrate (tonnes)

Antamina, Peru ⁽⁴⁾
   33.75       472       1,201       1,561






Total molybdenum
      472       1,201       1,561






Iron Ore Business

Western Australia Iron Ore

Production (’000 tonnes) ⁽⁷⁾

Newman, Australia
   85       63,697       56,915       44,620
Yarrie, Australia ⁽⁸⁾
   85       –       836       1,106
Area C Joint Venture, Australia
   85       49,994       46,960       44,717
Yandi Joint Venture, Australia
   85       68,551       68,518       60,054
Jimblebar, Australia ⁽⁹⁾
   85       16,759       8,863       –
Wheelarra, Australia ⁽¹⁰⁾
   85       18,994       10,553       8,377






Total Western Australia Iron Ore
      217,995       192,645       158,874






Samarco, Brazil ⁽⁴⁾
   50       14,513       10,919       10,982






Total iron ore
      232,508       203,564       169,856

   BHP Billiton
Group interest
%    BHP Billiton Group share of production
Year ended 30 June
          2012            2011            2010
Iron Ore⁽⁸⁾

Production (’000 tonnes)

Newman, Australia⁽⁹⁾
   85.0       51,326       45,245       32,097
Goldsworthy joint venture, Australia
   85.0       768       1,198       1,688
Area C joint venture, Australia
   85.0       42,425       39,794       38,687
Yandi joint venture, Australia
   85.0       53,536       36,460       41,396
Samarco, Brazil
   50.0       11,423       11,709       11,094






Total iron ore
      159,478       134,406       124,962






Manganese

Manganese ores

Saleable production (’000 tonnes)

Hotazel Manganese Mines, South Africa⁽¹⁰⁾
   44.4       3,625       3,007       2,718
GEMCO, Australia⁽¹⁰⁾
   60.0       4,306       4,086       3,406






Total manganese ores
      7,931       7,093       6,124






Manganese alloys

Saleable production (’000 tonnes)

Metalloys, South Africa^(10)(11)
   60.0       404       486       364
TEMCO, Australia⁽¹⁰⁾
   60.0       198       267       219






Total manganese alloys
      602       753       583






Metallurgical Coal⁽¹²⁾

Production (’000 tonnes)

Blackwater, Australia
   50.0       4,435       4,589       5,733
Goonyella Riverside, Australia⁽¹³⁾
   50.0       5,003       5,359       6,668
Peak Downs, Australia
   50.0       3,534       3,402       4,332
Saraji, Australia
   50.0       3,053       2,779       3,402
Norwich Park, Australia
   50.0       1,175       1,055       1,870
Gregory Joint Venture, Australia⁽¹⁴⁾
   50.0       1,411       2,717       2,398






Total BMA, Australia
      18,611       19,901       24,403






South Walker Creek, Australia
      4,081       3,134       3,609
Poitrel, Australia
      2,612       2,759       2,834






Total BHP Billiton Mitsui Coal, Australia⁽¹⁵⁾
   80.0       6,693       5,893       6,443






Illawarra, Australia
   100.0       7,926       6,884       6,535






Total metallurgical coal
      33,230       32,678       37,381






Energy Coal

Production (’000 tonnes)

Navajo, United States
   100.0       7,004       7,472       7,465
San Juan, United States
   100.0       2,408       4,140       6,013






Total New Mexico
      9,412       11,612       13,478






Middelburg/Wolvekrans, South Africa⁽¹⁶⁾
   100.0       14,848       14,328       14,703
Khutala, South Africa
   100.0       10,863       12,928       10,868
Klipspruit, South Africa
   100.0       7,568       7,072       4,887






Total BECSA
   100.0       33,279       34,328       30,459
Mt Arthur Coal, Australia
   100.0       16,757       13,671       12,039
Cerrejón Coal Company, Colombia
   33.3       11,663       9,889       10,155






Total energy coal
      71,111       69,500       66,131






   BHP Billiton
Group interest
%    BHP Billiton Group share of production ⁽¹⁾
Year ended 30 June
          2015            2014            2013
Coal Business

Metallurgical coal

Production (’000 tonnes) ⁽¹¹⁾

Blackwater, Australia
   50       6,994       6,730       5,432
Goonyella Riverside, Australia
   50       8,510       7,330       6,221
Peak Downs, Australia
   50       5,111       4,909       4,545
Saraji, Australia
   50       4,506       4,558       3,449
Gregory Joint Venture, Australia
   50       3,294       2,965       2,523
Daunia, Australia
   50       2,383       2,201       475
Caval Ridge, Australia ⁽¹²⁾
   50       3,064       563       –






Total BHP Billiton Mitsubishi Alliance
      33,862       29,256       22,645






South Walker Creek, Australia ⁽¹³⁾
   80       5,293       5,246       4,351
Poitrel, Australia ⁽¹³⁾
   80       3,466       3,063       2,712






Total BHP Billiton Mitsui Coal
      8,759       8,309       7,063






Total Queensland Coal
      42,621       37,565       29,708






Total metallurgical coal
      42,621       37,565       29,708






Energy coal

Production (’000 tonnes)

Navajo, United States ⁽¹⁴⁾
   100       4,858       5,127       7,468
San Juan, United States
   100       5,165       5,685       5,323






Total New Mexico Coal
      10,023       10,812       12,791






New South Wales Energy Coal, Australia
   100       19,698       19,964       18,010
Cerrejón, Colombia ⁽⁴⁾
   33.3       11,291       12,332       10,017






Total energy coal
      41,012       43,108       40,818






Other assets

Nickel

Saleable production (’000 tonnes)

Nickel West, Australia
   100       89.9       98.9       103.3






Total nickel
      89.9       98.9       103.3






Discontinued operations ⁽¹⁵⁾

Lead

Payable metal in concentrate (’000 tonnes)

Cannington, Australia
   100       151.6       186.5       213.4






Total lead
      151.6       186.5       213.4






Zinc

Payable metal in concentrate (’000 tonnes)

Cannington, Australia
   100       60.0       57.9       56.3






Total zinc
      60.0       57.9       56.3

   BHP Billiton
Group interest
%    BHP Billiton Group share of production ⁽¹⁾
Year ended 30 June
          2015            2014            2013
Silver

Payable metal in concentrate (’000 ounces)

Cannington, Australia
   100       18,718       25,161       31,062






Total silver
      18,718       25,161       31,062






Metallurgical coal

Production (’000 tonnes)

Illawarra Coal, Australia
   100       7,216       7,513       7,942






Total metallurgical coal
      7,216       7,513       7,942






Energy coal

Production (’000 tonnes)

Energy Coal South Africa, South Africa ⁽¹⁶⁾
   90       28,677       30,384       31,627






Total energy coal
      28,677       30,384       31,627






Nickel

Saleable production (’000 tonnes)

Cerro Matoso, Columbia
   99.9       33.7       44.3       50.8






Total nickel
      33.7       44.3       50.8






Alumina

Saleable production (’000 tonnes)

Worsley, Australia
   86       3,181       3,916       3,675
Alumar, Brazil
   36       1,103       1,262       1,205






Total alumina
      4,284       5,178       4,880






Aluminium

Production (’000 tonnes)

Hillside, South Africa
   100       581       715       665
Bayside, South Africa ⁽¹⁷⁾
   100       –       89       96
Alumar, Brazil
   40       40       104       154
Mozal, Mozambique
   47       222       266       264






Total aluminium
      843       1,174       1,179






Manganese ores

Saleable production (’000 tonnes)

Hotazel Manganese Mines, South Africa ⁽¹⁸⁾
   44.4       3,138       3,526       3,490
GEMCO, Australia ⁽¹⁸⁾
   60       4,086       4,776       5,027






Total manganese ores
      7,224       8,302       8,517






Manganese alloys

Saleable production (’000 tonnes)

Metalloys, South Africa ^(18) (19)
   60       379       377       374
TEMCO, Australia ⁽¹⁸⁾
   60       233       269       234






Total manganese alloys
      612       646       608

   BHP Billiton
Group interest
%    BHP Billiton Group share of production ⁽¹⁾
Year ended 30 June
          2015            2014            2013
Divested businesses

Diamonds

Production (’000 carats)

EKATI^TM, Canada
   80       –       –       972






Total diamonds
      –       –       972






Titanium minerals

Production (’000 tonnes)

Titanium slag

Richards Bay Minerals, South Africa
   37.76       –       –       53
Rutile

Richards Bay Minerals, South Africa
   37.76       –       –       6
Zircon

Richards Bay Minerals, South Africa
   37.76       –       –       16






Total titanium minerals
      –       –       75

⁽¹⁾	~~Suriname was sold effective 31 July 2009.~~ BHP Billiton Group share of production includes the proportional share of production for which profit is derived from our equity accounted investments, unless otherwise stated.

⁽²⁾
Metal production is reported on the basis of payable metal.

⁽³⁾

~~The Pinto Valley mining operations were placed~~Shown on ~~care and maintenance~~100 per cent basis following the application of IFRS 10, which came into effect from 1 July 2013. BHP Billiton interest in ~~January 2009, and continue to produce copper cathode through sulphide leaching. Sulphide mining and milling operations will recommence in FY2013.~~

saleable production is 57.5 per cent.

⁽⁴⁾

For statutory financial reporting purposes, this is an equity accounted investment. We have included production numbers from our equity accounted investments as the level of production and operating performance from these operations impacts Underlying EBIT of the Group. Our use of Underlying EBIT is explained in section 1.11.1 of this Annual Report.

⁽⁵⁾	On 11 October 2013, BHP Billiton completed the sale of its Pinto Valley operations.

⁽⁶⁾	Includes Cerro Colorado and Spence.

⁽⁵⁾	~~Data was sourced from the TZ Minerals International Pty Ltd Mineral Sands Annual Review 2011 and amounts represent production for the preceding year ended 31 December.~~

⁽⁶⁾	On 1 February 2012 we announced we had exercised an option to sell our 37.8 per cent non-operated interest in Richards Bay Minerals to Rio Tinto and will exit the titanium minerals industry. On 7 September 2012, we announced the sale was complete.

⁽⁷⁾	~~Yabulu was sold effective 31 July 2009.~~

⁽⁸⁾	Iron ore production is reported on a wet tonnes basis.

⁽⁹⁾⁽⁸⁾

~~Newman includes Mt Newman Joint Venture and Jimblebar.~~

Yarrie ceased production on 25 February 2014.

⁽⁹⁾	Shown on 100 per cent basis. BHP Billiton interest in saleable production is 85 per cent.

⁽¹⁰⁾	All production from Wheelarra is now processed via the Jimblebar processing hub.

⁽¹¹⁾	Metallurgical coal production is reported on the basis of saleable product. Production figures include some thermal coal.

⁽¹²⁾	Caval Ridge achieved first production in the June 2014 quarter.

⁽¹³⁾	Shown on 100 per cent basis. BHP Billiton interest in saleable production is 80 per cent.

⁽¹⁴⁾	BHP Billiton completed the sale of Navajo Mine on 30 December 2013. As BHP Billiton will retain control of the mine until full consideration is received, production will continue to be reported by the Group.

⁽¹⁵⁾	Production shown from 1 July 2014 to 30 April 2015. Refer to sections 1.3.7, 1.6.4, 2.1.7 and note 29 ‘Discontinued operations’ to the Financial Statements for more information on the demerger of assets to form South32.

⁽¹⁶⁾ Shown on 100 per cent basis. BHP Billiton interest in saleable production is 90 per cent.

⁽¹⁷⁾	Aluminium smelting at Bayside ceased with the closure of the final potline in June 2014.

⁽¹⁸⁾	Shown on 100 per cent basis. BHP Billiton interest in saleable production is 60 per cent, except Hotazel Manganese Mines which is 44.4 per ~~cent (FY2011: 44.4 per cent; FY2010: 44.4 per cent).~~ cent.

^(11)(19)

Production includes ~~Medium Carbon Ferro Manganese.~~

medium-carbon ferromanganese.

⁽¹²⁾	~~Metallurgical coal production is reported on the basis of saleable product. Production figures include some thermal coal.~~

⁽¹³⁾	~~Goonyella Riverside includes the Broadmeadow underground mine.~~

⁽¹⁴⁾	~~BMA intends to cease production at the Gregory open-cut mine from 10 October 2012.~~

⁽¹⁵⁾	~~Shown on 100 per cent basis. BHP Billiton interest in saleable production is 80 per cent (FY2011: 80 per cent; FY2010: 80 per cent).~~

⁽¹⁶⁾	~~Wolvekrans was previously known as Douglas mine.~~

~~2.4 Marketing~~2.3 Reserves

~~BHP Billiton’s Marketing network manages the Group’s revenue line and is responsible for:~~

~~selling our products and for the purchase of all major raw materials;~~

~~the supply chain for our various products, from assets to market, and also for raw materials, from suppliers to our assets;~~

~~managing credit and price risk associated with the revenue line;~~

~~achieving market clearing prices for the Group’s products;~~

~~defining our view of long-term market fundamentals.~~

~~Our responsibilities require an active presence in the various commodities markets and the global freight market.~~

Our marketing activities are centralised in Singapore; Houston, United States; and Antwerp, Belgium. Our Aluminium, Energy Coal, Iron Ore, Metallurgical Coal, Manganese, Base Metals, Stainless Steel Materials, Freight and Uranium marketing teams are headquartered in Singapore. Our Petroleum and Diamonds marketing teams operate from Houston and Antwerp, respectively.

These three marketing offices incorporate all the functions required to manage product marketing and distribution – from the point of production to final customer delivery. In addition, we have marketers located in 12 regional offices around the world.

We have a centralised ocean freight business that manages our in-house freight requirements. The primary purpose of the freight business is to create a competitive advantage for our shipments through the procurement and operation of quality, cost-effective shipping. From time to time, we carry complementary cargoes for external parties to optimise profitability.

~~2.5 Minerals exploration~~

Our minerals exploration program is integral to our growth strategy and is focused on discovering and acquiring operating interests in mineral deposits with the potential to support large, long-life, low-cost, expandable upstream assets, diversified by commodity, geography and market.

Our greenfield exploration targets, focused on copper, nickel, iron ore and potash, are organised from our three principal offices in Santiago, Chile; Perth, Australia; and Singapore. Our exploration activities include opportunity identification, application for and acquisition of mineral title, early reconnaissance operations and multi-million dollar delineation drilling programs.

In addition to our activities focused on finding new world-class deposits, several of our CSGs undertake brownfield exploration, principally aimed at delineating and categorising mineral deposits near existing operations, and advancing projects through the development pipeline.

~~Our expenditure on minerals exploration over the last three years is as follows.~~

Year ended 30 June
   2012    2011    2010
   US$M    US$M    US$M
Greenfield exploration
   324       207       126
Brownfield exploration
   773       476       390






Total minerals exploration
   1,097       683       516

~~2.6 Group Resource and Business Optimisation~~

Group Resource and Business Optimisation (RBO) provides governance and technical leadership for resource development and Ore Reserve reporting. RBO’s 66 professionals are focused on ensuring optimal value recovery from our resources. The team includes functional experts in mineral resource evaluation, brownfields exploration, planning, research and development, work management, production processes, mine engineering and mineral process engineering.

RBO engages directly with assets to deliver guidance and assess compliance in resource development and Ore Reserve reporting. It provides the Group Management Committee with assurance reports and portfolio analysis. RBO also provides functional expertise to audits and to investment review programs conducted by other Group Functions.

~~RBO’s accountabilities include governance for all resource and reserve estimation and Ore Reserve reporting.~~

~~2.7 Government regulations~~

Government regulations touch all aspects of our operations. However, the geographical diversity of our operations reduces the risk that any one set of government regulations would have a material effect on our business, taken as a whole.

The ability to extract minerals, oil and natural gas is fundamental to our business. In most jurisdictions, the rights to undeveloped mineral or petroleum deposits are owned by the state. Accordingly, we rely upon the rights granted to us by the government that owns the mineral, oil or natural gas. These rights usually take the form of a lease or licence, which gives us the right to access the land and extract the product. The terms of the lease or

licence, including the time period for which it is effective, are specific to the laws of the relevant government. Generally, we own the product we extract and royalties or similar taxes are payable to the government. Some of our operations, such as our oil and gas operations in Trinidad and Tobago and Algeria, are subject to production sharing contracts under which both we, as the contractor, and the government are entitled to a share of the production. Under such production sharing contracts, the contractor is entitled to recover its exploration and production costs from the government’s share of production.

Related to the ability to extract is the ability to process the minerals, oil or natural gas. Again, we rely upon the relevant government to grant the rights necessary to transport and treat the extracted material in order to ready it for sale.

Underlying our business of extracting and processing natural resources is the ability to explore for those orebodies. Typically, the rights to explore for minerals, oil and natural gas are granted to us by the government that owns those natural resources that we wish to explore. Usually, the right to explore carries with it the obligation to spend a defined amount of money on the exploration or to undertake particular exploration activities.

Governments also impose obligations on us in respect of environmental protection, land rehabilitation, occupational health and safety, and native land title with which we must comply in order to continue to enjoy the right to conduct our operations within that jurisdiction. These obligations often require us to make substantial expenditures to minimise or remediate the environmental impact of our operations, to ensure the safety of our employees and contractors and the like. For further information on these types of obligations, refer to section 2.8 of this Report.

~~Of particular note are the following regulatory regimes:~~

~~2.7.1 Uranium production in Australia~~

To mine, process, transport and sell uranium from within Australia, we are required to hold possession and export permissions, which are also subject to regulation by the Australian Government or bodies that report to the Australian Government.

To possess ‘nuclear material’, such as uranium, in Australia, a Permit to Possess Nuclear Materials (Possession Permit) must be held pursuant to the Australian Nuclear Non-Proliferation (Safeguards) Act 1987 (Non-Proliferation Act). A Possession Permit is issued by the Australian Safeguards and Non-Proliferation Office, an office established under the Non-Proliferation Act, which administers Australia’s domestic nuclear safeguards requirements and reports to the Australian Government.

To export uranium from Australia, a Permit to Export Natural Uranium (Export Permit) must be held pursuant to the Australian Customs (Prohibited Exports) Regulations 1958. The Export Permit is issued by the Minister for Resources and Energy.

A special transport permit is required under the Non-Proliferation Act by a party that transports nuclear material from one specified location to another specified location. As we engage service providers to transport uranium, those service providers are required to hold a special transport permit.

~~2.7.2 Exchange controls and shareholding limits~~

~~BHP Billiton Plc~~

resolutions of the Security Council of the United Nations and sanctions imposed by the European Union (EU) against certain countries, entities and individuals and may restrict the export or import of capital or the remittance of dividends to certain non-resident holders of BHP Billiton Plc’s shares. Any enforcement of financial sanctions by the UK Government would be initiated by HM Treasury. Such sanctions may be in force from time to time and include those against: (i) certain entities and/or individuals associated with Belarus, Cote d’Ivoire, The Democratic People’s Republic of Korea (North Korea), the Democratic Republic of Congo, Egypt, Eritrea, the Republic of Guinea, the Republic of Guinea-Bissau, Lebanon, Liberia, Libya, Iran, Somalia, Sudan, Syria, Tunisia, Zimbabwe and the previous regimes of Iraq and Yugoslavia; ⁽¹⁾ ~~(ii) individuals indicted by the International Criminal Tribunal for the former Yugoslavia; and (iii) entities and individuals linked with the Taliban, Al-Qaeda and other terrorist organisations.~~

There are no restrictions under BHP Billiton Plc’s Articles of Association or (subject to the effect of any sanctions) under English law that limit the right of non-resident or foreign owners to hold or vote BHP Billiton Plc’s shares.

~~There are certain restrictions on shareholding levels under BHP Billiton Plc’s Articles of Association described under the heading ‘BHP Billiton Limited’ below.~~

~~BHP Billiton Limited~~

Under the Australian Banking (Foreign Exchange) Regulations 1959, the Reserve Bank of Australia may impose restrictions on certain financial transactions and require the consent of the Reserve Bank of Australia for the movement of funds into and out of Australia. Based on our searches, restrictions currently apply if funds are to be paid to or received from specified persons and individuals associated with Syria, specified government and military officials and supporters of the government of Libya, specified supporters of the former Government of the Federal Republic of Yugoslavia, specified ministers and senior officials of the Government of Zimbabwe, certain specified entities associated with the Democratic People’s Republic of Korea (North Korea), and certain Iranian organisations and ministers. In addition, from time to time the United Nations Security Council and the Australian Government impose international sanctions on certain countries and organisations. The countries and organisations that are currently subject to United Nations sanctions are certain individuals or entities linked with the Taliban, Al-Qaeda and associated individuals and entities, other designated individuals and entities associated with terrorism, certain entities and individuals associated with the Democratic Republic of Congo, Cote d’Ivoire, the Democratic People’s Republic of Korea (North Korea), Eritrea, Guinea-Bissau, Iran, Iraq, Lebanon, Liberia, Libya, Sudan and Somalia. The countries currently subject to the Australian Government’s autonomous sanctions are the Democratic People’s Republic of Korea (North Korea), Fiji, the former Federal Republic of Yugoslavia, Iran, Libya, Syria and Zimbabwe. The controls impose certain approval and reporting requirements on transactions involving such countries, entities and individuals and/or assets controlled or owned by them. Transfers into or out of Australia of amounts greater than A$10,000 in any currency are also subject to reporting requirements.

Remittances of any dividends, interest or other payments by BHP Billiton Limited to non-resident holders of BHP Billiton Limited’s securities are not restricted by exchange controls or other limitations, save that in certain circumstances, BHP Billiton may be required to withhold Australian taxes.

There are no limitations, either under the laws of Australia or under the Constitution of BHP Billiton Limited, on the right of non-residents to hold or vote BHP Billiton Limited ordinary shares other than as set out below.

The Australian Foreign Acquisitions and Takeovers Act 1975 (the FATA) restricts certain acquisitions of interests in shares in BHP Billiton. Generally, under the FATA, the prior approval of the Australian Treasurer must be obtained for proposals by a foreign person (either alone or together with associates) to acquire control of 15 per cent or more of the voting power or issued shares in BHP Billiton Limited.

⁽¹⁾	~~As at 14 May 2012, the financial sanctions on the Burmese regime (Myanmar) were suspended until 30 April 2013.~~

The FATA also empowers the Treasurer to make certain orders prohibiting acquisitions by foreign persons in BHP Billiton Limited (and requiring divestiture if the acquisition has occurred) where he considers the acquisition to be contrary to the national interest and the 15 per cent threshold referred to above would be exceeded as a result. Such orders may also be made in respect of acquisitions by foreign persons where two or more foreign persons (and their associates) in aggregate already control 40 per cent or more of the issued shares or voting power in BHP Billiton Limited.

There are certain other statutory restrictions, and restrictions under BHP Billiton Limited’s Constitution and BHP Billiton Plc’s Articles of Association, that apply generally to acquisitions of shares in BHP Billiton (i.e. the restrictions are not targeted at foreign persons only). These include restrictions on a person (and associates) breaching a voting power threshold of:

~~20 per cent in relation to BHP Billiton Limited on a ‘stand-alone’ basis, i.e. calculated as if there were no special voting share and only counting BHP Billiton Limited’s ordinary shares.~~

30 per cent of BHP Billiton Plc. This is the threshold for a mandatory offer under Rule 9 of the UK takeover code and this threshold applies to all voting rights of BHP Billiton Plc (therefore including voting rights attached to the BHP Billiton Plc Special Voting Share).

~~30 per cent in relation to BHP Billiton Plc on a ‘stand-alone’ basis, i.e. calculated as if there were no special voting share and only counting BHP Billiton Plc’s ordinary shares.~~

20 per cent in relation to the BHP Billiton Group, calculated having regard to all the voting power on a joint electorate basis, i.e. calculated on the aggregate of BHP Billiton Limited’s and BHP Billiton Plc’s ordinary shares.

Under BHP Billiton Limited’s Constitution and BHP Billiton Plc’s Articles of Association, sanctions for breach of any of these thresholds, other than by means of certain ‘permitted acquisitions’, include withholding of dividends, voting restrictions and compulsory divestment of shares to the extent a shareholder and its associates exceed the relevant threshold.

~~2.8 Sustainability~~

~~Our BHP Billiton~~~~Charter~~ ~~value of Sustainability reflects our priority of putting health and safety first, being environmentally responsible and supporting our communities.~~

Our ability to operate globally is heavily dependent on gaining access to natural resources and maintaining our licence to operate. Sustainable development is core to our business strategy; we integrate health, safety, environmental, social and economic factors into our decision-making. We report the sustainability dimensions of what we do in detail in the Sustainability Report 2012. The sustainability dimensions that we report on include the health and safety of our people; governance and risk management processes; how we are socially responsible and contributing to improved standards of living and self-sustaining communities; resource conservation and biodiversity; and how we ensure the broader economic contributions of our operations benefit the regions in which we operate.

The information contained in this section covers assets that have been wholly owned and operated by BHP Billiton or which have been operated by BHP Billiton in a joint venture operation (controlled assets) for FY2012. In March 2011, we acquired the US Fayetteville shale resource from Chesapeake Energy Corporation and subsequently acquired Petrohawk Energy Corporation in August 2011, which now form our Petroleum Onshore US business. Under a transition services agreement, Chesapeake Energy Corporation continued to operate Fayetteville on our behalf until 1 April 2012. Accordingly, health safety environment and community (HSEC) data relating to our Onshore US business has not been collected in BHP Billiton systems for the FY2012 period and all information contained in this section excludes data from our Onshore US business.

~~Additional information relating to our sustainability performance for FY2012 is available in the Sustainability Report 2012 and is available online at~~~~www.bhpbilliton.com.~~

~~2.8.1 Our sustainability governance structure~~

The Sustainability Committee assists the Board in oversight of HSEC matters. This includes overseeing areas relating to HSEC risk, compliance with applicable legal and regulatory requirements, and overall Group HSEC performance.

More specifically, management is accountable for the implementation of sustainability-related processes and performance to comply with our suite of HSEC Group Level Documents (GLDs). GLDs contain minimum mandatory performance requirements and performance controls and are the foundation for developing and implementing management systems at all our operations. Regular internal audits are conducted to test compliance with the requirements of the HSEC GLDs. Audit results are used by management to create action plans where the businesses have not yet achieved full compliance with the GLD requirements. Key findings are reported to senior management, and summary reports are considered by the Sustainability Committee of the Board and, where appropriate, by the Risk and Audit Committee of the Board.

~~2.8.2 Assessing risks and establishing controls~~

We mandate criteria to identify risks we consider material to our business and take into consideration the potential health, safety, environmental, social, reputational, legal and financial impacts. The severity of any particular risk is assessed according to a matrix that describes the degree of harm, injury or loss from the most severe impact associated with a specific risk, assuming reasonable effectiveness of controls. The objectives of the risk assessment process are to understand the nature and tolerance of the material risks for the Group and ensure they are managed through the verification of critical controls. Information relating to the material risks for the Group, including sustainability risks is available in section 1.5 of this Report. Our risk management processes are consistent with the hierarchy of controls described in Article 6 of International Labour Organization (ILO) Convention 176 –Safety and Health in Mines, 1995.

~~2.8.3 Identifying our sustainability issues~~

We identified the sustainability issues included in this Report and the Sustainability Report 2012 through a three-step materiality process. Step one of the process included identifying issues by reviewing our internal risk registers, enquiries from our shareholders and investors, daily print media coverage and an independent review of issues raised by non-government organisations (NGOs) and global electronic and print media. Step two involved rating the significance of these issues to our stakeholders and the potential impact on our business as low, medium or high. The third step was to review the issues and seek feedback from key stakeholders. A number of material issues are discussed in the following sections:

~~Keeping our people safe and healthy~~

~~Employing and developing our people~~

~~Reducing our climate change impacts~~

~~Managing water~~

~~Managing land and enhancing biodiversity~~

~~Ensuring meaningful engagement with our stakeholders~~

~~Making a positive contribution to society~~

~~Understanding and managing our human rights impact~~

~~Reporting transparently and behaving ethically.~~

~~2.8.4 Keeping our people safe and healthy~~

The safety and health of our people is core to every aspect of our business. Having our people return home safe and well at the end of each day, and enabling them to end their working life fit and healthy is central to everything we do. This is reflected in the processes and controls we have in place throughout our organisation.

~~Our safety and health performance~~

The key safety and health issues that we faced in FY2012 related to adherence to isolation and permit-to-work procedures, and to reducing potential occupational health exposures, particularly to carcinogens and airborne contaminants, noise-induced hearing loss, musculoskeletal injuries and fatigue.

The FY2012 total recordable injury frequency (TRIF) performance of 4.7 per million hours worked improved by six per cent compared with FY2011 (5.0), and while we have not met our TRIF target of 3.7, it has reduced by 36 per cent since the FY2007 base year. Although our injury rates and statistical measures showed a steady improvement, we still had three fatalities in FY2012. Each of these incidents was thoroughly investigated. We reviewed and updated our Fatal Risk Controls GLD to provide further clarity about controls associated with isolation and permit to work, including expectations around change management and ensuring those involved in the work fully understand the hazards and associated controls.

~~In FY2012, the incidence of occupational illness was 43.7 cases per 10,000 employees, an increase of 7.4 per cent compared with 40.7 cases per 10,000 employees in FY2011~~⁽¹⁾. However, since 2007, we have achieved a 22 per cent reduction in the incidence of occupational illness against a target of 30 per cent. Forty-one per cent of these cases were due to noise-induced hearing loss and 44 per cent due to musculoskeletal illness. The increased number of cases led our operations to increase their focus on control effectiveness for these hazards.

We focus on improving our workplaces, using the recognised hierarchy of controls and work practices to minimise the need for personal protective equipment (PPE), which we provide to all employees and contractors as required.

~~Safely undertaking deepwater drilling~~

Deepwater oil and gas exploration is an important aspect of our worldwide business. Our team of skilled drilling professionals, comprehensive processes and systems are fundamental to ensuring our deepwater drilling operations are conducted in a safe manner that comply with the United States Bureau of Ocean Energy Management, Regulation and Enforcement regulations and our own strict requirements. Following the oil spill from BP’s Macondo well in the Gulf of Mexico in April 2010, we reviewed our deepwater drilling safety standards to assess the effectiveness of our existing risk management controls, which were tested and improved where required.

~~Managing aviation risk~~

Aviation is a significant material safety risk. We move a substantial number of people by chartered aircraft each year. Our Group aviation safety assurance process continues to use the Flight Safety Foundation Basic Aviation Risk Standard to satisfy the minimum technical requirements for contracted aviation activities. In FY2012, through our Aviation GLD, we enhanced the operational review process undertaken by our aviation specialists to assess the effectiveness of aviation critical controls. The Aviation GLD was also updated to provide greater emphasis on operational readiness and airfield infrastructure. We engage with our aviation specialists to ensure we maintain the necessary balance between audit and approval of aircraft operations and the risk-based operational review in the field.

~~Occupational health exposures~~

Our priority is to control exposures at their source. Health risks faced by our people include fatigue and other causes of impaired fitness for work, as well as occupational exposure to noise, silica, manganese, diesel exhaust particulate, fluorides, coal tar pitch, nickel and sulphuric acid mist. Our Health GLD requires that an exposure

⁽¹⁾	In FY2012, internal audits identified that some illnesses had not been recorded as required in FY2011. Consequently, the number of employee illnesses for FY2011 increased and has been adjusted. Employee data is based on head count as at 30 June 2012.

risk profile be established and maintained for our employees and contractors and that relevant exposure controls be identified and implemented. If the potential exposure to harmful agents exceeds 50 per cent of the occupational exposure limit (OEL), medical surveillance is implemented to identify potential illness or health effects at an early stage and to provide feedback as to whether the exposure controls we have in place are functioning as designed. We have seen a 41 per cent reduction since FY2009 in the number of carcinogen exposures to our employees that potentially exceed the OEL. This does not take into account the protection afforded by PPE.

~~Serious disease~~

BHP Billiton operations with a high exposure to serious diseases, such as HIV/AIDS, malaria and tuberculosis, have education, training and counselling programs in place to assist employees. We also offer prevention and risk-control programs to employees and, where appropriate, to employees’ families and local communities. We help manage the impact of disease and protect the viability of our operations by assisting in caring for our employees and the wellbeing of our host communities.

~~2.8.5 Employing and developing our people~~

Attracting, employing and developing people with exceptional skills, who share our values, provides us with a competitive advantage and is critical to our long-term sustainability. Each individual brings unique skills, experience and perspectives, and we recognise that we are strengthened by diversity. We are committed to providing a work environment in which everyone is treated fairly and with respect and has the opportunity to maximise their potential. We value promoting from within and seek to build a high-performance organisation through fair reward and recognition.

Recruitment is managed on a local basis by each Customer Sector Group, Minerals Exploration, Marketing and Group Function. Employment is offered and provided based on merit. Every person applying for a job is evaluated according to their job-related skills, qualifications, abilities, aptitudes and alignment with~~Our BHP Billiton Charter~~ values. We acknowledge that targeted affirmative action may be required to address historical imbalances and past discrimination through programs such as Indigenous employment and training and Black Economic Empowerment.

Additional information relating to diversity, and employee policies and involvement at BHP Billiton is available in sections 5.17 and 7.8 of this Report and in the Sustainability Report 2012 available online at www.bhpbilliton.com.

~~2.8.6 Reducing our climate change impacts~~

~~As a global organisation operating in an energy-intensive industry, we are actively managing risks associated with climate change, which are discussed in section 1.5 of this Report.~~

~~Potential impacts of climate change on our organisation~~

In the medium and long-term, we are likely to see changes in the cost structures of our greenhouse gas (GHG) intensive assets as a result of regulatory requirements in the countries where we operate. This may also have implications for our suppliers and customers. Inconsistency of regulations, particularly between developed and developing countries, could affect the investment attractiveness of assets in different jurisdictions.

Potential physical impacts of climate change on our operations may include changes in precipitation patterns, increased storm intensities and higher average temperature levels, which may adversely affect the productivity and financial performance of our operations.

~~Reducing energy intensity and greenhouse gas emissions~~

We strive to continually improve energy and GHG management. Our operations with material emissions must implement and maintain Energy and GHG Management Plans. These plans include a five-year forecast and identification, evaluation and implementation of energy-efficiency and GHG-reduction projects.

Emissions abatement and energy savings are key considerations in our decision-making, and we undertake transparent public reporting of our emissions. In FY2012, our carbon-based energy intensity and GHG emissions intensity were lower than the FY2006 baseline, by 15 per cent and 16 per cent, resulting in the successful achievement of our FY2012 target of 13 per cent and six per cent respectively. This result was primarily driven by the use of hydroelectric power to supply 98 per cent of the electricity needs at our Mozal aluminium smelter in Mozambique. The result also reflects successful implementation of energy efficiency projects and reductions of fugitive methane emissions.

We work collaboratively with customers, communities and employees to reduce emissions and support internal emissions reduction projects. To this end, we committed to spending US$300 million over the 2008 to 2012 period to support the implementation of energy efficient and low GHG emission technologies. We exceeded our commitment, having spent US$430 million on projects, which are in various stages of implementation. While this commitment was realised in FY2012, we remain focused on establishing projects that reduce our energy consumption and carbon emissions footprint.

~~Future greenhouse gas emissions abatement and targets~~

In FY2011 and FY2012, our Customer Sector Groups identified GHG emissions abatement projects and committed to implementing the most cost-effective options from FY2012 through to FY2017. The suite of abatement projects successfully implemented in FY2012 will deliver an annual GHG emissions reduction of up to 260,000 tonnes. The combined effect of all abatement projects to be undertaken through to FY2017 has enabled us to set a target to limit FY2017 GHG emissions equal to or below FY2006 levels.

~~Engaging in policy development~~

The issues associated with climate change continue to be a challenge for governments, communities and industries around the world and it seems a global solution to climate change is some time away. Until then, nations are likely to continue to accelerate their domestic emissions reduction efforts and establish low-carbon economies, balancing their needs to ensure a reliable energy supply and sustain economic growth.

Governments globally are considering a variety of legislative and regulatory options to mitigate GHG emissions. In our view, assessing these options requires an understanding of their likely effectiveness, scale and cost, as well as their implications for economic growth and quality of life. We take an active role in climate change policy development in the key regions where we operate and market our products. We have developed six principles that outline what we believe climate change policies should deliver to best tackle carbon emission reduction: clear price signal; revenue neutral; trade friendly; broad-based, predictable and gradual; simple and effective. In all instances of climate change policy development, we analyse and compare the various policy options by evaluating the degree to which they meet these principles. Although we are committed to contributing to the public debate on climate change, including sharing our knowledge and experience, we recognise that it is for government and society as a whole to decide which direction to take.

In recent years, we have actively engaged with the Australian Government on the development and implementation of its climate change policy response. During FY2012, we commented on the Australian Government’s draft Energy White Paper 2011, which will become the policy framework for government decision-making regarding energy sources in the years ahead. In terms of the carbon price introduced in July 2012, as part of the Australian Government’s Clean Energy Future Plan, we continue to hold the view that this is just one of the potential policy measures that government can adopt to address climate change and that any policy

response should be broad-based and use a portfolio of complementary measures to deliver abatement. Independently, we maintain the Carbon Pricing Protocol, an internal mechanism for pricing carbon and determining carbon price impacts on our greenfield and brownfield developments and on mergers and acquisitions. The Carbon Pricing Protocol is updated annually to reflect internal and external carbon price modelling and the proposed treatment of carbon permits in countries where we operate.

~~2.8.7 Managing water~~

~~The sustainability of our operations relies on our ability to obtain the appropriate quality and quantity of water and to use this resource responsibly.~~

~~Managing water is a complex issue~~

Increased competition for water, due to population growth, urbanisation and industrialisation, is affecting the quantity and quality of available water resources and poses a potential operational risk for our business. The social, cultural, environmental, ecological and economic values of water have led to greater scrutiny of responsible water use and expectations from our stakeholders for improved resource stewardship. We are experiencing greater governance, regulation and performance requirements in response to these expectations. At the same time, climate change is likely to make the patterns and cycles of water flows less predictable, requiring flexible and adaptive responses. We also consider the cumulative effects on water resources when multiple operations are active within a region.

~~Managing water risks across our operations~~

Water risks and impacts experienced by our operations vary from region to region and from site to site, with some sites facing multiple and conflicting risks, including water scarcity, water excess and water quality issues.

The range of potential water-related risks and their potential impacts on water resources, biodiversity and communities makes managing water a complex task for our businesses. To ensure these impacts are managed to an acceptable level, all operations are required to develop a Water Management Plan. This plan takes into consideration the baseline quantity and quality of water potentially affected and quantifies the acceptable level of impact to water resources, taking into account regulatory requirements and stakeholder expectations. It also details the preventive and mitigating controls necessary to achieve the acceptable level of impact, with each operation required to implement a monitoring and review program that verifies the effectiveness of these controls.

In FY2012, we achieved our water target with a 29 per cent improvement in the ratio of water recycled/reused to high-quality water consumed when compared with the FY2007 base year. This was primarily due to the reduction in high-quality water use and increase in desalinated water use at our Base Metals Escondida Asset.

Our new water target requires all operations with water-related material risks, including volume and quality considerations, to set targets and implement projects to reduce their impact on water resources. This target recognises the local and regional context of water by including all material risks, rather than adhering to a single metric based on water use reduction, and allows operations to define the necessary projects that will best address their material water risks.

~~Onshore US and hydraulic fracturing~~

In line with our strategy to have a suite of diversified commodities, we made a significant investment in natural gas and liquids by acquiring the US Fayetteville shale resource from Chesapeake Energy Corporation in March 2011 and subsequently acquiring Petrohawk Energy Corporation in August 2011, which now form our Petroleum Onshore US business. Extracting oil and gas from shale involves hydraulic fracturing. Hydraulic fracturing is an essential and common practice in the oil and gas industry to stimulate production of natural gas and oil from dense subsurface rock formations. Hydraulic fracturing involves using water, sand and a small amount of chemicals to fracture the hydrocarbon-bearing rock formation to allow flow of hydrocarbons into the wellbore.

Public concerns have been raised about hydraulic fracturing, including potential environmental impacts of the hydraulic fracturing fluid, its potential effect on drinking water aquifers, the handling and disposal of waste water produced from the wells, and the visual, noise and traffic impacts on the use of the surface land. The oil and gas industry is well established and is subject to federal, state and local regulations requiring permits for well construction, drilling and waste water disposal. The waste water produced from the wells, including the hydraulic fracturing fluids, is disposed of safely in accordance with applicable oil and gas industry regulations and BHP Billiton’s operating standards. The composition of hydraulic fracturing fluids, including chemicals, is publicly disclosed in FracFocus, the hydraulic fracturing Chemical Disclosure Registry (~~www.fracfocus.org~~~~). Our priority is to safely develop these operations in a way that protects the health and safety of the environment and the communities in which we operate.~~

~~Developing new water accounting standards~~

Unlike the more developed accounting approach to GHG emissions, there is no internationally consistent approach to water accounting and reporting. During FY2012, we piloted the Minerals Council of Australia’s Water Accounting Framework at several of our sites. From FY2013, we will align our water reporting across all our operations with the framework, which aims to improve data integrity, allow more meaningful analysis to inform policy-making and deliver improved outcomes for industry and communities.

~~2.8.8 Managing land and enhancing biodiversity~~

We seek to deliver lasting benefits to the environment and communities by improving natural resource management and enhancing biodiversity. Securing access to land and managing it effectively are essential components of our commitment to operate in a responsible and sustainable manner. We depend upon biodiversity and the related benefits derived from ecosystems, which include food, air and water.

~~Biodiversity and land is a complex issue~~

We appreciate the importance of preserving biodiversity and the challenge this presents to all land users. Host governments and communities are seeking a greater demonstration of effective land stewardship as a critical component in their decision to grant land access. This is exacerbated by growing competition for land, whether it is for mining, agriculture, forestry, water supply or biodiversity conservation. Increasingly, operations are located within areas of greater environmental or social sensitivity. Consequently, this requires broader consideration of how we manage land use and biodiversity at our operations and how this is balanced with other societal needs. Obtaining community support is most challenging when there is strong competition for the use of the land, such as the competition between resource development and agriculture.

~~Biodiversity, land and our business~~

We assess and manage the potential land and biodiversity impacts of our operations throughout their life cycle. Our Environment GLD requires all operations to have Land and Biodiversity Management Plans that incorporate baseline and impact assessments, controls designed to mitigate impacts on biodiversity and the related benefits derived from ecosystems, and monitoring programs to verify the effectiveness of controls. Operations are required to adhere to a formal management hierarchy that begins with avoiding disturbance, followed by mitigating negative impacts, rehabilitating land (both during operation and at closure) and undertaking compensatory actions, such as biodiversity offsets, at our operations. We rehabilitate disturbed areas consistent with the pre disturbance land use or alternative land uses developed in consultation with stakeholders. We have explicit commitments relating to exploration and extraction of resources in areas of high environmental sensitivity and also in relation to threatened species.

~~Managing land access~~

Our approach to land access is undertaken on a case-by-case basis, and takes into account potential environmental, societal, economic or cultural impacts. We first consider what land we need. We then look at our possible short-term and long-term impacts on that land, including the effects that our use may have on biodiversity and the related benefits derived from ecosystems. We also seek to identify the present and past uses of the land and any landowners, occupiers and users who may be affected by our activities. Compensatory actions, such as biodiversity offsets, may be undertaken where residual impacts exceed the acceptable level of impact to biodiversity, land use or water resources.

~~Addressing land rehabilitation challenges~~

The rehabilitation of land no longer required for our activities continues to be a central part of our approach to managing our effects on land. In 2007, we established a target of achieving a 10 per cent improvement in the land rehabilitation index (the ratio of land rehabilitated to land disturbed). We did not achieve our land rehabilitation target due to the growth of some of our operations and the challenges associated with progressive rehabilitation while an operation is active. This delayed our ability to rehabilitate land for suitable uses that meet environmental and stakeholder requirements.

~~Enhancing biodiversity and contributing to conservation~~

Improving our management of land and enhancing biodiversity are essential to operating in a responsible and sustainable manner. In July 2012, we introduced new biodiversity and conservation targets. The first target focuses on a core business requirement to implement management plans that include controls to prevent, minimise, rehabilitate and offset impacts to biodiversity and the related benefits derived from ecosystems. In addition to this, we have introduced a conservation target, which will see the Group finance the conservation and ongoing management of areas of high biodiversity and ecosystem value that are of national or international conservation significance. As a result of this conservation target, we will broaden our environmental activities beyond what could be achieved by our operations alone. This conservation work will be largely supported by the five-year alliance established in FY2012 between Conservation International and BHP Billiton, which aims to deliver significant and lasting benefits to the environment by preserving areas of high conservation value.

~~Managing waste~~

Mining and mineral processing operations produce large quantities of mineral waste, including waste rock, tailings and slag, which need to be effectively managed. Our operations are required to have Waste Management Plans, which address waste minimisation, storage, transportation and disposal. These plans are maintained to control risk of adverse impacts on the environment and communities.

Tailings dams are constructed and operated to engineering standards, and monitored and assessed to manage material risks, including the risk of failure. Mineral wastes are analysed for physical and geochemical characteristics to identify potential impacts arising from erosion, acid rock drainage, salinity, radioactivity and metal leaching. We do not dispose of tailings or waste rock into river or marine environments.

~~2.8.9 Ensuring meaningful engagement with our stakeholders~~

~~We engage regularly, openly and honestly with people and organisations interested in and affected by our operations and take their views and concerns into account in our decision-making.~~

~~Effectively engaging with our stakeholders~~

We define stakeholders as those who are potentially affected by our operations or who have an interest in or an influence over what we do. Our key stakeholders include the investment community, shareholders, customers,

media, business partners, employees and contractors, local and Indigenous communities, industry associations, suppliers, governments and regulators, non-government organisations (NGOs), community-based organisations and labour unions.

We seek to build trust with stakeholders at the earliest possible stage of a project’s life. Our Community GLD stipulates that a Stakeholder Engagement Management Plan be in place from the development phase of a project and be reviewed annually. The plans identify the interests and relationships of stakeholders and contain a range of culturally and socially inclusive engagement activities to encourage open communication. Our operations are required to measure the effectiveness of their stakeholder engagement by conducting mandatory community perception surveys every three years.

~~Engaging with NGOs through the Forum on Corporate Responsibility~~

Established in 1999, the Forum on Corporate Responsibility currently includes six members from our Group Management Committee (GMC) and eight senior leaders from the NGO sector. The NGO members have extensive experience in regions where we have business interests, including South America, west Africa, Australia and the United Kingdom. Our Chief Executive Officer chairs the meetings, which were held twice during FY2012.

The Forum encourages open discussion and expression of views on environmental, socio-economic, geopolitical and ethical issues. Sustainability issues discussed in the past financial year included energy choices; biodiversity; Indigenous people and free prior and informed consent; resource endowment and benefit sharing; and consideration of our new HSEC targets. While we are not bound by the advice of the Forum and the Forum does not necessarily endorse the Company’s decisions, the meeting provides insight into society’s current priorities and an opportunity to understand and debate issues from multiple viewpoints.

~~Acknowledging customary rights~~

At a very early stage in a project, before any substantive work is carried out on the ground, we seek to identify landowners, occupiers and users who may be affected by our activities. Knowing who owns and uses the land is critical to establishing an effective community consultation and engagement program.

In instances where land may be used for customary purposes and no formal land title has been issued, information is sought from relevant organisations to determine those groups with connections to the land. This includes government authorities with responsibilities for customary land uses and any Indigenous peoples’ representative organisations. Surveys are commissioned to identify the customary owners and how the land is being used to ensure these uses are taken into account in our development plans.

~~Committed to broad-based community support~~

We require greenfield or significant expansion projects to obtain support from stakeholders before proceeding with development. Such broad-based community support is distinct from achieving free prior and informed consent, which we seek when it is mandated and defined by law.

~~Addressing community concerns~~

Our operations are required to have local processes to accept, assess and resolve community concerns, complaints and grievances about the performance or behaviour of BHP Billiton and our people. As part of the complaint resolution process, all complaints and grievances are required to be acknowledged, documented and investigated internally. As required, appropriate actions are implemented and complainants are advised of the outcome.

~~2.8.10 Making a positive contribution to society~~

We develop partnerships that promote social and economic development and benefit the broader community. We work with host governments and other organisations to create transparency of the broad economic benefits to communities generated from our operations.

~~Our broad socio-economic contribution~~

At a Group level, we are an active participant in industry and sustainable development forums, such as the International Council on Mining and Metals (ICMM), and we are a member of the World Business Council for Sustainable Development.

We seek to understand our socio-economic impact on local communities and host regions through our participation in the ICMM’s multi-stakeholder Resource Endowment initiative (REi). The REi aims to enhance the mining industry’s socio-economic contribution to the countries and communities where organisations like BHP Billiton operate, by better understanding the factors that either inhibit or promote social and economic development that are linked to large-scale mining projects.

~~We engage with governments on a range of policy issues and also play a role in advocating transparent and ethical governance, through our own actions and in discussion with opinion leaders.~~

Economic value for regional economies is generated through revenues, employee compensation and other operating costs, donations and other community investments, retained earnings and payments to capital providers and to governments. Nationally and regionally, we contribute taxes and royalties to governments that in turn provide infrastructure and services to their constituents. Additionally, we often develop infrastructure that provides local communities and businesses with benefits, such as airports, roads, community childcare centres and medical clinics.

Training and employing local people is important to us. However, our ability to have a significant impact on unemployment is limited by the nature of our operations as typically we require highly skilled people with relevant industry and technical experience. We make a broader economic contribution through indirect employment, where we focus on building the capacity of local businesses to provide us with a diverse range of services and products. Our approach is to source locally if a product or service that meets our requirements is available. In FY2012, 45 per cent of our Group spend was with local and regional suppliers. Local and regional spend, in this context, refers to spend within communities in which we operate and the regions, such as states and provinces, where our operations are located.

We also voluntarily invest one per cent of our pre-tax profit, calculated on the average of the previous three years’ pre-tax profit, in community programs that aim to have a long-lasting positive impact on people’s quality of life. This includes implementing new and supporting existing community projects.

~~Community development programs~~

~~Our community development programs are focused on improving the quality of life of people in our host communities.~~

Each community development project is required to be linked to a Community Development Management Plan. In FY2012, as part of a GMC key performance indicator, all controlled operations developed and implemented Community Development Management Plans in compliance with our Community GLD.

Community development projects are selected on the basis of their capacity to have a positive impact on the quality-of-life indicators for the relevant community and enhance the Group’s licence to operate. Projects must have documented objectives specifically linked to the achievement of long-term sustainable community

development and improvements in indicators identified in a social baseline study. We monitor progress by tracking changes in these indicators every three years. Prior to approval, community projects are required to be assessed in relation to anti-corruption requirements and are implemented in accordance with the BHP Billiton~~Code of Business Conduct~~.

~~During FY2012, our voluntary community investment totalled US$214 million~~⁽¹⁾, comprising cash, in-kind support and administrative costs and included a US$65 million contribution to our UK-based charitable company, BHP Billiton Sustainable Communities. The cash component of our FY2012 community investment of US$128.6 million comprises:

~~direct investment in community programs;~~

~~contributions to the Group’s charitable foundations, excluding BHP Billiton Sustainable Communities;~~

~~the Enterprise Development and socio-economic development components of our broad-based Black Economic Empowerment programs in South Africa.~~

Excluding the contribution to BHP Billiton Sustainable Communities, 51 per cent of our expenditure was invested in local communities, 38 per cent was invested regionally and the remaining 11 per cent was invested in national or international programs in countries where we operate.

~~Supporting employee contributions~~

In addition to the social programs directly supported by the Group, many of our employees make a valuable contribution to their local communities by giving their personal time and expertise to a range of activities. One of the most significant ways we support the efforts of our employees engaged in community activities is through our global Matched Giving Program, whereby the Company matches employee volunteering hours, fundraising and donation efforts. The program aims to strengthen local communities by supporting and encouraging employees who volunteer, fundraise or donate to not-for-profit organisations. In FY2012, more than 6,000 employees participated in the Matched Giving Program, volunteering a total of approximately 60,000 hours of their own time to community activities important to them. Employee contributions benefited more than 1,400 not-for-profit organisations, which received US$7.7 million from the Group as part of the program.

~~2.8.11 Understanding and managing our human rights impact~~

We have a responsibility to understand our potential impacts on human rights and to mitigate or eliminate them. We operate in accordance with the United Nations (UN) Universal Declaration of Human Rights and the UN Global Compact Principles.~~Our Charter and Code of Business Conduct~~ ~~and the performance requirements detailed in our GLDs support this commitment.~~

~~Our human rights due diligence process~~

Our human rights due diligence process requires our operations to identify and document key potential human rights risks by completing a human rights impact assessment (HRIA). HRIAs must be verified through an engagement process with stakeholders, validated by a qualified specialist every three years and internally reviewed on an annual basis. Where a HRIA identifies a material risk, a Human Rights Management Plan must be developed and implemented. Selected employees and contractors receive training on how to comply with BHP Billiton’s human rights commitments.

⁽¹⁾	~~The expenditure represents BHP Billiton’s equity share, for both operated and non-operated joint venture operations.~~

~~Security and human rights~~

Our Security and Emergency Management GLD requires all our operations to identify and manage security-related material risks to our people and property. The nature and global reach of our business can result in our people working in countries where there is potential exposure to personal and business risk. Each country is assessed for the degree of risk associated with visiting, exploring and operating within it, and appropriate controls are developed to mitigate identified risks. The Voluntary Principles on Security and Human Rights (VPs) assists organisations to maintain the safety and security of their operations through the provision of an operating framework that upholds respect for human rights and fundamental freedoms.

We use both public and private security providers to protect our people and assets. Our Security and Emergency Management GLD requires private security providers engaged by BHP Billiton to be signatories to, or agree in writing to align with the International Code of Conduct for Private Security Providers. In addition to this, written advice is given to security providers outlining our commitment to the VPs and the expectation for private security providers, or request for public security providers, to operate consistently with these principles.

Occasionally, it is necessary to provide armed security protection for the safety of our people. Firearms are only deployed under a set of approved rules of engagement and when it can be demonstrated that no other options exist to protect a human life, to carry out stewardship requirements (such as injured livestock management) or as a means of last resort when threatened by dangerous wildlife. Criteria for the use of firearms and rules of engagement must comply with the International Association of Oil and Gas Producers, ‘~~Firearms and the Use of Force’~~ ~~(Report number 320, Revision 2).~~

~~2.8.12 Reporting transparently and behaving ethically~~

Wherever we operate in the world, we strive to work with integrity – doing what is right and doing what we say we will do. We care as much about how results are achieved as we do about the results themselves. At BHP Billiton, we believe that to maintain our position as one of the world’s leading companies, we must commit to the highest ethical business practices and governance standards in all our dealings. We strive to foster a culture that values and rewards exemplary ethical standards, personal and corporate integrity and respect for others.

As our operations expand globally, we increasingly confront the challenges of doing business in political, legal and commercial environments where corruption is a real risk. However, regardless of the country or culture within which our people work, our Anti-corruption GLD and the~~Code of Business Conduct~~ ~~forbid bribery and corruption in all our business dealings.~~

~~Particulars in relation to the~~~~Code of Business Conduct~~ ~~and anti-corruption are referred to in section 5.16 of this Report and in the Sustainability Report 2012 available online at~~~~www.bhpbilliton.com.~~ ~~Specific discussion on legal proceedings is available in section 8 of this Report.~~

~~Transparently reporting taxes~~

Through our membership of the ICMM, BHP Billiton supports the Extractive Industries Transparency Initiative (EITI), a global initiative to improve governance in resource-rich countries through the verification and full publication of company payments and government revenues from oil, gas and mining. We are committed to supporting and cooperating in the implementation of country-level EITI Work Plans as our host countries progress the initiative.

In line with our support for the EITI, we report in the Sustainability Report 2012 payment of taxes and royalties derived from resource development on a country-by-country basis. We presented the data as the taxes and royalty payments that we make as BHP Billiton, such as corporate income taxes and royalties, and those that we collect on behalf of employees.

~~Closure planning~~

Closure planning is a key consideration in the planning and development of our projects and operations. Operations are required to produce Life of Asset Plans, which detail the activities to develop the resource, and Closure Plans, which describe the proposed methods to rehabilitate and remediate following those activities and address closure obligations. In addition to our projects and operating assets, we are also responsible for a number of legacy operations that are in various stages of decommissioning, rehabilitation or post-closure care and maintenance. Information on our closure and rehabilitation provisions can be found in note 18 ‘Provisions’ to the financial statements.

~~Product stewardship~~

As our primary activities are in the extraction (and, in some cases, processing) stages of a product’s life cycle, the majority of the life cycles of our products occur after the products have left our control. We recognise there is strong business merit in implementing product stewardship programs with other participants in the life cycles of our products. We seek to work with those involved in the product life cycles to enhance environmental and social performance along the supply chain and to promote responsible product use and management. This approach applies to all stages of the supply chain from product storage to transport, consumption, recycling and disposal of our products and by-products.

In FY2012, we engaged in a number of product stewardship initiatives such as the Responsible Jewellery Council, Steel Stewardship Forum and Responsible Aluminium. For other commodities, including copper and nickel, we participate in the stewardship programs incorporated within industry associations.

As a member of the ICMM, we have also committed to implementing the ICMM Sustainable Development Framework, which requires that we facilitate and encourage responsible design, use, reuse, recycling and disposal of our products.

Many of our products are required to have a specific materials safety data sheet (MSDS). These MSDSs outline the relevant health, safety and environmental aspects of our products and are provided to customers and the transporters of our products.

~~Managing our suppliers~~

~~Our contractors and suppliers have requirements in their contracts consistent with~~~~Our Charter, Code of Business Conduct~~, and Anti-corruption GLD and Health, Safety, Environment and Community GLDs. In our Supply ‘Source to Contract’ GLD, we specify that our suppliers align with these requirements, as well as with our zero tolerance to a number of human rights issues, including child labour, inhumane treatment of employees and forced or compulsory labour. All contracted suppliers are categorised depending on their HSEC and business conduct risk, and our level of commercial dependency, and a procedure to engage with each supplier is developed appropriate to the level of risk.

~~2.9 Employees~~

People are the foundation of our business and underpin our success. We value our people and encourage the development of talented and motivated individuals to support the continued performance and growth of our diverse operations. We strive to build a sense of purpose and achievement among all our people in the work we do.

~~By working to~~~~Our Charter~~ ~~we align our people around our common purpose and values. We all use~~~~Our Charter~~ ~~as a vital reference point for how we do business, wherever we are in the world, and whatever work we do.~~

~~Our organisation is structured in four component parts: CSGs, Minerals Exploration, Marketing and Group Functions.~~

~~Each part of our organisation has a clear mandate that sets out the scope of responsibilities and accountabilities.~~

In FY2012, we had an average of 46,370 employees working in more than 100 locations worldwide. We had an average of 78,813 contractors globally (2011: 64,548; 2010: 58,563). Females comprise 17 per cent of our workforce. Approximately 10 per cent of our 406 senior leaders are female. For further information about our approach to diversity, please refer to section 5.17.

The table below provides a breakdown of the average number of employees, in accordance with our International Financial Reporting Standards (IFRS) reporting requirements, which includes our proportionate share of jointly controlled entities’ employees, the Executive Director and 100 per cent of employees of subsidiary companies, by CSG for each of the past three financial years. Part-time employees are included on a full-time equivalent basis. Employees of businesses acquired or disposed of during a particular year are included for the period of ownership. Contractors are not included in the figures below.

CSG
   FY2012    FY2011    FY2010
Petroleum
   3,058       2,308       2,178
Aluminium
   5,050       4,599       4,471
Base Metals
   8,775       7,602       7,434
Diamonds and Specialty Products
   1,905       1,737       1,689
Stainless Steel Materials
   3,578       3,412       3,481
Iron Ore
   5,784       4,047       3,624
Manganese
   2,760       2,426       2,549
Metallurgical Coal
   4,535       4,019       3,533
Energy Coal
   8,977       8,752       8,762
Group and unallocated
   1,948       1,855       1,849






Total
   46,370       40,757       39,570

~~The table below provides a breakdown of our average number of employees by geographic location for each of the past three financial years.~~

   FY2012    FY2011    FY2010
Africa
   10,311       10,061       10,622
Asia
   1,114       970       816
Australasia
   19,330       16,290       15,178
Europe
   532       492       515
North America
   4,166       3,168       2,971
South America
   10,917       9,776       9,468






Total
   46,370       40,757       39,570

~~2.10 Organisational structure~~

~~2.10.1 General~~

The BHP Billiton Group consists of the BHP Billiton Limited Group and the BHP Billiton Plc Group as a combined enterprise, following the completion of the DLC merger in June 2001. Refer to note 25 ‘Subsidiaries’ to the financial statements for a list of BHP Billiton Limited and BHP Billiton Plc significant subsidiaries.

The BHP Billiton DLC merger was designed to place shareholders of both companies in a position where they effectively have an interest in a single group that combines the assets and is subject to the liabilities of both companies. BHP Billiton Limited and BHP Billiton Plc have each retained their separate corporate identities and maintained separate stock exchange listings, but they are operated and managed as if they are a single unified economic entity, with their boards and senior executive management comprising the same people.

~~2.10.2 DLC structure~~

~~The principles of the BHP Billiton DLC are reflected in the BHP Billiton Sharing Agreement and include the following:~~

~~the two companies are to operate as if they are a single unified economic entity, through Boards of Directors that comprise the same individuals and a unified senior executive management;~~

the Directors of both companies will, in addition to their duties to the company concerned, have regard to the interests of BHP Billiton Limited shareholders and BHP Billiton Plc shareholders as if the two companies were a single unified economic entity and, for that purpose, the Directors of each company take into account in the exercise of their powers the interests of the shareholders of the other;

certain DLC equalisation principles must be observed. These are designed to ensure that for so long as the ‘Equalisation Ratio’ between a BHP Billiton Limited share and a BHP Billiton Plc share is 1:1, the economic and voting interests in the combined BHP Billiton Group resulting from the holding of one BHP Billiton Limited share are equivalent to that resulting from one BHP Billiton Plc share. Further details are set out in the sub-section ‘Equalisation of economic and voting rights’ below.

~~Additional documents that affect the DLC include:~~

~~BHP Billiton Limited Constitution~~

~~BHP Billiton Plc Memorandum and Articles of Association~~

~~BHP Billiton Special Voting Shares Deed~~

~~BHP Billiton Limited Deed Poll Guarantee~~

~~BHP Billiton Plc Deed Poll Guarantee.~~

~~Australian Foreign Investment Review Board (FIRB) conditions~~

~~The Treasurer of Australia approved the DLC merger subject to certain conditions, the effect of which was to require that, among other things, BHP Billiton Limited continues to:~~

~~be an Australian company, which is managed from Australia;~~

~~ultimately manage and control the companies conducting the business that was conducted by it at the time of the merger for as long as those businesses form part of the BHP Billiton Group.~~

The conditions have effect indefinitely, subject to amendment of the Australian Foreign Acquisitions and Takeovers Act 1975 or any revocation or amendment by the Treasurer of Australia. If BHP Billiton Limited no longer wishes to comply with these conditions, it must obtain the prior approval of the Treasurer. Failure to comply with the conditions attracts substantial penalties under the Foreign Acquisitions and Takeovers Act.

~~Equalisation of economic and voting rights~~

BHP Billiton Limited shareholders and BHP Billiton Plc shareholders have economic and voting interests in the combined BHP Billiton Group. The economic and voting interests represented by a share in one company relative to the economic and voting interests of a share in the other company is determined by reference to a ratio known as the ‘Equalisation Ratio’. Presently, the economic and voting interests attached to each BHP Billiton Limited share and each BHP Billiton Plc share are the same, since the Equalisation Ratio is 1:1. The Equalisation Ratio would change if either BHP Billiton Limited or BHP Billiton Plc returned value to only its shareholders and no matching action were taken.

This means that the amount of any cash dividend paid by BHP Billiton Limited in respect of each BHP Billiton Limited share is normally matched by an equivalent cash dividend by BHP Billiton Plc in respect of each BHP Billiton Plc share, and vice versa. If one company has insufficient profits or is otherwise unable to pay the agreed dividend, BHP Billiton Limited and BHP Billiton Plc will, as far as practicable, enter into such transactions as are necessary so as to enable both companies to pay the amount of pre-tax dividends per share.

~~Joint Electorate Actions~~

Under the terms of the DLC agreements, the BHP Billiton Limited Constitution and the BHP Billiton Plc Articles of Association special voting arrangements have been implemented so that the shareholders of both companies vote together as a single decision-making body on matters affecting the shareholders of each company in similar ways (such matters are referred to as Joint Electorate Actions). For so long as the Equalisation Ratio remains 1:1, each BHP Billiton Limited share will effectively have the same voting rights as each BHP Billiton Plc share on Joint Electorate Actions.

A Joint Electorate Action requires approval by ordinary resolution (or special resolution if required by statute, regulation, applicable listing rules or other applicable requirements) of BHP Billiton Limited, with both the BHP Billiton Limited ordinary shareholders and the holder of the BHP Billiton Limited Special Voting Share voting as a single class and also of BHP Billiton Plc, with the BHP Billiton Plc ordinary shareholders and the holder of the BHP Billiton Plc Special Voting Share voting as a single class.

~~Class Rights Actions~~

In the case of certain actions in relation to which the two bodies of shareholders may have divergent interests (referred to as Class Rights Actions), the company wishing to carry out the Class Rights Action requires the prior approval of the shareholders in the other company voting separately and, where appropriate, the approval of its own shareholders voting separately. Depending on the type of Class Rights Action undertaken, the approval required is either an ordinary or special resolution of the relevant company.

These voting arrangements are secured through the constitutional documents of the two companies, the BHP Billiton Sharing Agreement, the Special Voting Shares Deed and rights attaching to a specially created Special Voting Share issued by each company and held in each case by a Special Voting Company. The shares in the Special Voting Companies are held legally and beneficially by Law Debenture Trust Corporation Plc.

~~Cross guarantees~~

BHP Billiton Limited and BHP Billiton Plc have each executed a Deed Poll Guarantee, pursuant to which creditors entitled to the benefit of the BHP Billiton Limited Deed Poll Guarantee and the BHP Billiton Plc Deed Poll Guarantee will, to the extent possible, be placed in the same position as if the relevant debts were owed by both BHP Billiton Limited and BHP Billiton Plc combined.

~~Restrictions on takeovers of one company only~~

The BHP Billiton Limited Constitution and the BHP Billiton Plc Articles of Association have been drafted to ensure that, except with the consent of the Board, a person cannot gain control of one company without having made an equivalent offer to the shareholders of both companies on equivalent terms. Sanctions for breach of these provisions would include withholding of dividends, voting restrictions and the compulsory divestment of shares to the extent a shareholder and its associates exceed the relevant threshold.

~~2.11 Material contracts~~

~~2.11.1 DLC agreements~~

On 29 June 2001, BHP Billiton Limited (then known as BHP Limited) and BHP Billiton Plc (then known as Billiton Plc) merged by way of a DLC structure. To effect the DLC, BHP Limited and Billiton Plc (as they were then known) entered into the following agreements designed to place the shareholders of both companies in a position where they effectively have an interest in a single group that combines the assets, and is subject to all the liabilities, of both companies:

~~BHP Billiton Sharing Agreement~~

~~BHP Billiton Special Voting Shares Deed~~

~~BHP Billiton Limited Deed Poll Guarantee~~

~~BHP Billiton Plc Deed Poll Guarantee.~~

~~The effect of each of these agreements and the manner in which they operate are described in section 2.10 of this Report.~~

~~2.11.2 Merger Agreement with Petrohawk Energy Corporation~~

~~The Offer~~

On 14 July 2011, BHP Billiton Limited, BHP Billiton Petroleum (North America) Inc. (Parent), North America Holdings II Inc. (Purchaser), and Petrohawk Energy Corporation, (Petrohawk), entered into an Agreement and Plan of Merger (Merger Agreement), pursuant to which Purchaser commenced an offer (Offer) to acquire all of the outstanding shares of Petrohawk’s common stock, par value US$0.001 per share (Shares), for US$38.75 per Share, net to the seller in cash (Offer Price), without interest.

~~The Merger~~

The Merger Agreement also provided that, following consummation of the Offer and satisfaction or waiver of certain customary conditions, Purchaser would be merged with and into Petrohawk (Merger), with Petrohawk surviving as a wholly owned subsidiary of Parent. Upon completion of the Merger, each untendered Share outstanding immediately prior to the effective time of the Merger (excluding those Shares that are held by (i) Parent, Petrohawk or their respective wholly owned subsidiaries and (ii) stockholders of Petrohawk who properly demand appraisal in connection with the Merger under the Delaware General Corporation Law (DGCL)) would be converted into the right to receive the Offer Price.

If Purchaser held 90 per cent or more of the outstanding Shares following the consummation of the Offer (Short-Form Threshold), the parties would effect the Merger as a short-form merger under the DGCL without the need for approval by Petrohawk’s stockholders.

~~Conditions to the Offer~~

Consummation of the Offer was subject to several conditions, including: (i) that a majority of the Shares outstanding (generally determined on a fully diluted basis) be validly tendered and not properly withdrawn prior to the expiration date of the Offer; (ii) clearance from the Committee on Foreign Investment in the United States; (iii) the absence of a material adverse effect on Petrohawk; and (iv) certain other customary conditions. The Offer was not subject to a financing condition.

~~Representations and warranties, covenants, termination fee~~

Petrohawk made customary representations, warranties and covenants in the Merger Agreement. Petrohawk’s covenants included covenants relating to Petrohawk’s conduct of its business between the date of the Merger Agreement and the closing of the Merger, restrictions on soliciting proposals for alternative transactions, public disclosures and other matters. The Merger Agreement contained certain termination rights of Parent and Petrohawk and provided that, upon the termination of the Merger Agreement under specified circumstances, Petrohawk would be required to pay Parent a termination fee of US$395 million.

~~The foregoing description of the Offer, the Merger and the Merger Agreement does not purport to be complete and is qualified in its entirety by reference to the Merger Agreement.~~

~~Completion of the Offer~~

On 21 August 2011, we announced that at the end of Friday, 19 August 2011, approximately 293.9 million Petrohawk shares had been validly tendered and not withdrawn, including approximately 36 million Petrohawk shares tendered by guaranteed delivery. The tendered shares represented 97.4 per cent of the outstanding shares of Petrohawk, thus satisfying the Short-Form Threshold provision of the Merger Agreement. We also announced that following payment for all shares validly tendered and not withdrawn, we expected to effect a short-form merger under Delaware law as promptly as possible. The short-form merger was effected on 25 August 2011.

~~2.12 Constitution~~

The following text summarises the Constitution of BHP Billiton Limited and the Articles of Association of BHP Billiton Plc. The effect of the Constitution of BHP Billiton Limited and the Articles of Association of BHP Billiton Plc is, so far as possible, identical. Where the term ‘BHP Billiton’ is used in this description of the Constitution and Articles of Association, it can be read to mean either BHP Billiton Limited or BHP Billiton Plc.

~~Certain provisions of the Constitution of BHP Billiton Limited and the Articles of Association of BHP Billiton Plc can only be amended where such amendment is approved by special resolution either:~~

~~by approval as a Class Rights Action, where the amendment results in a change to an ‘Entrenched Provision’; or~~

~~otherwise, as a Joint Electorate Action.~~

~~A description of Joint Electorate Actions and Class Rights Actions is contained under the heading ‘Equalisation of economic and voting rights’ in section 2.10.2 of this Report.~~

~~2.12.1 Directors~~

The management and control of the business and affairs of BHP Billiton are vested in the Board of Directors, which may exercise all powers of BHP Billiton, other than those which are required to be exercised or done by BHP Billiton in a general meeting.

~~2.12.2 Power to issue securities~~

BHP Billiton may, pursuant to the Constitution and Articles of Association, issue any shares or other securities (including redeemable shares) with preferred, deferred or other special rights, obligations or restrictions as and when the Directors may determine and on any other terms the Directors consider appropriate, provided that:

~~any such issue does not affect any special rights conferred on the holders of any shares;~~

~~any such issue is subject to the provisions regarding shareholder approval in the Constitution and Articles of Association;~~

~~the rights attaching to a class other than ordinary shares are expressed at the date of issue.~~

~~2.12.3 Restrictions on voting by Directors~~

A Director may not vote in respect of any contract or arrangement or any other proposal in which he or she has a material personal interest. A Director shall not be counted in the quorum at a meeting in relation to any resolution on which he or she is not entitled to vote.

In addition, under the UK Companies Act 2006, a Director has a duty to avoid a situation in which he or she has (or can have) a direct or indirect interest that conflicts (or may conflict) with the interests of the company. The duty is not infringed, if among other things, the situation is authorised by non-interested Directors. The Articles of Association of BHP Billiton Plc enable the Board to authorise a matter that might otherwise involve a Director breaching his or her duty to avoid conflicts of interest. An interested Director may not vote or be counted towards a quorum for a resolution authorising such a situation. Where the Board gives such authorisation, the Board may prohibit, or may establish regulations which prohibit, the relevant Director from voting on any matter relating to the conflict. The Board has adopted procedures to manage these voting restrictions.

Subject to applicable laws, a Director is entitled to vote, and be counted in the quorum, in respect of any resolution concerning any of the following matters, namely where the material personal interest:

~~arises because the Director is a shareholder of BHP Billiton and is held in common with the other shareholders of BHP Billiton;~~

~~arises in relation to the Director’s remuneration as a Director of BHP Billiton;~~

relates to a contract BHP Billiton is proposing to enter into that is subject to approval by the shareholders and will not impose any obligation on BHP Billiton if it is not approved by the shareholders;

~~arises merely because the Director is a guarantor or has given an indemnity or security for all or part of a loan, or proposed loan, to BHP Billiton;~~

~~arises merely because the Director has a right of subrogation in relation to a guarantee or indemnity referred to above;~~

relates to a contract that insures, or would insure, the Director against liabilities the Director incurs as an officer of BHP Billiton, but only if the contract does not make BHP Billiton or a related body corporate the insurer;

~~relates to any payment by BHP Billiton or a related body corporate in respect of an indemnity permitted by law, or any contract relating to such an indemnity; or~~

~~is in a contract, or proposed contract with, or for the benefit of, or on behalf of, a related body corporate and arises merely because the Director is a director of a related body corporate.~~

~~2.12.4 Loans by Directors~~

Any Director may lend money to BHP Billiton at interest with or without security or may, for a commission or profit, guarantee the repayment of any money borrowed by BHP Billiton and underwrite or guarantee the subscription of shares or securities of BHP Billiton or of any corporation in which BHP Billiton may be interested without being disqualified as a Director and without being liable to account for BHP Billiton for any commission or profit.

~~2.12.5 Retirement of Directors~~

In 2011, the Board adopted a policy consistent with the UK Corporate Governance Code, under which all Directors must, if they wish to remain on the Board, seek re-election by shareholders annually. This policy took effect at the 2011 Annual General Meetings, and replaced the previous system, as set out in the Constitution and Articles of Association, under which Directors were required to submit themselves to shareholders for re-election at least every three years.

~~2.12.6 Rights attaching to shares~~

~~Dividend rights~~

Under English law, dividends on shares may only be paid out of profits available for distribution. Under Australian law, dividends on shares may only be paid out of net assets, provided that the payment is fair and reasonable to the company’s shareholders as a whole and the payment of the dividend does not materially prejudice the company’s ability to pay its creditors. The Constitution and Articles of Association provide that payment of any dividend may be made in any manner, by any means and in any currency determined by the Board.

All unclaimed dividends may be invested or otherwise used by the Board for the benefit of whichever of BHP Billiton Limited or BHP Billiton Plc declared that dividend, until claimed or, in the case of BHP Billiton Limited, otherwise disposed of according to law. In the case of BHP Billiton Plc, any dividend unclaimed after a period of 12 years from the date on which such dividend was declared or became due for payment shall be forfeited and shall revert to BHP Billiton Plc.

~~Voting rights~~

Voting at any general meeting of BHP Billiton Limited shareholders can, in the first instance, be conducted by a show of hands unless a poll is demanded by any of the following (except in relation to the election of a chairman of a meeting or, unless the Chairman otherwise determines, the adjournment of a meeting), or is otherwise required (as outlined below):

~~the Chairman;~~

~~any shareholder under the law; or~~

~~the holder of the BHP Billiton Limited Special Voting Share.~~

Voting at any general meeting of BHP Billiton Plc can, in the first instance, be conducted by a show of hands unless a poll is demanded by any of the following, (except in relation to the election of a chairman of a meeting or, unless the Chairman otherwise determines, the adjournment of a meeting), or is otherwise required (as outlined below):

~~the Chairman;~~

~~not less than five members present in person or by proxy and entitled to vote;~~

~~a member or members present in person or by proxy and representing not less than five per cent of the total voting rights of all the members having the right to vote at the meeting; or~~

~~the holder of the BHP Billiton Plc Special Voting Share.~~

As described under the heading ‘Equalisation of economic and voting rights’ in section 2.10.2 of this Report, certain matters may be decided as Joint Electorate Actions or Class Rights Actions. Any matter considered by shareholders at an Annual General Meeting of BHP Billiton Limited or BHP Billiton Plc constitutes a Joint Electorate Action and shall therefore be decided on a poll. Therefore, in practice, generally all items of business at Annual General Meetings proceed directly to poll.

In addition, at any general meeting a resolution, other than a procedural resolution, put to the vote of the meeting on which the holder of the relevant BHP Billiton Special Voting Share is entitled to vote shall be decided on a poll.

For the purposes of determining which shareholders are entitled to attend or vote at a meeting of BHP Billiton Plc or BHP Billiton Limited, and how many votes such shareholder may cast, the relevant company will specify

in any notice of meeting a time, not more than 48 hours before the time fixed for the meeting, by which a shareholder must be entered on the Register of Shareholders in order to have the right to attend or vote at the relevant meeting.

Shareholders who wish to appoint a proxy to attend, vote or speak at a meeting of BHP Billiton Plc or BHP Billiton Limited (as appropriate) on their behalf, must deposit the relevant form appointing a proxy in accordance with the instructions contained in any notice of meeting, so as to be received in the specified manner not less than 48 hours before the time appointed for holding the meeting to which the appointment of a proxy relates.

~~Rights to share in BHP Billiton Limited’s profits~~

~~The rights attached to the shares of BHP Billiton Limited, as regards the participation in the profits available for distribution, are as follows:~~

The holders of any preference shares shall be entitled, in priority to any payment of dividend to the holders of any other class of shares, to a preferred right to participate as regards dividends up to but not beyond a specified amount in distribution.

Subject to the special rights attaching to any preference shares, but in priority to any payment of dividends on all other classes of shares, the holder of the Equalisation Share (if any) shall be entitled to be paid such dividends as are declared or paid thereon.

Any surplus remaining after payment of the distributions above shall be payable to the holders of BHP Billiton Limited ordinary shares and the BHP Billiton Limited Special Voting Share in equal amounts per share.

~~Rights to share in BHP Billiton Plc’s profits~~

~~The rights attached to the shares of BHP Billiton Plc, in relation to the participation in the profits available for distribution, are as follows:~~

The holders of the cumulative preference shares shall be entitled, in priority to any payment of dividend to the holders of any other class of shares, to be paid a fixed cumulative preferential dividend (Preferential Dividend) at a rate of 5.5 per cent per annum, to be paid annually in arrears on 31 July in each year or, if any such date shall be a Saturday, Sunday or public holiday in England, on the first business day following such date in each year. Payments of Preferential Dividends shall be made to holders on the register at any date selected by the Directors up to 42 days prior to the relevant fixed dividend date.

Subject to the rights attaching to the cumulative preference shares, but in priority to any payment of dividends on all other classes of shares, the holder of the BHP Billiton Plc Special Voting Share shall be entitled to be paid a fixed dividend of US$0.01 per annum, payable annually in arrears on 31 July.

Subject to the rights attaching to the cumulative preference shares and the BHP Billiton Plc Special Voting Share, but in priority to any payment of dividends on all other classes of shares, the holder of the Equalisation Share shall be entitled to be paid such dividends as the Board may decide to pay thereon.

~~Any surplus remaining after payment of the distributions above shall be payable to the holders of the BHP Billiton Plc ordinary shares in equal amounts per BHP Billiton Plc ordinary share.~~

~~2.12.7 Right on a return of assets on liquidation~~

On a return of assets on liquidation of BHP Billiton Limited, the assets of BHP Billiton Limited remaining available for distribution among shareholders, after giving effect to the payment of all prior ranking amounts owed to all creditors and holders of preference shares, and to all prior ranking statutory entitlements, shall be applied in paying to the holders of the BHP Billiton Limited Special Voting Share and the Equalisation Share (if

any) an amount of up to A$2.00 on each such share, on an equal priority with any amount paid to the holders of BHP Billiton Limited ordinary shares, and any surplus remaining shall be applied in making payments solely to the holders of BHP Billiton Limited ordinary shares in accordance with their entitlements.

On a return of assets on liquidation of BHP Billiton Plc, subject to the payment of all prior ranking amounts owed to the creditors of BHP Billiton Plc and to all prior ranking statutory entitlements, the assets of BHP Billiton Plc to be distributed on a winding-up shall be distributed to the holders of shares in the following order of priority:

To the holders of the cumulative preference shares, the repayment of a sum equal to the nominal capital paid up or credited as paid up on the cumulative preference shares held by them and accrual, if any, of the Preferential Dividend, whether such dividend has been earned or declared or not, calculated up to the date of commencement of the winding-up.

To the holders of the BHP Billiton Plc ordinary shares and to the holders of the BHP Billiton Plc Special Voting Share and the Equalisation Share, the payment out of surplus, if any, remaining after the distribution above of an equal amount for each BHP Billiton Plc ordinary share, the BHP Billiton Plc Special Voting Share and the Equalisation Share, if issued, subject to a maximum in the case of the BHP Billiton Plc Special Voting Share and the Equalisation Share of the nominal capital paid up on such shares.

~~2.12.8 Redemption of preference shares~~

If BHP Billiton Limited at any time proposes to create and issue any preference shares, the preference shares may be issued on the terms that they are to be redeemed or, at the option of either or both BHP Billiton Limited and the holder, are liable to be redeemed, whether out of share capital, profits or otherwise.

~~The preference shares confer on the holders the right to convert the preference shares into ordinary shares if, and on the basis, the Board determines at the time of issue of the preference shares.~~

~~The preference shares are to confer on the holders:~~

the right (on redemption and on a winding up) to payment in cash in priority to any other class of shares of (i) the amount paid or agreed to be considered as paid on each of the preference shares; (ii) the amount, if any, equal to the aggregate of any dividends accrued but unpaid and of any arrears of dividends;

~~the right, in priority to any payment of dividend on any other class of shares, to the preferential dividend.~~

There is no equivalent provision in the Articles of Association of BHP Billiton Plc although as noted in section 2.12.2 above, BHP Billiton can issue preference shares which are subject to a right of redemption on terms the Board considers appropriate.

~~2.12.9 Capital calls~~

Subject to the terms on which any shares may have been issued, the Board may make calls on the shareholders in respect of all monies unpaid on their shares. BHP Billiton has a lien on every partly paid share for all amounts payable in respect of that share. Each shareholder is liable to pay the amount of each call in the manner, at the time and at the place specified by the Board (subject to receiving at least 14 days’ notice specifying the time and place for payment). A call is considered to have been made at the time when the resolution of the Board authorising the call was passed.

~~2.12.10 Borrowing powers~~

Subject to relevant law, the Directors may exercise all powers of BHP Billiton to borrow money, and to mortgage or charge its undertaking, property, assets (both present and future) and all uncalled capital or any part or parts thereof and to issue debentures and other securities, whether outright or as collateral security for any debt, liability or obligation of BHP Billiton or of any third party.

~~2.12.11 Changes to rights of shareholders~~

Rights attached to any class of shares issued by either BHP Billiton Limited or BHP Billiton Plc can only be varied (whether as a Joint Electorate Action or a Class Rights Action) where such variation is approved both:

~~by the Company that issued the relevant shares, as a special resolution;~~

by the holders of the issued shares of the affected class, either by a special resolution passed at a separate meeting of the holders of the issued shares of the class affected, or with the written consent of members with at least 75 per cent of the votes of that class.

~~2.12.12 Conditions governing general meetings~~

All provisions relating to general meetings apply with any necessary modifications to any special meeting of any class of shareholders that may be held. Therefore, the following information relates equally to general meetings and any special meeting of any class of shareholders.

The Board may and shall on requisition in accordance with applicable laws call a general meeting of the shareholders at the time and place or places and in the manner determined by the Board. No shareholder may convene a general meeting of BHP Billiton except where entitled under law to do so. Any Director may convene a general meeting whenever the Director thinks fit. General meetings can also be cancelled, postponed or adjourned, where permitted by law or the Constitution or Articles of Association. Notice of a general meeting must be given to each shareholder entitled to vote at the meeting and such notice of meeting must be given in the form and manner in which the Board thinks fit. Five shareholders of the relevant company present in person or by proxy constitute a quorum for a meeting. A shareholder who is entitled to attend and cast a vote at a general meeting of BHP Billiton may appoint a person as a proxy to attend and vote for the shareholder in accordance with the law.

~~2.12.13 Limitations on rights to own securities~~

Neither the Constitution of BHP Billiton Limited nor the Articles of Association of BHP Billiton Plc impose any limitations on the rights to own securities other than restrictions that reflect the takeovers codes under relevant Australian and UK law. In addition, the Australian Foreign Acquisitions and Takeovers Act 1975 imposes a number of conditions that restrict foreign ownership of Australian-based companies.

~~Share control limits imposed by the Constitution and the Articles of Association, as well as relevant laws, are described in sections 2.7.2 and 2.10.2 of this Report.~~

~~2.12.14 Documents on display~~

~~You can consult reports and other information about BHP Billiton Limited that it has filed pursuant to the rules of the ASX at~~~~www.asx.com.au~~. You can consult reports and other information filed for publication by BHP Billiton Plc pursuant to the rules of the UK Listing Authority at the Authority’s document viewing facility (the National Storage Mechanism). Information filed on the ASX, or pursuant to the rules of the UK Listing Authority is not incorporated by reference into this Annual Report. The documents referred to in this Annual Report as being available on our website,~~www.bhpbilliton.com~~~~, are not incorporated by reference and do not form part of this Annual Report.~~

~~BHP Billiton Limited and BHP Billiton Plc both file annual and special reports and other information with the SEC. These filings are available on the SEC website at~~~~www.sec.gov~~. You may also read and copy any document that either BHP Billiton Limited or BHP Billiton Plc files at the SEC’s public reference room located at 100 F Street, NE, Washington, DC 20549. Please call the SEC at 1-800-SEC-0330 or access the SEC website at~~www.sec.gov~~ ~~for further information on the public reference room.~~

~~2.13 Reserves~~

~~2.13.1~~2.3.1 Petroleum reserves

~~Reserves and production~~

BHP Billiton Petroleum proved reserves are estimated and reported according to ~~SEC standards. For FY2012, our proved oil~~US Securities and ~~gas reserves~~Exchange Commission (SEC) standards and have been determined in accordance with SEC Rule 4-10(a) ofRegulation S-X. Proved oil and gas reserves are those quantities of crude oil, natural gas and natural gas liquids (NGL)~~, which,~~ that, by analysis of geoscience and engineering data, can be estimated with reasonable certainty to be economically producible from a given date forward from known reservoirs, and under existing economic conditions, operating methods, operating contracts and government regulations. Unless evidence indicates that renewal of existing operating contracts is reasonably certain, estimates of economically producible reserves reflect only ~~reflect~~ the period before the contracts expire. The project to extract the hydrocarbons must have commenced or the operator must be reasonably certain that it will commence within a reasonable time. Developed oil and gas reserves are reserves that can be expected to be recovered through existing wells with existing equipment and operating methods, and through installed extraction equipment and infrastructure operational at the time of the reserve estimate if the extraction is by means not involving a well. As specified in SEC Rule 4-10(a) of Regulation S-X, oil and gas prices are taken as the unweighted average of the corresponding first day of the month prices for the ~~twelve~~12 months prior to the ending date of the period covered.

Estimates of oil and gas reserves are inherently imprecise, require the application of judgement and are subject to future revision. Accordingly, financial and accounting measures (such as the standardised measure of discounted cash flows, depreciation, depletion and amortisation charges, the assessment of impairments and the assessment of valuation allowances against deferred tax assets) that are based on reserve estimates are also subject to change.

Proved reserves ~~are~~were estimated by reference to available ~~seismic,~~ well and reservoir information, including but not limited to well logs, well test data, core data, production and pressure ~~trends for producing reservoirs~~data, geologic data, seismic data and, in some cases, to similar data from ~~other~~ analogous, producing reservoirs. A wide range of engineering and geoscience methods, including performance analysis, well analogues and geologic studies were used to estimate high confidence proved developed and undeveloped reserves in accordance with SEC regulations. For our conventional operations, performance of producing wells was based on rate and pressure decline methods, including material balance, and was supplemented by reservoir simulation models where appropriate. In our Onshore US shale operations, performance of producing wells was based on decline curve analysis methods. For wells that lacked sufficient production history, reserves were estimated using performance-based type curves and offset location analogues with similar geologic and reservoir characteristics. When assessing proved undeveloped locations, a combination of geologic and engineering data, and where appropriate, statistical analysis was used to support the assignment of proved undeveloped reserves. Performance data, along with log and core data, was used to delineate consistent, continuous reservoir characteristics in core areas of the development. Proved ~~reserves~~undeveloped locations were included in core areas between known data and adjacent to productive wells. Locations where a high degree of certainty could not be demonstrated using the above technologies and techniques were not categorised as proved.

Proved reserve estimates ~~are~~were attributed to future development projects only where there is a significant commitment to project funding and execution, and for which applicable government and regulatory approvals have been secured or are reasonably certain to be secured. Furthermore, estimates of proved reserves include only ~~include~~ volumes for which access to market is assured with reasonable certainty. All proved reserve estimates are

subject to revision, either upward or downward, based on new information, such as from development drilling and production activities, or from changes in economic factors, including product prices, contract terms or development plans.

Reserve estimates contained in this section have been estimated with deterministic methodology, with the exception of the North West Shelf gas operation in Australia, where probabilistic methodology has been utilised to estimate and aggregate reserves for the reservoirs dedicated to the gas project only. The probabilistic based portion of these reserves totals 38 MMboe (total boe conversion is based on the following: 6,000 scf of natural gas equals 1 boe) and represents approximately two per cent of our total reported proved reserves. Aggregation of proved reserves beyond the field/project level has been performed by arithmetic summation. Due to portfolio effects, aggregates of proved reserves may be conservative. The custody transfer point(s) or point(s) of sale applicable for each field or project are the reference point for reserves. The reserves replacement ratio is the reserves change during the year before production, divided by the production during the year stated as a percentage.

The Petroleum Reserves Group (PRG) is a dedicated group that provides ~~overall~~ oversight of the ~~reserves~~reserves’ assessment and reporting processes. It is independent of the various ~~asset~~operation teams directly responsible for development and production activities. The PRG is staffed by individuals averaging ~~over 30~~more than 20 years’ experience in the oil and gas industry. The manager of the PRG, ~~Tina Obut,~~Abhijit Gadgil, is a full-time employee of BHP Billiton and is the individual responsible for overseeing and supervising the preparation of the ~~reserves~~reserve estimates and compiling the information for inclusion in this Annual Report. ~~She~~He has an advanced degree in engineering and ~~over 20~~more than 30 years of diversified industry experience in reservoir engineering, reserves assessment, field development and technical management and is a ~~25-year~~30-year member of the Society of Petroleum Engineers (SPE). He has also served on the Society of Petroleum Engineers Oil and Gas Reserves Committee. Mr Gadgil has the qualifications and experience required to act as a qualified petroleum reserves evaluator under the Australian Securities Exchange (ASX) Listing Rules. The ~~PRG manager~~estimates of petroleum reserves are based on, and fairly represent, information and supporting documentation prepared under the supervision of Mr Gadgil and he has reviewed and agrees with the information included in section ~~2.13.1~~2.3.1 of this ~~Report.~~Annual Report and has given his prior written consent for its publication. No part of the individual compensation for members of the PRG is dependent on reported reserves.

Production for FY2012 totalled 222 MMboe in sales and an additional 6 MMboe in non-sales production, typically fuel, consumed in our petroleum operations. During FY2012, Petroleum added a total of 953 MMboe⁽¹⁾ of proved oil and gas reserves. The largest component was the acquisition of the Petrohawk Energy Corporation onshore conventional and shale assets accounting for 617 MMboe of proved reserves. Additional minor property acquisitions and sales added a net 6.5 MMboe.

⁽¹⁾	~~Total boe conversion is based on the following: 6,000 scf of natural gas equals 1 boe.~~

Excluding purchases and sales of reserves, Petroleum added a total of 330 MMboe to proved reserves, replacing 148 per cent of production sales, through extensions, discoveries, revisions and improved recovery. Additions from extensions and discoveries were 36 MMboe and include new development projects planned in the Pyrenees offshore complex in Australia and development drilling in the Fayetteville and Eagle Ford fields located onshore US. Additions from revisions were 259 MMboe and are mostly related to infill drilling, since acquisition, in the Eagle Ford field. Additions from improved recovery were 35 MMboe and are associated with water injection projects in Mad Dog and Shenzi fields in the offshore US Gulf of Mexico (GOM).

Petroleum’s reserves are estimated as of 30 June ~~2012.~~2015. Reserve assessments for all Petroleum ~~properties~~operations were conducted by technical staff within the operating organisation. These individuals meet the professional qualifications outlined by the ~~Society of Petroleum Engineers,~~SPE, are trained in the fundamentals of SEC reserves reporting and the reserves processes and are endorsed by the PRG. Each reserve assessment is reviewed annually by the PRG to ensure technical quality, adherence to internally published Petroleum ~~CSG Guidelines~~guidelines and compliance with SEC reporting requirements. Once endorsed by the PRG, all reserves receive final endorsement by senior management and the Risk and Audit Committee prior to public reporting. Our internal Group ~~Audit Services~~Risk Assessment and Assurance provides secondary assurance of the oil and gas reserve reporting processes through annual audits.

Production for FY2015 totalled 256 MMboe in sales, which is an increase of 10 MMboe from FY2014. There were an additional 6 MMboe in non-sales production, primarily for fuel consumed in our Petroleum operations.

As of 30 June 2015, our proved reserves of 1907.9 MMboe reflect a net reduction of 274 MMboe and total production of 261 MMboe (including 5 MMboe in non-sales production primarily related to fuel consumed in Petroleum operations) compared to the previous estimate as at 30 June 2014. Approximately 58 per cent of our proved reserves as of 30 June 2015 were in conventional operations, while approximately 42 per cent were in unconventional operations. As discussed below, the decrease in proved reserves was largely driven by the very challenging commodity price environment and a reduced capital and drilling program for the Onshore US, which has resulted in deferral of drilling into future years. As we continue to defer development of these operations for long-term value, the related proved undeveloped reserves have been migrated to non-proven categories within our resource base in accordance with applicable SEC standards.

Discoveries and extensions during the year added 208 MMboe to proved reserves, including 165 MMboe of extensions related to drilling in our US shale operations, 5 MMboe of extensions related to drilling in the Atlantis field in the US Gulf of Mexico and 38 MMboe of discoveries following approval of the Greater Western Flank Phase 2 project in Australia, which allowed the transfer of the contingent resources carried for the project into proved undeveloped reserves. Improved recovery additions resulted in a further 4 MMboe increase to proved reserves for a new water injection project in the Shenzi field in the US Gulf of Mexico.

The divestment of conventional operations in North Louisiana and unconventional operations in the Pecos area in our Permian operation contributed to a reduction of 34 MMboe. There were no purchases during the year.

During FY2015, net revisions to our prior estimates reduced proved reserves by 452 MMboe, primarily due to the very challenging price environment. In addition, lower commodity prices have prompted reductions in our capital program which have resulted in the deferral of development plans and transfer of proved undeveloped reserves into other non-proven categories within our resource base.

In our US operations, the overall reduction in proved reserves through revisions totalled 484 MMboe, including downward revisions of 496 MMboe for our onshore unconventional operations that were partially offset by additions of 12 MMboe for better than expected performance, primarily in the Shenzi field in our Gulf of Mexico operations. The downward revisions in our onshore unconventional operations comprised reductions related to price impact on economic productive life, deferral of development drilling beyond the required five-year development window, reductions of prior estimated due to new information and other development program revisions and data adjustments. The Haynesville operation had the largest reductions due to price and deferral of development drilling, while the largest reduction through revisions of prior estimates occurred in the Hawkville operation. The majority of the Hawkville reductions of prior estimates reflect interference between wells related to the combination of completion design and natural reservoir fractures. When combined with the 165 MMboe addition for US unconventional drilling extensions noted above, the net effect of revisions and extensions in our US unconventional operations resulted in a net reduction of 331 MMboe.

The reductions noted above were also partially offset by the addition of 25 MMboe to proved reserves in Australia through better than expected performance primarily in the Macedon field and, to a lesser extent, a number of fields in the Bass Strait and the North West Shelf project. Operations outside of Australia and the USA also added a combined 8 MMboe for better than expected performance, primarily in the Angostura field in Trinidad and Tobago.

These results are summarised in the following tables, ~~below,~~ which detail estimated oil, condensate, NGL and natural gas reserves at 30 June ~~2012,~~2015, 30 June ~~2011~~2014 and 30 June ~~2010,~~2013, with a reconciliation of the changes in each year. Reserves have been calculated using the economic interest method and represent net interest volumes after deduction of applicable royalty. Reserves ~~include quantities~~ of ~~oil, condensate, NGL and natural gas that will be produced under~~72 MMboe are in two production and risk-sharing arrangements that involve the Group in upstream risks and rewards without transfer of ownership of the products. At 30 June ~~2012,~~2015, approximately four per cent of the proved ~~developed and undeveloped oil, condensate and NGL reserves and two per cent of natural gas~~ reserves are attributable to ~~those~~such arrangements. Reserves also include volumes calculated by probabilistic aggregation of certain fields that share common infrastructure. These aggregation procedures result in enterprise-wide proved reserves volumes which may not be realised upon divestment on an individual property basis.

Millions of barrels
   Australia United
States Other Total
Proved developed and undeveloped oil, condensate and NGL reserves ^(a)(b)

Reserves at 30 June 2009
   333.1    195.9    56.6    585.6


Improved Recovery
   11.0    0.0    0.0    11.0
Revisions of previous estimates
   5.9    73.4    (2.4 ) 76.9
Extensions and discoveries
   6.9    49.2    7.5    63.6
Purchase/sales of reserves
   0.0    0.0    0.0    0.0
Production^(c)
   (40.2 ) (44.1 ) (12.8 ) (97.1 )


Total changes
   (16.4 ) 78.5    (7.7 ) 54.4


Reserves at 30 June 2010
   316.7    274.4    48.9    640.0


Improved Recovery
   0.7    22.0    0.0    22.7
Revisions of previous estimates
   2.0    1.6    3.7    7.3
Extensions and discoveries
   3.2    1.6    0.2    5.0
Purchase/sales of reserves
   0.0    0.0    0.0    0.0
Production^(c)
   (48.4 ) (32.2 ) (11.3 ) (91.9 )


Total changes
   (42.5 ) (7.0 ) (7.4 ) (56.9 )


Reserves at 30 June 2011
   274.2    267.4    41.5    583.1


Improved Recovery
   0.0    34.1    0.0    34.1
Revisions of previous estimates
   9.0    170.3    5.0    184.3
Extensions and discoveries
   8.8    5.0    0.0    13.8
Purchase/sales of reserves
   0.0    73.9    0.0    73.9
Production^(c)
   (39.1 ) (36.6 ) (9.6 ) (85.3 )


Total changes
   (21.3 ) 246.8    (4.6 ) 220.9


Reserves at 30 June 2012^(d)
   252.8    514.3    36.9    804.0


Developed

Proved developed oil, condensate and NGL reserves

as of 30 June 2009
   182.2    98.7    51.5    332.4
as of 30 June 2010
   217.1    108.9    44.4    370.4
as of 30 June 2011
   176.3    94.8    39.2    310.3
Developed Reserves as of 30 June 2012
   155.3    171.1    36.7    363.2


Undeveloped

Proved undeveloped oil, condensate and NGL reserves

as of 30 June 2009
   150.9    97.2    5.1    253.2
as of 30 June 2010
   99.6    165.5    4.5    269.6
as of 30 June 2011
   97.9    172.6    2.3    272.8
Undeveloped Reserves as of 30 June 2012
   97.5    343.2    0.1    440.8


Millions of barrels
Australia United
States Other^(b) Total
Proved developed and undeveloped oil and condensate reserves^(a)

Reserves at 30 June 2012
157.6    415.7    36.6    610.0

Improved recovery
–    12.6    0.1    12.7
Revisions of previous estimates
13.7    (65.7 ) 1.1    (50.9 )
Extensions and discoveries
0.2    137.5    0.2    137.9
Purchase/sales of reserves
–    (1.9 ) –    (1.9 )
Production
(25.9 ) (38.7 ) (7.9 ) (72.5 )

Total changes
(12.0 ) 43.8    (6.5 ) 25.4

Reserves at 30 June 2013
145.7    459.6    30.1    635.4

Improved recovery
–    –    –    –
Revisions of previous estimates
14.2    (50.0 ) (0.4 ) (36.1 )
Extensions and discoveries
–    99.0    0.3    99.3
Purchase/sales of reserves
–    (0.4 ) (3.5 ) (3.9 )
Production
(23.6 ) (54.0 ) (6.5 ) (84.1 )

Total changes
(9.4 ) (5.4 ) (10.0 ) (24.8 )

Reserves at 30 June 2014
136.2    454.2    20.1    610.5

Improved recovery
–    3.4    0.1    3.5
Revisions of previous estimates
3.2    (53.7 ) 2.4    (48.1 )
Extensions and discoveries
5.9    52.0    –    58.0
Purchase/sales of reserves
–    (1.0 ) –    (1.0 )
Production
(21.4 ) (71.6 ) (5.6 ) (98.5 )

Total changes
(12.2 ) (70.9 ) (3.1 ) (86.2 )

Reserves at 30 June 2015
124.0    383.3    17.1    524.3

Developed

Proved developed oil and condensate reserves

as of 30 June 2012
101.5    148.6    36.5    286.6
as of 30 June 2013
105.0    209.5    27.7    342.2
as of 30 June 2014
96.5    237.8    14.7    349.0
Developed reserves as of 30 June 2015
81.2    225.4    11.7    318.3

Undeveloped

Proved undeveloped oil and condensate reserves

as of 30 June 2012
56.2    267.1    0.1    323.4
as of 30 June 2013
40.6    250.1    2.5    293.2
as of 30 June 2014
39.7    216.4    5.4    261.5
Undeveloped reserves as of 30 June 2015
42.7    157.9    5.4    206.0

^(a)	Small differences are due to rounding to first decimal place.

^(b)	~~NGL~~Other is ~~extracted separately from crude oil~~comprised of Algeria, Pakistan, Trinidad and ~~natural gas~~Tobago and ~~reported as a liquid.~~ the United Kingdom.

Millions of barrels
   Australia United
States Other^(c) Total
Proved developed and undeveloped NGL reserves^(a)

Reserves at 30 June 2012
   95.2    98.6    0.2    194.0


Improved recovery
   –    1.0    –    1.0
Revisions of previous estimates
   3.5    (23.3 ) –    (19.8 )
Extensions and discoveries
   0.1    82.2    –    82.3
Purchase/sales of reserves
   –    –    –    –
Production^(b)
   (7.9 ) (9.6 ) –    (17.5 )


Total changes
   (4.3 ) 50.3    –    45.9


Reserves at 30 June 2013
   90.9    148.9 ^(d) 0.2    239.9 ^(d)


Improved recovery
   –    –    –    –
Revisions of previous estimates
   (0.3 ) (25.3 ) (0.1 ) (25.7 )
Extensions and discoveries
   –    46.9    –    46.9
Purchase/sales of reserves
   –    (0.2 ) –    (0.2 )
Production^(b)
   (8.5 ) (13.6 ) –    (22.1 )


Total changes
   (8.8 ) 7.7    (0.1 ) (1.2 )


Reserves at 30 June 2014
   82.1    156.6 ^(d) –    238.7 ^(d)


Improved recovery
   –    0.3    –    0.3
Revisions of previous estimates
   0.6    (62.4 ) 0.1    (61.7 )
Extensions and discoveries
   1.1    33.1    –    34.2
Purchase/sales of reserves
   –    (0.2 ) –    (0.2 )
Production^(b)
   (7.2 ) (18.7 ) (0.1 ) (26.0 )


Total changes
   (5.5 ) (48.0 ) –    (53.5 )


Reserves at 30 June 2015
   76.6    108.6 ^(d) –    185.2


Developed

Proved developed NGL reserves

as of 30 June 2012
   53.9    22.5    0.2    76.6
as of 30 June 2013
   54.7    54.1    0.2    108.9
as of 30 June 2014
   46.0    75.0    –    121.0
Developed reserves as of 30 June 2015
   40.1    59.7    –    99.8


Undeveloped

Proved undeveloped NGL reserves

as of 30 June 2012
   41.3    76.1    –    117.4
as of 30 June 2013
   36.2    94.8    –    131.0
as of 30 June 2014
   36.1    81.5    –    117.7
Undeveloped reserves as of 30 June 2015
   36.5    48.9    –    85.4

^(c)	~~Production for reserves reconciliation differs slightly from marketable production due to timing of sales and corrections to previous estimates.~~

^(d)	~~Total proved oil, condensate and NGL reserves include 5.3 million barrels derived from probabilistic aggregation of reserves from reservoirs dedicated to the North West Shelf gas project only.~~

Billions of cubic feet
   Australia ^(b) United
States Other Total
Proved developed and undeveloped natural gas reserves

Reserves at 30 June 2009^(a)(e)
   3,789.7    92.8    892.0    4,774.5


Improved Recovery
   40.5    0.0    23.6    64.1
Revisions of previous estimates
   94.2    2.2    (51.5 ) 44.9
Extensions and discoveries
   1.6    9.3    0.0    10.9
Purchase/sales of reserves
   0.0    0.0    0.0    0.0
Production^(c)
   (259.7 ) (17.7 ) (91.3 ) (368.7 )


Total changes
   (123.4 ) (6.1 ) (119.2 ) (248.8 )


Reserves at 30 June 2010^(e)
   3,666.3    86.6    772.8    4,525.7


Improved Recovery
   0.0    3.5    0.0    3.5
Revisions of previous estimates
   582.8    197.9    12.4    793.1
Extensions and discoveries
   63.7    0.3    31.6    95.6
Purchase/sales of reserves
   0.0    2,490.6    0.0    2,490.6
Production^(c)
   (274.7 ) (49.1 ) (81.2 ) (405.0 )


Total changes
   371.8    2,613.1    (37.2 ) 2,977.7


Reserves at 30 June 2011
   4,038.1    2,729.8    735.6    7,503.5


Improved Recovery
   0.0    3.3    0.0    3.3
Revisions of previous estimates
   90.1    328.1    29.1    447.3
Extensions and discoveries
   6.6    128.3    0.0    134.9
Purchase/sales of reserves
   0.0    3,297.3    0.0    3,297.3
Production^(c)(f)
   (276.1 ) (458.4 ) (122.6 ) (857.2 )


Total changes
   (179.5 ) 3,298.7    (93.5 ) 3,025.7


Reserves at 30 June 2012^(d)
   3,858.6    6,028.5    642.1    10,529.2


Developed

Proved developed natural gas reserves

as of 30 June 2009^(e)
   1,899.0    38.5    383.7    2,321.2
as of 30 June 2010
   1,724.8    30.3    236.8    1,991.9
as of 30 June 2011
   1,754.0    1,122.1    719.9    3,596.0
Developed Reserves as of 30 June 2012
   1,619.0    2,742.5    634.5    4,996.0


Undeveloped

Proved undeveloped natural gas reserves

as of 30 June 2009^(e)
   1,890.7    54.3    508.3    2,453.3
as of 30 June 2010
   1,941.5    56.3    536.0    2,533.8
as of 30 June 2011
   2,284.1    1,607.7    15.7    3,907.4
Undeveloped Reserves as of 30 June 2012
   2,239.6    3,286.0    7.6    5,533.2

^(a)	Small differences are due to rounding to first decimal place.

^(b)	Production includes volumes consumed in operations.

^(c)	Other is comprised of Algeria, Pakistan, Trinidad and Tobago and the United Kingdom.

^(d)	For FY2013, FY2014 and FY2015, amounts include 4.0, 3.9 and 4.2 million barrels respectively, which are anticipated to be consumed in operations in the United States.

Billions of cubic feet
   Australia^(c) United
States Other^(d) Total
Proved developed and undeveloped natural gas reserves^(a)

Reserves at 30 June 2012
   3,858.6    6,028.5    642.1    10,529.2


Improved recovery
   –    3.4    –    3.4
Revisions of previous estimates
   34.6    (1,159.5 ) (54.9 ) (1,179.8 )
Extensions and discoveries
   8.7    1,675.4    –    1,684.1
Purchase/sales of reserves
   –    (0.5 ) –    (0.5 )
Production^(b)
   (299.3 ) (491.3 ) (116.3 ) (906.9 )


Total changes
   (255.9 ) 27.4    (171.2 ) (399.7 )


Reserves at 30 June 2013
   3,602.6 ^(e) 6,055.9 ^(f) 471.0 ^(g) 10,129.5 ^(h)


Improved recovery
   –    –    –    –
Revisions of previous estimates
   207.9    (1,174.3 ) 3.4    (962.9 )
Extensions and discoveries
   –    1,205.9    123.6    1,329.5
Purchase/sales of reserves
   –    (1.5 ) (58.4 ) (59.9 )
Production^(b)
   (315.2 ) (462.7 ) (96.9 ) (874.8 )


��

Total changes
   (107.2 ) (432.4 ) (28.4 ) (568.0 )


Reserves at 30 June 2014
   3,495.4 ^(e) 5,623.5 ^(f) 442.6 ^(g) 9,561.5 ^(h)


Improved recovery
   –    0.8    –    0.8
Revisions of previous estimates
   124.3    (2,207.6 ) 32.8    (2,050.5 )
Extensions and discoveries
   185.4    509.7    –    695.1
Purchase/sales of reserves
   –    (195.6 ) –    (195.6 )
Production^(b)
   (321.8 ) (434.6 ) (64.8 ) (821.1 )


Total changes
   (12.0 ) (2,327.3 ) (32.0 ) (2,371.3 )


Reserves at 30 June 2015
   3,483.4 ^(e) 3,296.1 ^(f) 410.6 ^(g) 7,190.2 ^(h)


Developed

Proved developed natural gas reserves

as of 30 June 2012
   1,619.0    2,742.5    634.5    4,996.0
as of 30 June 2013
   2,674.4    3,094.3    471.0    6,239.7
as of 30 June 2014
   2,553.7    3,208.3    315.5    6,077.5
Developed reserves as of 30 June 2015
   2,400.7    2,499.0    281.1    5,180.7


Undeveloped

Proved undeveloped natural gas reserves

as of 30 June 2012
   2,239.6    3,286.0    7.6    5,533.2
as of 30 June 2013
   928.2    2,961.6    –    3,889.8
as of 30 June 2014
   941.7    2,415.2    127.1    3,484.0
Undeveloped reserves as of 30 June 2015
   1,082.7    797.1    129.6    2,009.4

^(a)	Small differences are due to rounding to first decimal place.

^(b)	Production includes volumes consumed by operations.

^(c)	Production for Australia includes gas sold as LNG.

^(c)(d)

~~Production for reserves reconciliation differs slightly from marketable production due to timing~~Other is comprised of ~~sales~~Algeria, Pakistan, Trinidad and ~~corrections to previous estimates.~~

Tobago and the United Kingdom.

^(d)(e)

~~Total proved natural gas reserves~~For FY2013, FY2014 and FY2015, amounts include ~~158.9~~387, 360 and 343 billion cubic feet ~~derived from probabilistic aggregation of reserves from reservoirs dedicated~~respectively, which are anticipated to ~~the North West Shelf gas project only.~~

be consumed in operations in Australia.

^(e)(f)

~~Does not~~For FY 2013, FY2014 and FY2015, amounts include ~~volumes expected~~91, 185 and 154 billion cubic feet respectively, which are anticipated to be consumed ~~by operations.~~

in operations in the United States.

^(f)(g)

~~Production includes volumes~~For FY2013, FY2014 and FY2015, amounts include 49, 30, and 27 billion cubic feet respectively, which are anticipated to be consumed ~~by operations.~~

in operations in Other areas.

Millions of barrels of oil equivalent^(a)
   Australia United
States Other Total
Proved developed and undeveloped oil, condensate, natural gas and NGL reserves^(b)

Reserves at 30 June 2009^(e)
   964.7    211.4    205.3    1,381.4


Improved Recovery
   17.8    0.0    3.9    21.7
Revisions of previous estimates
   21.6    73.8    (11.0 ) 84.4
Extensions and discoveries
   7.2    50.8    7.5    65.4
Purchase/sales of reserves
   0.0    0.0    0.0    0.0
Production^(c)
   (83.5 ) (47.1 ) (28.0 ) (158.6 )


Total changes
   (36.9 ) 77.5    (27.6 ) 12.9


Reserves at 30 June 2010^(e)
   927.7    288.8    177.7    1,394.3


Improved Recovery
   0.7    22.6    0.0    23.3
Revisions of previous estimates
   99.1    34.5    5.9    139.5
Extensions and discoveries
   13.9    1.6    5.4    20.9
Purchase/sales of reserves
   0.0    415.1    0.0    415.1
Production^(c)
   (94.2 ) (40.3 ) (24.9 ) (159.4 )


Total changes
   19.5    433.5    (13.6 ) 439.4


Reserves at 30 June 2011^(e)
   947.2    722.4    164.1    1,833.7


Improved Recovery
   0.0    34.7    0.0    34.7
Revisions of previous estimates
   23.9    225.0    9.9    258.8
Extensions and discoveries
   9.9    26.4    0.0    36.3
Purchase/sales of reserves
   0.0    623.5    0.0    623.5
Production^(c)(f)
   (85.1 ) (113.0 ) (30.1 ) (228.2 )


Total changes
   (51.3 ) 796.6    (20.2 ) 725.2


Reserves at 30 June 2012^(d)
   895.9    1,519.0    143.9    2,558.8


Developed

Proved developed oil, condensate, natural gas and NGL reserves

as of 30 June 2009^(e)
   498.7    105.1    115.5    719.3
as of 30 June 2010
   504.6    114.0    83.9    702.4
as of 30 June 2011
   468.6    281.9    159.2    909.7
Developed Reserves as of 30 June 2012
   425.1    628.2    142.5    1,195.8


Undeveloped

Proved undeveloped oil, condensate, natural gas and NGL reserves

as of 30 June 2009^(e)
   466.0    106.3    89.8    662.1
as of 30 June 2010
   423.2    174.9    93.8    691.9
as of 30 June 2011
   478.6    440.5    4.9    924.0
Undeveloped Reserves as of 30 June 2012
   470.8    890.8    1.4    1,363.0

^(h)	For FY2013, FY2014 and FY2015, amounts include 527, 575 and 524 billion cubic feet respectively, which are anticipated to be consumed in operations.

Millions of barrels of oil equivalent^(a)

Australia
United
States Other^(d) Total
Proved developed and undeveloped oil, condensate, natural gas and NGL reserves^(b)

Reserves at 30 June 2012
   895.9    1,519.0    143.9    2,558.8


Improved recovery
   –    14.2    –    14.2
Revisions of previous estimates
   23.0    (282.3 ) (8.1 ) (267.3 )
Extensions and discoveries
   1.8    498.9    0.2    500.9
Purchase/sales of reserves
   –    (2.0 ) –    (2.0 )
Production^(c)
   (83.7 ) (130.2 ) (27.3 ) (241.2 )


Total changes
   (59.0 ) 98.7    (35.1 ) 4.7


Reserves at 30 June 2013
   837.0 ^(e) 1,617.7 ^(f) 108.8 ^(g) 2,563.5 ^(h)


Improved recovery
   –    –    –    –
Revisions of previous estimates
   48.6    (271.0 ) 0.1    (222.4 )
Extensions and discoveries
   –    346.8    20.9    367.7
Purchase/sales of reserves
   –    (0.9 ) (13.2 ) (14.1 )
Production^(c)
   (84.6 ) (144.7 ) (22.6 ) (251.9 )


Total changes
   (36.1 ) (69.7 ) (14.9 ) (120.6 )


Reserves at 30 June 2014
   800.9 ^(e) 1,548.0 ^(f) 93.9 ^(g) 2,442.8 ^(h)


Improved recovery
   –    3.8    0.1    3.9
Revisions of previous estimates
   24.6    (484.0 ) 7.9    (451.5 )
Extensions and discoveries
   37.9    170.0    –    208.0
Purchase/sales of reserves
   –    (33.8 ) –    (33.8 )
Production^(c)
   (82.2 ) (162.7 ) (16.5 ) (261.4 )


Total changes
   (19.8 ) (506.7 ) (8.4 ) (534.9 )


Reserves at 30 June 2015
   781.1 ^(e) 1,041.3 ^(f) 85.5 ^(g) 1,907.9 ^(h)


Developed

Proved developed oil, condensate, natural gas and NGL reserves

as of 30 June 2012
   425.1    628.2    142.5    1,195.8
as of 30 June 2013
   605.5    779.2    106.3    1,491.0
as of 30 June 2014
   568.1    847.6    67.3    1,483.0
Developed reserves as of 30 June 2015
   521.5    701.6    58.5    1,281.6


Undeveloped

Proved undeveloped oil, condensate, natural gas and NGL reserves

as of 30 June 2012
   470.8    890.8    1.4    1,363.0
as of 30 June 2013
   231.5    838.5    2.5    1,072.5
as of 30 June 2014
   232.8    700.4    26.6    959.8
Undeveloped reserves as of 30 June 2015
   259.6    339.7    27.0    626.3

^(a)	Barrel oil equivalent conversion based on 6,000 scf of natural gas equals 1 boe.

^(b)	Small differences are due to rounding to first decimal place.

^(c)	~~Production for reserves reconciliation differs slightly from marketable production due to timing of sales and corrections to previous estimates.~~

^(d)	~~Total proved reserves include 31.8 MMboe derived from probabilistic aggregation of reserves from reservoirs dedicated to the North West Shelf gas project only.~~

^(e)	~~Does not include volumes expected to be consumed by operations.~~

^(f)	Production includes volumes consumed by operations.

^(d)	Other is comprised of Algeria, Pakistan, Trinidad and Tobago and the United Kingdom.

^(e) For FY2013, FY2014 and FY2015, amounts include 64, 60 and 57 million barrels equivalent respectively, which are anticipated to be consumed in operations in Australia.

^(f)	For FY2013, FY2014 and FY2015, amounts include 19, 35 and 30 million barrels equivalent respectively, which are anticipated to be consumed in operations in the United States.

^(g)	For FY2013, FY2014 and FY2015, amounts include 8, 5 and 4 million barrels equivalent respectively, which are anticipated to be consumed in operations in Other areas.

^(h)	For FY2013, FY2014 and FY2015, amounts include 92, 100 and 91 million barrels equivalent respectively, which are anticipated to be consumed in operations.

Proved undeveloped reserves

At ~~year-end,~~30 June 2015, Petroleum had ~~1,363~~626 MMboe of proved undeveloped reserves, ~~as compared to 924~~which represented 33 per cent of our year-end 2015 proved reserves of 1,908 MMboe. Approximately 373 MMboe ator 60 per cent of the ~~end of FY2011.~~

~~The largest component in the increase in~~ proved undeveloped reserves ~~was through~~resides primarily in our conventional offshore fields in Australia, the ~~acquisition~~Gulf of ~~Petrohawk Energy Corporation, which included a total of 337~~Mexico and Trinidad and Tobago, while 253 MMboe or 40 per cent reside in our North American shale fields.

The current proved undeveloped ~~reserves. Subsequent minor acquisitions added 6.0~~reserves reflect a net reduction of 334 MMboe ~~in proved undeveloped reserves. Extensions and discoveries added 19~~from the 960 MMboe ~~associated with a discovery in~~reported at 30 June 2014. This reduction was the ~~Mad Dog field and new developments planned in the Upper Pyrenees and Moondyne fields in the Pyrenees development. Revisions added 112~~combined result of development activities that converted 121 MMboe ~~primarily through the extension~~ of ~~proved areas in the Eagle Ford field. Improved recovery added 34 MMboe through water injection projects in Mad Dog and Shenzi fields in the offshore US GOM. A total of 69 MMboe was converted from~~ proved undeveloped to proved developed reserves, downward proved undeveloped reserves revisions of 361 MMboe primarily driven by the decline in product prices in FY2015 and reductions in our planned Onshore US drilling program in response to the lower price environment. The Onshore US portion of these reductions totalled 356 MMboe. Partially offsetting the reductions were new additions of 148 MMboe as extensions/discoveries and improved recovery for new development projects, including 102 MMboe for new drilling locations in our Onshore US fields which extended the proven area of the fields (all of which will be drilled within five years), and the approval of the Greater Western Flank Phase 2 project in Australia, which added 38 MMboe (which is reported as a ~~result~~discovery). Also included were an extension of ~~drilling~~reservoir limits in the ~~Fayetteville~~Atlantis field, ~~the implementation of water injection programs at Shenzi~~which added 5 MMboe; and ~~Atlantis, the start-up of a compression~~an improved recovery project in the ~~Minerva gas~~Shenzi field, ~~and~~which added 4 MMboe, both of which are in the ~~re-start~~Gulf of Mexico.

Of the ~~oil production of the North West Shelf oil fields in which we have an interest. During FY2012, Petroleum spent US$6.2 billion progressing development of undeveloped reserves worldwide.~~

Petroleum’s offshore development projects require significant capital expenditure and multi-year lead times before initial production can be achieved with the associated progression of reserves from undeveloped to developed. Based on current project schedules, approximately 93 per cent of the 1,363626 MMboe currently classified as proved undeveloped at 30 June 2015, 225 MMboe has been reported for five or more years. All of these reserves are ~~actively being pursued and~~in our offshore conventional fields that are currently producing or have significant development in place, which are scheduled to ~~be on stream~~start producing within the next five years. The ~~remaining~~largest component of this is 133 MMboe in the Kipper-Tuna-Turrum project in Bass Strait, Australia. This project is expected to be on production in 2016 when the gas conditioning plant is completed. The Atlantis field in the Gulf of Mexico contains 31 MMboe, which is actively being drilled. The remainder resides in other Australian offshore fields that have active development plans. Our North American shale fields do not contain any proved undeveloped reserves ~~are located~~that have been reported for five or more years. In addition, management plans anticipate drilling all the proved undeveloped reserves in ~~active~~the North American shale fields ~~expected to produce well into~~in the next ~~decade and~~five years, with none of the proved undeveloped reserves being more than five years old at the time they are drilled.

During FY2015, Petroleum continued active development of our inventory of proved undeveloped projects by converting 121 MMboe to proved developed reserves. Over the past three years, the conversion of proved undeveloped to developed has totalled 636 MMboe, averaging 212 MMboe per year. In currently producing conventional fields, the remaining proved undeveloped reserves will be developed and brought on stream in a phased manner to best optimise the use of production facilities and to meet long-term gas supply contracts. The CSG has a dependable history of progressing large undeveloped volumes from undeveloped to developed, evidenced by the past three years, which have averaged over 75 MMboe per year.sales commitments. During FY2015, Petroleum spent US$4.5 billion on development activities worldwide.

~~2.13.2~~

2.3.2 Ore Reserves

Ore Reserves are estimates of the amount of ore that can be economically and legally extracted and processed from our mining properties. In order to estimate reserves, assumptions are required about a range of geological, technical and economic factors, including quantities, grades, production techniques, recovery rates, production costs, transport costs, commodity demand, commodity prices and exchange rates. Estimating the quantity and/or grade of Ore Reserves requires the size, shape and depth of ore bodies to be determined by analysing geological data such as drilling samples. Because the economic assumptions used to estimate reserves change from period to period and ~~because~~as additional geological and operational data is generated during the course of operations, estimates of reserves may change from period to period. All of the Ore ~~Reserve figures~~Reserves estimates presented are reported in 100 per cent terms, ~~and~~ represent estimates at 30 June ~~2012 (unless otherwise stated).~~2015 and have been prepared by experienced engineers. All tonnes and grade information has been rounded, hence small differences may be present in the totals. Tonnes are reported as dry metric tonnes ~~unless~~(unless otherwise ~~stated.~~stated).

Our mineral leases are of sufficient duration (or convey a legal right to renew for sufficient duration) to enable all Ore Reserves on the leased properties to be mined in accordance with current production schedules. Our Ore Reserves may include areas where some additional approvals remain outstanding but where based on the technical investigations we carry out as part of our mine planning process, and our knowledge and experience of the approvals process, we expect that such approvals will be obtained as part of the normal course of business and within the timeframe required by the current life of mine schedule.

The reported Ore Reserves contained in this Annual Report do not exceed the quantities that we estimate could be extracted economically if future prices for each commodity were equal to the average historical prices for the three years to 31 December ~~2011,~~2014, using current operating costs. However, we do not use a bauxite, aluminium or alumina price to determine bauxite reserves. The primary criteria for determining bauxite reserves are the feed specifications required by the captive alumina refinery. In ~~addition to these specifications a number of modifying~~

factors are used to differentiate bauxite reserves from other mineralised material. For our Hotazel Manganese Mine, geological stratigraphic controls, cut-off grade and plant feed requirements are used to determine reserves.

~~Also, in~~ some cases where commodities are produced as by-products (or co-products) with other metals, we use the three-year average historical prices for the combination of commodities produced at the relevant mine in order to verify that each ore reserve is economic. The three-year historical average prices used for each traded commodity to test for impairment of the Ore Reserves contained in this Annual Report are as follows:


Commodity Price				US$
Copper				~~3.26/~~3.35/lb
Gold				~~1,256/~~1,449/oz
Nickel				~~9.00/~~7.47/lb
Silver				~~23.34/~~24.68/oz
Lead				0.95/lb
Zinc				0.91/lb
Uranium				~~49.61/~~40.08/lb
Iron Ore – Fines Iron Ore – Lump				~~1.993/~~1.811/dmtu ~~2.216/~~1.970/dmtu
Metallurgical Hard Coking Coal⁽¹⁾				~~214.1/~~151.0/t
Thermal Coal Newcastle⁽²⁾⁽¹⁾				~~97.2/~~82.9/t
Thermal Coal Colombia⁽¹⁾				73.6/t

⁽¹⁾	Metallurgical Coal is on the basis of an average of the Peak Downs Contract, Hay Point FOB, Japanese Financial Year Contract Price for 2009, and the BHP Billiton Quarterly Contract Price for 2010 and 2011.

⁽²⁾	Thermal coal ~~is on~~prices reported are sourced from the ~~basis of an average of the Contract,~~McCloskey Report FOB by region. Newcastle ~~FOB, 6700~~and Columbia 6000 kcal/tonne ~~Gross Air Dried.~~ Net As Received. These are comparable to realised prices used to test for impairment.

The reported reserves may 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 Exploration Results, Mineral Resources and Ore Reserves, December ~~2004~~2012 (the JORC Code), which ~~contemplates~~provides guidance on the use of reasonable investment assumptions in calculating reserve estimates.

Ore Reserves of mining operations assigned to South32 in May 2015 as part of the Demerger are not reported because those mining operations are no longer owned or operated by BHP Billiton. For further information on the South32 Demerger, refer to sections 1.3.7, 1.6.4 and 2.1.7.

~~Aluminium Customer Sector Group~~Copper Business

Ore Reserves in accordance with Industry Guide 7

As at 30 June 2012
As at 30 June 2011
   Proven Ore Reserves Probable Ore Reserves Total Ore Reserves Reserve
Life
(years) BHP
Billiton
Interest
% Total Ore Reserves Reserve
Life
(years)
Commodity
Deposit ⁽¹⁾⁽²⁾
Ore Type Mt % A. Al₂O₃ % R. SiO₂ Mt % A. Al₂O₃ % R. SiO₂ Mt % A. Al₂O₃ % R. SiO₂ Mt % A. Al₂O₃ % R. SiO₂
Bauxite

Australia

Worsley
Laterite 263    31.1    1.8    49    30.5    1.8    312    31.0    1.8    18    86    299    31.0    1.8    18
Brazil

MRN⁽³⁾
MRN
Washed 52    50.8    4.1    22    50.4    4.4    74    50.7    4.2    5    14.8    13    50.3    4.6    1


As at 30 June 2015																																		As at 30 June 2014
Commodity Deposit ^(1)(2)(3)(4)	Ore Type	Proven Ore Reserves										Probable Ore Reserves										Total Ore Reserves										Reserve Life (years)			BHP Billiton Interest %		Total Ore Reserves										Reserve Life (years)
Commodity Deposit ^(1)(2)(3)(4)	Ore Type	Mt		% TCu		% SCu						Mt		% TCu		% SCu						Mt		% TCu		% SCu						Reserve Life (years)			BHP Billiton Interest %		Mt		% TCu		% SCu						Reserve Life (years)
Copper
Escondida⁽⁵⁾	Oxide		105		0.81		–						42		0.63		–						147		0.76		–						54			57.5		145		0.80		–						52
	Sulphide		3,720		0.73		–						1,890		0.56		–						5,610		0.67		–											5,150		0.70		–
	Sulphide Leach		1,880		0.46		–						770		0.41		–						2,640		0.45		–											2,260		0.44		–
Cerro Colorado⁽⁶⁾	Oxide		16		0.59		0.43						83		0.56		0.39						99		0.56		0.40						7.9			100		103		0.56		0.38						9.0
	Sulphide		16		0.68		0.11						38		0.61		0.12						54		0.63		0.12											62		0.65		0.12
Spence⁽⁷⁾	Oxide		38		0.68		0.48						2.9		0.72		0.60						41		0.68		0.49						8.9			100		37		0.76		0.54						10
	Oxide Low Solubility		14		0.86		0.39						12		0.57		0.22						26		0.73		0.31											33		0.82		0.36
	Supergene Sulphide		104		0.93		0.12						31		0.62		0.11						135		0.86		0.12											153		0.90		0.12
	ROM		–		–		–						55		0.37		0.08						55		0.37		0.08											61		0.39		0.09

		Mt		% Cu		kg/t U₃O₈		g/tAu		g/tAg		Mt		% Cu		kg/t U₃O₈		g/tAu		g/tAg		Mt		% Cu		kg/t U₃O₈		g/tAu		g/tAg							Mt		% Cu		kg/t U₃O₈		g/tAu		g/tAg
Copper Uranium
Olympic Dam⁽⁸⁾	Sulphide		144		2.02		0.61		0.71		5		340		1.92		0.58		0.75		3		484		1.95		0.59		0.74		4		48			100		518		1.86		0.57		0.72		4		47
	SP		7.9		0.99		0.36		0.59		2		36		0.99		0.37		0.49		2		44		0.99		0.37		0.51		2							–		–		–		–		–

		Mt		% Cu		% Zn		g/tAg		ppmMo		Mt		% Cu		% Zn		g/tAg		ppmMo		Mt		% Cu		% Zn		g/tAg		ppmMo							Mt		% Cu		% Zn		g/tAg		ppmMo
Copper Zinc
Antamina	Sulphide Cu only		128		1.03		0.15		9		370		224		0.98		0.18		8		330		352		1.00		0.17		8		340		12			33.75		413		0.99		0.16		9		310		13
	Sulphide Cu-Zn		62		1.05		2.24		17		100		200		0.83		2.07		13		80		262		0.88		2.11		14		80							260		0.95		1.89		15		74

⁽¹⁾	~~Approximate drill hole spacings used to classify the reserves were:~~ Cut-off grades:


Deposit	~~Proven~~ Ore ~~Reserves~~Type	~~Probable~~ Ore Reserves
~~Worsley~~Escondida	~~Maximum 80m~~Oxide	~~Maximum 160m~~³ 0.20%SCu
	Sulphide	–
	Sulphide Leach	³ 0.30%TCu and lower than variable cut-off grade (V_COG) of concentrator. Sulphide Leach is an alternative process to the concentrators.
	Concentrator	Greater than V_COG – mine plans optimised considering financial and technical parameters in order to maximise Net Present Value.
~~MRN~~Cerro Colorado	A bauxite intersection grid of 200m, plus at least 10 samples reached by searching ellipsoid. Mining and metallurgical characterisation (test pit/bulk sample), plus a reliable suite of chemical and size distribution dataOxide & Sulphide	Those areas with a bauxite intersection grid spacing of less than 400m and/or a 400m spaced grid with a 200m offset fill in, plus a minimum of seven samples reached by searching ellipsoid, plus a reliable suite of chemical and size distribution data

⁽²⁾³	~~Metallurgical recoveries for the operations were:~~

	0.30% TCu
~~Deposit~~Spence	Oxide	~~Estimated Metallurgical Recovery of A.Al~~₂O₃³ 0.30% TCu
	Oxide Low Solubility	³ 0.30% TCu
	Supergene Sulphide	³ 0.30% TCu
	ROM	³ 0.10% TCu
~~Worsley (Worsley Refinery)~~Olympic Dam	~~88%~~Sulphide	Variable between 0.8%Cu and 1.4% Cu
	SP	³ 0.16% Cu
~~MRN (Alumar Refinery)~~Antamina	~~94%~~Sulphide Cu only	Net value per concentrator hour incorporating all material revenue and cost factors and includes metallurgical recovery (see footnote 4 for averages). Mineralisation at the US$6,000/hr limit averages 0.25% Cu, 5g/tAg, 10ppmMo and 6,700t/hr mill throughput.
	Sulphide Cu-Zn	Net value per concentrator hour incorporating all material revenue and cost factors and includes metallurgical recovery (see footnote 4 for averages). Mineralisation at the US$6,000/hr limit averages 0.11% Cu, 0.75% Zn, 8g/tAg and 6,400t/hr mill throughput.

⁽³⁾

MRN – The increase in the reserves was due to obtaining the environmental licence for operation for Bela Cruz, as anticipated, in October 2011. The MRN reserves are located on mining leases that provide MRN the right to mine. Current mining areas have environmental approval to operate. As further operational licences are obtained, mineralisation will be converted to Ore Reserves.

~~Base Metals Customer Sector Group~~

~~Ore Reserves~~Antamina – All metals used in ~~accordance with Industry Guide 7~~

As at 30 June 2012
As at 30 June 2011
Commodity
Deposit⁽¹⁾⁽²⁾

Ore Type
Proven Ore Reserves Probable Ore Reserves Total Ore Reserves Reserve
Life
(years) BHP
Billiton
Interest
% Total Ore Reserves Reserve
Life
(years)
   Mt % TCu % SCu Mt % TCu % SCu Mt % TCu % SCu Mt % TCu %
SCu
Copper

Escondida ⁽³⁾
Oxide 76    0.90    –    40    0.88    –    116    0.89    –    54    57.5    121    0.87    –    35
Sulphide 2,779    0.80    –    2,148    0.59    –    4,928    0.71    –    2,012    0.97    –
Sulphide Leach 1,150    0.50    –    827    0.44    –    1,977    0.47    –    3,540    0.50    –
Cerro Colorado ⁽⁴⁾
Oxide 27    0.62    0.46    104    0.61    0.44    131    0.61    0.44    10    100    149    0.62    0.45    10
Sulphide 23    0.74    0.13    48    0.61    0.13    71    0.65    0.13    54    0.70    0.13
Spence⁽⁵⁾
Oxide 31    0.86    0.62    4.3    0.76    0.62    36    0.85    0.62    11    100    26    0.89    0.75    12
Oxide Low Solubility 15    1.13    0.59    8.3    0.88    0.46    23    1.04    0.54    37    1.09    0.60
Sulphide 131    0.99    0.13    35    0.73    0.11    165    0.94    0.12    201    0.93    0.14
ROM –    –    –    62    0.42    0.10    62    0.42    0.10    39    0.50    0.07
Pinto Valley⁽⁶⁾
Sulphide 27    0.37    –    48    0.41    –    75    0.40    –    4    100    89    0.40    –    4
Low-grade Leach 6.0    0.21    –    7.0    0.21    –    13    0.21    –    13    0.21    –
   Mt % Cu kg/t
U₃O₈ g/t Au g/t Ag Mt % Cu kg/t
U₃O₈ g/t Au g/t Ag Mt % Cu kg/t
U₃O₈ g/t Au g/t Ag Mt % Cu kg/t
U₃O₈ g/t Au g/t Ag
Copper Uranium

Olympic Dam⁽⁷⁾
Sulphide 161    1.92    0.59    0.69    4.05    469    1.71    0.56    0.75    3.12    629    1.76    0.57    0.73    3.36    57    100    552    1.84    0.57    0.76    3.41    50
   Mt % Cu % Zn g/t Ag % Mo Mt % Cu % Zn g/t Ag % Mo Mt % Cu % Zn g/t Ag % Mo Mt % Cu % Zn g/t Ag % Mo
Copper Zinc

Antamina
Sulphide Cu Only 82    1.04    0.16    8.1    0.032    467    0.94    0.14    8.9    0.026    549    0.96    0.15    8.7    0.027    16    33.75    580    0.97    0.2    8.8    0.03    17
Sulphide Cu-Zn 39    0.80    1.86    14.6    0.006    175    0.83    1.99    14.3    0.006    214    0.82    1.96    14.4    0.006    223    0.83    2.0    14.5    0.01
   Mt g/t Ag % Pb % Zn Mt g/t Ag %Pb % Zn Mt g/t Ag % Pb % Zn Mt g/t Ag % Pb % Zn
Silver Lead Zinc

Cannington
UG Sulphide 20    275    7.2    3.7    3.8    217    6.0    3.8    23    266    7.0    3.7    8    100    25    278    7.1    3.7    8

net value calculations for the Antamina reserves were assumed to be recovered into concentrate (see footnote 4 for averages) and sold.

⁽¹⁾⁽²⁾

Approximate drill hole spacings used to classify the reserves were:

Deposit

Proven Ore Reserves

Probable Ore Reserves
Escondida

Oxide: ~~35m~~30m x ~~35m~~
~~Mixed: 60m x 60m~~
30m
Sulphide: 50m x 50m

Sulphide Leach: 60m x 60m
Oxide: 45m x 45m
~~Mixed: 115m x 115m~~

Sulphide: 90m x 90m

Sulphide Leach: 115m x 115m
Cerro Colorado
   45m to 55m ~~x 55m on first kriging pass~~drill spacing    120m ~~x 120m on second kriging pass~~drill spacing
Spence
~~Oxide: 50m x 50m~~
~~Sulphide: maximum 75m x 75m~~

~~Oxide and~~Oxide: maximum 50m x 50m
Supergene Sulphide: ~~approximately 100m~~
~~continuous square grid~~
~~Pinto Valley~~maximum 65m x 65m    ~~60m~~Oxide and Supergene Sulphide: maximum 125m x ~~120m~~ ~~200m x 200m~~125m
Olympic Dam
   Drilling grid of 20m to 30m    Drilling grid of 30m to 70m
Antamina
   ~~30m drill spacing~~Drilling grid of 25m to 35m    ~~55m drill spacing~~
~~Cannington~~ ~~12.5m sectional x 15m vertical~~ ~~25m sectional x 25m vertical~~Drilling grid of 40m to 60m

⁽²⁾⁽³⁾

Ore delivered to process plant.

⁽⁴⁾ Metallurgical recoveries for the operations were:


Deposit		Metallurgical Recovery
Escondida		Oxide: ~~69%~~ 70% Sulphide: 84% Sulphide Leach: ~~36%~~ 32%
Cerro Colorado		~~70% average for~~71% of TCu
Spence		Oxide: 73% Oxide Low Solubility: ~~70%~~ 71% Supergene Sulphide: ~~70%~~ 72% ROM: 30%
~~Pinto Valley~~ Olympic Dam		~~Mill: 86%~~ ~~Leach: 25%~~
~~Olympic Dam~~		Cu 94%, U₃O₈ ~~72%~~73%, Au ~~70%~~71%, Ag ~~66%~~64%
Antamina		~~Sulpide~~Sulphide Cu ~~Only:~~only: Cu ~~92%~~93%, Zn 0%, Ag ~~65%~~79%, Mo ~~75%~~ ~~Sulpide~~64% Sulphide Cu-Zn: Cu ~~81%~~78%, Zn ~~82%~~ 81%, Ag ~~55%~~ 66%, Mo 0%
~~Cannington~~		~~Ag 86%, Pb 87%, Zn 74%~~

⁽³⁾⁽⁵⁾

Escondida – The increase in ~~reserves~~Ore Reserves was ~~predominantly~~mainly due to ~~OGP1 approval that will deliver double~~additional drilling to define and convert Probable Reserves to Proven Reserves. Inherent within the ~~current flotation capacity allowing improved recovery~~Reserve Life calculation were Oxide and Sulphide Leach which have a Reserve Life of ~~lower grade ores with commensurate expansion of the reserves footprint. Infill drilling has also contributed to the reserve increase.~~

11 and 51 years respectively.

⁽⁴⁾⁽⁶⁾

Cerro Colorado – ~~Change in reserves was due~~Environmental and mining permit approvals required to ~~additional drilling and subsequent revision~~continue operations were delayed, but are expected to be granted during CY2015 as part of the ~~reserve estimate.~~

normal course of business. The current Environmental Qualification Resolution is in effect until December 2016.

⁽⁵⁾⁽⁷⁾

Spence – ~~The increase in reserves~~Ore type previously reported as Sulphide was ~~due to reclassification of mineralisation~~redefined as ~~a result of improved confidence on recovery.~~

Supergene Sulphide.

⁽⁶⁾⁽⁸⁾

Pinto Valley – The Pinto Valley mine and mill remained on care and maintenance throughout FY2012. Restart of the mine and mill was recently approved, and activity is underway for production to begin in the first half of FY2013. The difference from previous reserves was due a mine design change to account for minor slope stability issues.

⁽⁷⁾	Olympic Dam – The ~~increase in reserves was mainly due to the addition of mine development material.~~ Ore Reserves were based on underground sub-level open stoping extraction.

~~Diamonds Customer Sector Group~~Iron Ore Business

Ore Reserves in accordance with Industry Guide 7

As at 30 June 2012
   As at 30 June 2011
Commodity
Deposit
   Ore
Type    Proven Ore
Reserves    Probable Ore
Reserves    Total Ore
Reserves    Reserve
Life
(years)    BHP
Billiton
Interest
%    Total Ore
Reserves    Reserve
Life
(years)
      Mt    cpt    Mt    cpt    Mt    cpt          Mt    cpt
Diamonds

EKATI Core Zone⁽¹⁾⁽²⁾
   OC    –       –       13       1.2       13       1.2       3       80       20       0.9       5
   SP    –       –       0.2       0.3       0.2       0.3             0.3       0.4
   UG    –       –       4.2       0.6       4.2       0.6             4.8       0.6


As at 30 June 2015																																		As at 30 June 2014
		Proven Ore Reserves												Probable Ore Reserves												Total Ore Reserves													Reserve Life (years)		BHP Billiton Interest %		Total Ore Reserves												Reserve Life (years)
Commodity Deposit^{(1)(2)(3)(4)(5)}	Ore Type	Mt		%Fe		%P		%SiO₂		%Al₂O₃		%LOI		Mt		%Fe		%P		%SiO₂		%Al₂O₃		%LOI		Mt		%Fe		%P		%SiO₂			%Al₂O₃		%LOI		Reserve Life (years)		BHP Billiton Interest %		Mt		%Fe		%P		%SiO₂		%Al₂O₃		%LOI		Reserve Life (years)
Iron Ore
WAIO^{(6)(7)(8)(9)(10)}	BKM		940		63.1		0.11		3.1		2.1		4.0		1,400		61.5		0.12		4.2		2.3		4.9		2,400		62.2		0.12		3.8			2.2		4.6		15		89		2,100		62.2		0.12		3.7		2.2		4.5		16
	BKM Bene		80		61.5		0.11		6.2		2.8		1.7		90		60.8		0.13		6.9		2.7		1.7		170		61.2		0.12		6.5			2.7		1.7						170		60.7		0.09		7.5		2.7		1.7
	CID		600		56.2		0.05		6.4		1.8		10.9		130		57.6		0.05		5.5		1.4		10.4		740		56.5		0.05		6.2			1.7		10.8						840		56.5		0.05		6.1		1.7		10.8
	MM		200		62.3		0.06		3.0		1.6		5.8		410		60.7		0.07		4.0		2.2		6.3		610		61.2		0.07		3.6			2.0		6.1						530		61.5		0.07		3.5		1.9		6.0
	NIM		–		–		–		–		–		–		–		–		–		–		–		–		–		–		–		–			–		–						30		59.8		0.05		10.2		1.2		2.3

			Mt		%Fe		%Pc								Mt		%Fe		%Pc								Mt		%Fe		%Pc													Mt		%Fe		%Pc
Samarco JV⁽¹¹⁾	ROM		1,400		40.4		0.05								1,500		38.8		0.05								2,900		39.6		0.05									38		50		2,900		39.6		0.05								39

⁽¹⁾	Approximate drill hole spacings used to classify the reserves were:


Deposit	Proven Ore Reserves	Probable Ore Reserves
~~EKATI Core Zone~~	~~n/a~~	~~Less than 60m~~

⁽²⁾	~~EKATI Core Zone – Reserves were estimated at 1.2mm cut-off. For metallurgical recovery, factors were assigned per geological domain and deposit.~~

~~Stainless Steel Materials Customer Sector Group~~

~~Ore Reserves in accordance with Industry Guide 7~~

As at 30 June 2012
   As at 30 June 2011
Commodity
Deposit⁽¹⁾⁽²⁾
   Ore Type    Proven Ore
Reserves    Probable Ore
Reserves    Total Ore
Reserves    Reserve
Life
(years)    BHP
Billiton
Interest
%    Total Ore
Reserves    Reserve
Life
(years)
      Mt    % Ni    Mt    % Ni    Mt    % Ni          Mt    % Ni
Nickel
Colombia

Cerro Matoso⁽³⁾
   Laterite    41       1.3       16       1.0       57       1.2       32       99.94       48       1.3       31
   SP    34       1.2       –       –       34       1.2             38       1.3
   MNR Ore    19       0.2       –       –       19       0.2             20       0.2
   Low-grade
Stockpile    –       –       –       –       –       –             7.1       1.0
Nickel West

Leinster
   OC    2.9       1.3       0.2       0.9       3.1       1.3       8       100       3.1       1.3       8
   UG    3.8       1.9       6.4       1.7       10       1.8             12       1.8
   SP    –       –       –       –       –       –             1.4       1.0
   SP
Oxidised    –       –       –       –       –       –             1.8       1.7
Mt Keith
   OC    91       0.57       8.0       0.50       99       0.56       13       100       105       0.56       13
   SP    17       0.54       11       0.50       28       0.52             33       0.53
Cliffs
   UG    0.5       3.2       1.0       3.1       1.5       3.1       3       100       1.6       2.9       3

⁽¹⁾	~~Approximate drill hole spacings used to classify the reserves were:~~


~~Deposit~~	~~Proven Ore Reserves~~	~~Probable Ore Reserves~~
~~Cerro Matoso~~	~~35m or less with three drill holes~~	~~35m to 100m with three drill holes~~
~~Leinster~~	~~25m x 25m~~	~~25m x 50m~~
~~Mt Keith~~	~~60m x 40m~~	~~80m x 80m~~
~~Cliffs~~	~~25m x 25m (and development)~~	~~50m x 50m~~
⁽²⁾~~Metallurgical recoveries for the operations were:~~
~~Deposit~~	~~Metallurgical Recovery~~
~~Cerro Matoso~~	~~84% (reserve to metal)~~
~~Leinster~~	~~85% based on blended plant recovery curves and 11% Ni in concentrate~~
~~Mt Keith~~	~~67% at 19% concentrate grade~~
~~Cliffs~~	~~88% at 11% concentrate grade~~

⁽³⁾

Cerro Matoso – The increase in Ore Reserves followed review of the geological model and reserves estimation. Low-grade Stockpile was no longer included in the Ore Reserve estimate. The mining concessions are due to expire on 30 September 2012 and we have applied for an extension of these. If this extension is not granted, Cerro Matoso S.A. has an underlying mining agreement with the Colombian Government that grants Cerro Matoso S.A. the rights to continue mining and producing through to 2029 with a further extension of 15 years possible.

~~Iron Ore Customer Sector Group~~

~~Ore Reserves in accordance with Industry Guide 7~~

As at 30 June 2012
As at 30 June 2011
Commodity
Deposit^{(1)(2)(3)(4)(5)(6)}
Proven Ore Reserves Probable Ore Reserves Total Ore Reserves Reserve
Life
(years) BHP
Billiton
Interest
% Total Ore Reserves Reserve
Life
(years)
Ore
Type Mt % Fe % P % SiO₂ % Al₂O₃ % LOI Mt % Fe % P % SiO₂ % Al₂O₃ % LOI Mt % Fe % P % SiO₂ % Al₂O₃ % LOI Mt % Fe % P % SiO₂ % Al₂O₃ % LOI
Iron Ore

Mt Newman JV⁽⁷⁾
BKM 360    63.8    0.08    4.2    2.0    1.8    773    62.5    0.11    4.0    2.0    3.9    1,133    62.9    0.10    4.1    2.0    3.2    24    85    1,198    62.9    0.10    4.1    2.0    3.2    29
MM 11    61.2    0.07    2.8    1.5    7.5    67    61.7    0.06    3.1    1.8    6.3    78    61.6    0.06    3.1    1.8    6.4    83    61.6    0.07    3.0    1.8    6.5
Jimblebar
BKM 192    62.6    0.12    3.2    2.4    4.3    307    62.3    0.11    3.5    2.5    4.3    499    62.4    0.11    3.4    2.4    4.3    44    100    374    62.8    0.11    3.3    2.3    4.1    42
MM –    –    –    –    –    –    92    61.3    0.08    3.2    2.2    6.2    92    61.3    0.08    3.2    2.2    6.2    92    61.3    0.08    3.2    2.2    6.2
Mt Goldsworthy JV Northern
NIM 8.5    60.1    0.06    8.4    1.7    3.3    17    60.3    0.05    9.7    1.1    2.1    26    60.2    0.06    9.3    1.3    2.5    15    85    25    60.8    0.06    8.2    1.3    2.6    13
Mt Goldsworthy JV Area C
BKM 104    63.1    0.14    2.6    1.8    4.8    277    61.9    0.13    3.7    2.1    5.3    381    62.2    0.13    3.4    2.0    5.2    15    85    361    62.2    0.13    3.4    2.0    5.2    17
MM 171    62.6    0.06    2.9    1.6    5.5    191    61.6    0.06    3.8    1.8    5.8    362    62.1    0.06    3.4    1.7    5.7    399    62.1    0.06    3.4    1.7    5.7
Yandi JV⁽⁷⁾
CID 593    57.0    0.05    5.6    1.5    10.9    273    57.4    0.04    5.9    1.4    10.3    867    57.2    0.04    5.7    1.5    10.7    14    85    940    57.2    0.04    5.7    1.5    10.7    21
   Mt % Fe % Pc Mt % Fe % Pc Mt % Fe % Pc Mt % Fe % Pc
Samarco JV⁽⁸⁾
ROM 1,094    42.3    0.05    927    39.8    0.05    2,021    41.1    0.05    31    50    2,048    41.2    0.05    41

⁽¹⁾	~~Approximate drill hole spacings used to classify the reserves were:~~


~~Deposit~~	~~Proven Ore Reserves~~	~~Probable Ore Reserves~~
~~Mt Newman JV~~WAIO	50m x 50m	150m x 50m
~~Jimblebar~~	~~50m x 50m~~	~~150m x 50m~~
~~Mt Goldsworthy JV Northern~~	~~25m x 25m~~	~~50m x 50m~~
~~Mt Goldsworthy JV Area C~~	~~50m x 50m~~	~~150m x 50m~~
~~Yandi JV~~	~~50m x 50m~~	~~200m x 100m~~
Samarco JV	~~200m~~Maximum 150m x ~~200m x 16m~~100m	~~400m~~Maximum 300m x ~~400m x 16m~~200m

⁽²⁾	For Western Australia Iron Ore (WAIO) reserves were divided into joint ventures and material types that reflect the various products. BKM – Brockman, MM – Marra Mamba, NIM – Nimingarra, CID – Channel Iron Deposit.

⁽³⁾	~~Metallurgical~~WAIO recovery was 100%, except for ~~Mt Newman JV~~ BKM Bene – Brockman Beneficiated Ore, where recovery was ~~96%~~74% (tonnage basis) ~~and~~due to the beneficiation plant processing ore from Whaleback. Samarco JV ~~where~~ recovery was 82% (metal basis).

⁽⁴⁾⁽³⁾

The reserve grades listed refer to in situ mass percentage on a dry weight basis. ~~For Mt Newman, Mt Goldsworthy and Yandi joint ventures and Jimblebar,~~WAIO tonnages represent wet tonnes based on the following moisture contents: BKM – Brockman 3%, BKM Bene – 3%, CID – Channel Iron Deposits 8%, MM – Marra Mamba 4%, ~~CID 8%,~~ NIM – Nimingarra 3.5%. For Samarco JV, the reserve tonnages also represent wet tonnes based on a moisture content of 6.5% for ROM. Iron ore ~~was~~is marketed for WAIO as Lump (direct blast furnace feed), and Fines (sinter plant feed) and Samarco JV as Fines (sinter plant feed), direct reduction and blast furnace ~~pellets (Samarco JV).~~

pellets.

⁽⁵⁾⁽⁴⁾

Cut-off ~~grades used to estimate reserves: Mt Newman JV 59–62%Fe for BKM, 50%Fe for BKM beneficiation material, 59%Fe for MM; Jimblebar 59%Fe for BKM,~~ grades: WAIO 50–58%Fe for ~~MM; Mt Goldsworthy JV Northern 50%Fe for NIM; Mt Goldsworthy JV Area C 59%Fe for BKM, 57%Fe for MM; Yandi JV 55.0–55.5%Fe for CID;~~all material types; Samarco JV ~~33%Fe.~~

Fe³ 22%, Pc£ 0.097% (phosphorous in concentrate) and PPCc£ 7.7% (LOI in concentrate).

⁽⁵⁾ Ore delivered to process plant.

⁽⁶⁾

~~Our~~ WAIO reserves are reported on a Pilbara basis by ore type to align with our production of the Newman Blend lump product which comprises of BKM, BKM Bene and MM ore types, in addition to other lump and fines products. This also reflects our single logistics chain and associated management system.

⁽⁷⁾	WAIO BHP Billiton interest is reported as Pilbara reserve tonnes weighted average across all Joint Ventures. BHP Billiton ownership varies between 85% and 100%.

⁽⁸⁾

WAIO reserves are all located on State Agreement mining leases that guarantee the right to ~~mine, except Callawa (part of Mt Goldsworthy JV Northern), which resides on standard Western Australian mining lease. We are required to obtain certain state government~~mine. Across WAIO, State Government approvals (including environmental and heritage clearances) are required before ~~we commence~~commencing mining operations in a particular area. ~~We have included~~Included in ~~our~~the reserves are select areas where one or more approvals remain outstanding, but where, based on the technical investigations ~~we carry~~carried out as part of ~~our~~the mine planning process and ~~our~~company knowledge and experience of the approvals process, ~~we expect~~it is expected that such approvals will be obtained as part of the normal course of business and within the time frame required by the current mine schedule.

⁽⁷⁾⁽⁹⁾

~~Mt Newman JV and Yandi JV~~WAIO – ~~Reserve lives have reduced as a result~~Reporting of ~~approved increased production rates aligned with~~NIM ore type was discontinued due to suspension of mining activities at the ~~WAIO growth plan.~~

Yarrie mine in the Northern Pilbara in February 2014.

^(8)(10)

~~Samarco JV–~~WAIO – The ~~approved~~increase in reserves was due to revised economic assumptions used in the mine planning process. The decrease in Reserve Life was due to an increase in nominated production rate ~~increased~~from 233Mt in FY2014 to ~~55mtpa resulting~~264Mt in ~~a reduced reserve life.~~

FY2015.

⁽¹¹⁾
		Samarco JV – Delays in environmental approvals due to changes in Brazilian legislation for the protection of caves within the declared reserves footprint resulted in downgrading of 400Mt Proven Reserves to Probable Reserves. Although it is too early to assess the final impact of these regulations on Samarco’s operations, industry precedent suggests that such approvals could be anticipated.

~~Manganese Customer Sector Group~~Coal Business

~~Ore Reserves in accordance with Industry Guide 7~~

As at 30 June 2012
As at 30 June 2011
Commodity Deposit⁽¹⁾⁽²⁾
Ore Type Proven Ore Reserves Probable Ore Reserves Total Ore Reserves Reserve
Life
(years) BHP
Billiton
Interest % Total Ore Reserves Reserve
Life
(years)
Mt % Mn % Yield Mt % Mn % Yield Mt % Mn % Yield Mt % Mn % Yield
Manganese

GEMCO⁽³⁾
ROM 78    45.2    55    25    45.2    55    103    45.2    55    12    60    109    46.3    54    12
   Mt % Mn % Fe Mt % Mn % Fe Mt % Mn % Fe Mt % Mn % Fe
Wessels⁽⁴⁾
Lower Body-HG 2.2    47.8    11.1    9.9    47.8    11.2    12    47.8    11.2    46    44.4    15    47.8    11.2    48
Lower Body-LG 2.2    42.3    11.6    7.5    41.9    11.9    9.7    42.0    11.8    10    41.6    12.6
Upper Body –    –    –    48    42.0    17.9    48    42.0    17.9    47    42.0    17.8
Mamatwan⁽⁴⁾⁽⁵⁾
M, C, N Zones 40    37.2    4.4    29    37.1    4.5    69    37.2    4.4    21    44.4    46    37.1    4.4    22
X Zone 3.7    36.7    4.8    2.4    36.7    4.6    6.1    36.7    4.7    3.1    36.8    4.8
NTS-M,C,N Zones –    –    –    –    –    –    –    –    –    24    37.2    4.6
NTS-X Zone –    –    –    –    –    –    –    –    –    3.3    36.9    4.7

⁽¹⁾	~~Approximate drillhole spacings used to classify the reserves were:~~


~~Deposit~~	~~Proven Ore Reserves~~	~~Probable Ore Reserves~~
~~GEMCO~~	~~60m x 120m and 60m x 60m~~	~~120m x 120m~~
~~Wessels~~	~~Defined as rim ±30m wide around mined-out areas, supplemented by some economically viable remnant blocks within mined-out areas~~	~~Defined as all ground beyond 30m for a distance of 425m~~
~~Mamatwan~~	~~80m x 80m~~	~~160m x 160m~~

⁽²⁾	~~Metallurgical recoveries for the operations were:~~


~~Deposit~~		~~Metallurgical Recovery~~
~~GEMCO~~		~~See yield in Ore Reserves table~~
~~Wessels~~		~~88%~~
~~Mamatwan~~		~~96%~~

⁽³⁾	~~GEMCO – Tonnes are stated as ROM, manganese grades are given as per washed ore samples and should be read together with their respective tonnage yields.~~

⁽⁴⁾	~~Wessels and Mamatwan – Tonnes are stated as wet tonnes.~~

⁽⁵⁾

Mamatwan – A Section 102 application was approved by the Department of Mineral Resources to amend the Mamatwan Mining Rights area to include the Ntsimbintle Prospecting Right. The Mamatwan and Ntsimbintle (NTS) Ore Reserves, which were previously declared separately per ore type, are therefore now combined and declared as a single Ore Reserve per ore type.

~~Metallurgical Coal Customer Sector Group~~

Coal Reserves in accordance with Industry Guide 7

As at 30 June 2012
As at 30 June 2011
Commodity
Deposit^(1)(2)(3)

Mining
Method

Coal
Type
Proven Coal
Reserves Probable Coal
Reserves Total Coal
Reserves Total Marketable Coal
Reserves Reserve
Life
(years) BHP
Billiton
Interest % Total Marketable Coal
Reserves Reserve
Life
(years)
Mt Mt Mt Mt % Ash % VM % S Mt % Ash % VM % S
Queensland Coal
CQCA JV

Goonyella Riverside Broadmeadow⁽⁴⁾
OC Met 350    224    574    426    9.8    22.7    0.50    36    50    437    9.7    22.7    0.50    35
UG Met 47    135    182    149    7.0    24.2    0.52    132    7.0    23.9    0.51
Peak Downs⁽⁵⁾
OC Met 529    548    1,077    634    10.5    22.1    0.60    35    50    574    9.1    21.0    0.60    62
Saraji
OC Met 412    153    565    343    10.6    18.1    0.63    40    50    350    10.2    18.1    0.62    41
Norwich Park⁽⁶⁾
OC Met 156    62    218    154    10.3    16.7    0.70    25    50    194    10.3    16.9    0.70    29
Blackwater
OC Met/Th 170    379    549    483    8.8    26.3    0.40    36    50    494    8.7    26.3    0.40    36
Daunia⁽⁷⁾
OC Met 94    50    145    117    8.2    20.7    0.34    26    50    117    8.2    20.7    0.34    26
Gregory JV

Gregory Crinum
OC Met 8.6    1.2    9.8    8.0    7.4    33.0    0.60    4    50    9.2    7.4    33.0    0.60    6
UG Met –    23    23    19    7.5    33.7    0.60    22    6.5    33.7    0.59
BHP Mitsui

South Walker Creek⁽⁸⁾
OC Met/Th 74    45    119    88    9.1    13.2    0.30    21    80    91    9.1    13.0    0.34    23
Poitrel-Winchester⁽⁷⁾
OC Met 30    29    58    44    8.0    23.5    0.35    14    80    42    8.1    23.0    0.34    14
Illawarra Coal

Appin⁽⁹⁾
UG Met/Th 11    110    121    103    8.9    24.2    0.36    31    100    68    8.9    23.9    0.37    19
West Cliff
UG Met/Th 5.7    4.8    11    7.9    8.9    21.0    0.36    4    100    8.8    8.9    21.4    0.36    3
Dendrobium⁽¹⁰⁾
UG Met/Th 6.1    41    47    –    –    –    –    15    100    38    9.7    24.0    0.59    12
UG Met –    –    –    21    9.7    24.0    0.59    –    –    –    –
UG Th –    –    –    12    23.0    –    –    –    –    –    –

As at 30 June 2015
As at 30 June 2014
Commodity
Deposit^{(1)(2)(3)(4)(5)}

Mining
Method

Coal
Type
Proven Coal
Reserves Probable Coal
Reserves Total Coal
Reserves Proven Marketable
Coal Reserves Probable Marketable
Coal Reserves Total Marketable
Coal Reserves Reserve
Life
(years) BHP
Billiton
Interest % Total Marketable
Coal Reserves Reserve
Life
(years)
Mt Mt Mt Mt %Ash %VM %S Mt %Ash %VM %S Mt %Ash %VM %S Mt %Ash %VM %S
Metallurgical Coal

Queensland Coal

CQCA JV

Goonyella Riverside Broadmeadow⁽⁶⁾
OC Met 599    19    618    469    9.1    22.8    0.53    14    10.9    23.1    0.57    483    9.2    22.8    0.53    33    50    404    9.8    22.7    0.50    30
UG Met 37    160    197    30    8.0    23.0    0.52    110    9.3    23.6    0.55    140    9.0    23.4    0.54    144    9.0    23.4    0.54
Peak Downs⁽⁷⁾
OC Met 463    548    1,011    282    10.6    22.3    0.60    319    10.3    21.9    0.59    601    10.5    22.1    0.60    33    50    613    10.5    22.1    0.60    34
Saraji⁽⁸⁾
OC Met 372    153    525    234    10.6    18.0    0.60    88    10.6    18.5    0.70    322    10.6    18.1    0.63    30    50    327    10.6    18.1    0.63    37
Norwich Park⁽⁹⁾
OC Met 154    76    230    112    10.3    16.9    0.70    54    10.3    16.9    0.70    166    10.3    16.9    0.70    66    50    153    10.3    16.7    0.70    25
Blackwater
OC Met/Th 128    379    507    114    8.0    26.7    0.40    337    9.1    26.1    0.40    451    8.8    26.3    0.40    29    50    459    8.8    26.3    0.40    30
Daunia
OC Met 84    55    139    69    8.0    20.8    0.35    47    9.1    19.9    0.34    116    8.4    20.4    0.35    25    50    112    8.3    20.7    0.35    25
Gregory JV

Gregory Crinum⁽⁹⁾
OC Met 6.6    0.3    6.9    5.4    7.0    34.8    0.60    0.2    7.0    35.3    0.60    5.6    7.0    34.8    0.60    4.0    50    5.6    7.0    34.8    0.60    2.8
UG Met –    2.4    2.4    –    –    –    –    2.2    7.2    34.2    0.57    2.2    7.2    34.2    0.57    11    7.2    33.8    0.58
BHP Billiton Mitsui

South Walker Creek⁽¹⁰⁾
OC Met 73    35    108    52    9.2    12.8    0.32    25    9.2    12.4    0.31    77    9.2    12.7    0.32    14    80    65    9.0    14.2    0.32    11
Poitrel-Winchester⁽¹¹⁾
OC Met 61    36    97    42    9.0    23.5    0.32    25    8.9    24.0    0.31    67    9.0    23.7    0.31    20    80    45    8.3    23.6    0.34    14

⁽¹⁾

Cut-off criteria applied were: Goonyella Riverside, Peak Downs, Saraji, Norwich Park, Blackwater, Daunia and Gregory³ 0.5m seam thickness; Broadmeadow³ 2.5m seam thickness; Crinum³ 2.0m seam thickness; South Walker Creek and Poitrel-Winchester seam thickness cut-off applied after economic assessment.

⁽²⁾	Only geophysically logged, fully analysed cored holes with greater than 95% recovery were used to classify the reserves. Drill hole spacings vary between seams and geological domains and were determined in conjunction with geostatistical analyses where applicable. The range of maximum spacings was:


Deposit	Proven ~~Ore~~Coal Reserves	Probable ~~Ore~~Coal Reserves
Goonyella Riverside Broadmeadow	~~500m~~900m to ~~1,000m~~1,300m plus 3D seismic coverage for UG	~~1,000m~~1,750m to ~~2,050m~~2,400m
Peak Downs	500m to 1,050m	500m to 2,100m
Saraji	500m to 1,040m	~~900~~900m to 2,100m
Norwich Park	500m to 1,400m	~~1,000~~1,000m to 2,800m
Blackwater	500m	500m to 1,000m
Daunia	~~500m to 1,000m~~650m	~~1,000m to 2,000m~~1,200m
Gregory Crinum	850m plus 3D seismic coverage for UG	850m to 1,700m
South Walker Creek	500m to 800m	1,000m to 1,500m
Poitrel-Winchester	300m to 950m	550m to 1,850m

~~Appin~~
Goonyella ~~700m~~ ~~1,500m~~
~~West Cliff~~
~~700m~~ ~~1,500m~~
~~Dendrobium~~
~~700m~~ ~~1,500m~~Riverside Broadmeadow and Daunia – The classification criteria were revised based on a drill hole spacing analysis study.

⁽²⁾⁽³⁾

~~Processing~~Product recoveries for the operations were:


Deposit		~~Processing~~Product Recovery
Goonyella Riverside Broadmeadow		76%
Peak Downs		~~Peak Downs: 62%~~ ~~Caval Ridge: 56%~~ 56-62%
Saraji		~~63%~~61%
Norwich Park		~~70%~~72%
Blackwater		~~88%~~89%
Daunia		~~80%~~83%
Gregory Crinum		~~80%~~84%
South Walker Creek		~~75%~~71%
Poitrel-Winchester		~~74%~~
~~Appin~~		~~85%~~
~~West Cliff~~		~~75%~~
~~Dendrobium~~		69%

⁽³⁾⁽⁴⁾

Total Coal Reserves ~~are~~were at the moisture content when ~~mined.~~mined (4% CQCA JV, Gregory JV, BHP Billiton Mitsui). Total Marketable Coal Reserves ~~(tonnes) are the tonnage of coal available,~~were at ~~specified~~a product specific moisture content (9.5-10% Goonyella Riverside Broadmeadow; 9.5-10% Peak Downs; 10% Saraji; 7.5-11% Blackwater; 9.5-10% Daunia; 10-11% Norwich Park; 8.5% Gregory Crinum; 9% South Walker Creek; 9.5-12% Poitrel-Winchester) and at an air-dried quality basis, for sale after the beneficiation of the Total Coal Reserves. ~~Note that where the coal was not beneficiated, the tonnes of Total Coal Reserves are the tonnes of Total Marketable Coal Reserves, with moisture adjustment where applicable.~~

⁽⁴⁾⁽⁵⁾

~~Goonyella Riverside Broadmeadow- Broadmeadow UG was re-estimated using the Longwall Top~~ Coal ~~Caving method.~~

delivered to wash plant.

⁽⁵⁾⁽⁶⁾

~~Peak Downs- Reserve life decreased from 62~~Goonyella Riverside Broadmeadow – The increase in Coal Reserves was due to ~~35 years as Caval Ridge project was approved for execution. The production rate will increase from 16.5mtpa to 31mtpa.~~

revised mining and cost assumptions.

⁽⁶⁾⁽⁷⁾

~~Norwich Park~~Peak Downs – ~~Change in reserves was due to cost and revenue assumption changes.~~

The Coal Reserves for Caval Ridge are reported as part of Peak Downs.

⁽⁷⁾⁽⁸⁾

~~Daunia and Poitrel-Winchester- Coal type previously called Met/Th is now called Met based on product specifications.~~

Saraji – The decrease in Reserve Life was due to an increased nominated production rate from 14.4Mtpa in FY2014 to 17.3Mtpa in FY2015.

⁽⁸⁾⁽⁹⁾

~~South Walker Creek- Total Marketable Coal Reserves~~Norwich Park and Gregory mines remain on care and maintenance. The increases in Reserve Life were due to revised assumptions and are ~~Pulverised Coal Injection (PCI) coal~~

subject to ongoing review.

^(9)(10)

~~Appin- Total reserve increased following the granting of state government development consent~~South Walker Creek – The increase in ~~December 2011. This enabled the conversion of exploration title~~Coal Reserves was due to ~~mining title in the northern areas. As this process is ongoing, all reserves declared in the extended areas were classified as Probable Coal Reserve.~~

revised economic assumptions.

^(10)(11)

~~Dendrobium- Change~~Poitrel-Winchester – The increase in ~~reserves~~Coal Reserves was due to ~~detailed review~~incorporation of ~~current equipment extraction capabilities.~~

additional drilling information.

~~Energy~~ Coal ~~Customer Sector Group~~Business

Coal Reserves in accordance with Industry Guide 7

As at 30 June 2012
As at 30 June 2011
Commodity
Deposit⁽¹⁾⁽²⁾

Mining
Method

Coal
Type
Proven
Coal
Reserves Probable
Coal
Reserves Total Coal
Reserves Total Marketable Coal Reserves Reserve
Life
(years) BHP
Billiton
Interest
% Total Marketable Coal Reserves Reserve
Life
(years)
Mt Mt Mt Mt % Ash % VM % S KCal/
kg
CV % Total
Moisture⁽³⁾ Mt % Ash % VM % S KCal/kg
    CV     % Total
Moisture ⁽³⁾
New Mexico

San Juan⁽⁴⁾
UG Th 31    –    31    31    22.4    –    0.80    5,300    8.5    6    100    45    19.0    –    0.70    5,600    8.5    7
Navajo⁽⁴⁾
OC Th 30    –    30    30    23.2    –    0.76    4,800    13.0    4    100    36    23.0    –    0.90    4,800    13.0    5
South Africa

Khutala⁽⁵⁾
OC Met –    –    –    –    –    –    –    –    –    8    100    9.5    18.9    29.1    1.90    6,100    7.0    16
OC Th –    –    –    –    –    –    –    –    –    139    33.5    21.7    1.22    4,700    7.0
UG Th 58    –    58    58    34.8    20.1    0.73    4,400    7.0    75    34.5    20.4    0.80    4,400    7.0
Wolvekrans⁽⁶⁾
OC Th 347    117    465    348    19.9    22.3    0.76    5,800    7.5    24    100    281    20.0    23.5    0.66    6,000    7.2    30
Middelburg⁽⁷⁾
OC Th 146    –    146    104    20.9    22.7    0.63    6,000    7.5    29    100    106    20.4    23.1    0.63    6,000    7.2    23
Klipspruit⁽⁸⁾
OC Th 64    1.5    65    53    17.5    23.8    0.53    6,200    7.6    8    100    61    18.8    23.3    0.50    6,100    7.6    9
Australia

Mt Arthur Coal⁽⁹⁾
OC Th 578    469    1,046    808    16.4    30.4    0.56    6,500    8.3    45    100    877    16.1    30.5    0.55    6,500    8.3    50
Colombia

Cerrejon Coal Company⁽¹⁰⁾
OC Th 702    86    788    763    8.8    33.0    0.60    6,200    12.7    21    33.33    718    9.4    32.9    0.60    6,200    12.0    23


As at 30 June 2015																																	As at 30 June 2014
Commodity Deposit^{(1)(2)(3)(4)(5)}	Mining Method	Coal Type	Proven Coal Reserves		Probable Coal Reserves		Total Coal Reserves		Proven Marketable Coal Reserves										Probable Marketable Coal Reserves										Total Marketable Coal Reserves										Reserve Life (years)		BHP Billiton Interest %		Total Marketable Coal Reserves										Reserve Life (years)
Commodity Deposit^{(1)(2)(3)(4)(5)}	Mining Method	Coal Type	Mt		Mt		Mt		Mt		% Ash		% VM		% S		KCal/kg CV		Mt		% Ash		% VM		% S		KCal/kg CV		Mt		% Ash		% VM		% S		KCal/kg CV		Reserve Life (years)		BHP Billiton Interest %		Mt		% Ash		% VM		% S		KCal/kg CV		Reserve Life (years)
Energy Coal
New Mexico
San Juan⁽⁶⁾⁽⁷⁾	UG	Th		15		–		15		15		17.2		–		0.99		5,640		–		–		–		–		–		15		17.2		–		0.99		5,640		2.5		100		21		17.2		–		0.99		5,640		3.5
Navajo⁽⁶⁾⁽⁸⁾	OC	Th		13		–		13		13		21.8		–		0.76		4,900		–		–		–		–		–		13		21.8		–		0.76		4,900		2.6		–		17		21.8		–		0.76		4,900		3.1
Australia
Mt Arthur Coal⁽⁹⁾	OC	Th		519		479		998		409		17.3		30.5		0.56		6,380		376		17.6		29.6		0.49		6,410		785		17.4		30.1		0.53		6,400		31		100		817		16.7		30.3		0.54		6,410		33
Colombia
Cerrejón⁽¹⁰⁾	OC	Th		557		92		648		543		9.0		32.8		0.60		6,080		90		8.8		32.6		0.50		5,970		633		9.0		32.8		0.60		6,070		17		33.33		704		9.3		33.7		0.60		6,170		17

⁽¹⁾	Cut-off criteria:


Deposit		Coal Reserves
San Juan		³ 3.0m seam thickness,³ 5,000KCal/kg CV
Navajo		³ 0.6m seam thickness
Mt Arthur Coal		³ 0.3m mineable seam thickness,£ 26.5% ash,³ 50% product yield
Cerrejón		³ 0.65m seam thickness

⁽²⁾	Approximate drill hole spacings used to classify the reserves were:


Deposit	Proven ~~Ore~~Coal Reserves	Probable ~~Ore~~Coal Reserves
San Juan	<500m (250m radius from drill hole)	500m to 1,000m (250m to 500m radius from drill hole)
Navajo	<500m (250m radius from drill hole)	500m to 1,000m (250m to 500m radius from drill hole)
~~Khutala~~	~~>8 boreholes per 100ha~~	~~4 to 8 boreholes per 100ha~~
~~Wolvekrans~~	~~>8 boreholes per 100ha~~	~~4 to 8 boreholes per 100ha~~
~~Middelburg~~	~~>8 boreholes per 100ha~~	~~4 to 8 boreholes per 100ha~~
~~Klipspruit~~	~~>8 boreholes per 100ha~~	~~4 to 8 boreholes per 100ha~~
Mt Arthur Coal	<500m	500m to 1,000m
~~Cerrejon Coal Company~~Cerrejón	>6 ~~boreholes~~drill holes per 100ha	2 to 6 ~~boreholes~~drill holes per 100ha

⁽²⁾⁽³⁾

~~Processing~~Product recoveries for the operations were:


Deposit		~~Processing~~Product Recovery
San Juan		100%
Navajo		100%
~~Khutala~~		~~93%~~
~~Wolvekrans~~		~~74%~~
~~Middelburg~~		~~83%~~
~~Klipspruit~~		~~82%~~
Mt Arthur Coal		~~70%~~79%
~~Cerrejon Coal Company~~Cerrejón		~~97%~~98%

⁽³⁾⁽⁴⁾

Total Coal Reserves were at the moisture ~~is for~~content when mined (8.5% San Juan; 13.0% Navajo; 8.7% Mt Arthur Coal; 13.2% Cerrejón). Total Marketable Coal Reserves ~~product.~~

were at a product specific moisture content (8.5% San Juan; 13.0% Navajo; 9.6% Mt Arthur Coal; 14.2% Cerrejón) and at an air-dried quality basis, for sale after the beneficiation of the Total Coal Reserves.

⁽⁴⁾⁽⁵⁾

Coal delivered to wash plant, except for San Juan and ~~Navajo- Coal Reserves have been reduced following review of the mine plans.~~

Navajo, where coal is not washed.

⁽⁵⁾⁽⁶⁾

Volatile matter was not estimated for San Juan and Navajo because %VM is not a quality requirement in the current sales contract.

~~Khutala~~
⁽⁷⁾ San Juan – ~~Open-cut thermal coal reserves have been excluded because the anticipated capital from Eskom to enable mining to commence has not yet been approved.~~
Divestment is in progress.

⁽⁶⁾⁽⁸⁾

~~Wolvekrans~~Navajo – Divestment completed in December 2013. BHP Billiton will remain the mine manager and operator until 2016 and therefore production will continue to be reported. The ~~increase in reserves was predominantly~~Reserve Life decreased due to ~~including additional export product sales~~a decrease in ~~the mine plan. Decrease~~nominated production rate from 5.4Mtpa in ~~reserve life reflects a correction~~FY2014 to ~~the reported production rate.~~

4.8Mtpa in FY2015.

⁽⁷⁾⁽⁹⁾

~~Middelburg- A decrease~~Mt Arthur Coal – The Reserve Life decreased due to an increase in ~~the stated~~nominated production ~~by 1mtpa has resulted~~rate from 30.8Mtpa in ~~an extension of the reserve life by six years.~~

FY2014 to 32Mtpa in FY2015.

^(8)(10)

~~Klipspruit- Additional drilling allowed the reclassification~~Cerrejón – The decrease in Coal Reserves was due to a revised life of ~~Probable Ore Reserves~~mine plan. The Reserve Life remained constant due to ~~Proven Ore Reserves.~~

a decrease in nominated production rate from 41.5Mtpa in FY2014 to 38.8Mtpa in FY2015.

Other Assets

Ore Reserves in accordance with Industry Guide 7

As at 30 June 2015

As at 30 June 2014

Commodity Deposit^(1)(2)(3)(4)

Proven Ore Reserves

Probable Ore Reserves

Total Ore Reserves

Reserve
Life
(years)

BHP
Billiton
Interest
%

Total Ore Reserves

Reserve
Life
(years)

Ore Type

%Ni

Nickel

Nickel West

Leinster⁽⁵⁾

–

100

3.0

1.3

1.5

Mt Keith

0.6

1.0

0.5

0.6

5.0

100

0.6

5.9

3.6

0.5

3.1

0.5

6.7

0.5

Cliffs⁽⁵⁾

–

100

1.6

2.6

3.2

⁽⁹⁾⁽¹⁾

Cut-off grades – Mt ~~Arthur Coal- Decrease in the reserves was due to a change in the mine plan.~~

Keith: variable ranging from 0.35-0.40% Ni and³ 0.18% recoverable Ni for OC and SP.

^(10)(2)

~~Cerrejon Coal Company- The approval of~~Approximate drill hole spacings used to classify the ~~next expansion phase resulted in a reserve increase.~~

~~3 Operating and financial review and prospects~~

~~3.1 Introduction~~

This section is intended to convey management’s perspective of the BHP Billiton Group and its operational and financial performance. We intend this disclosure to assist readers to understand and interpret the financial statements prepared in accordance with International Financial Reporting Standards (IFRS) included in this Report. The basis of preparation of the financial statements is set out in note 1 ‘Accounting policies’ to the financial statements. The Operating and financial review and prospects should be read in conjunction with the financial statements, together with the accompanying notes.

We are the world’s largest diversified natural resources company, with a combined market capitalisation of approximately US$160.6 billion as at 30 June 2012. We generated Revenue of US$72.2 billion and Profit attributable to shareholders of US$15.4 billion for FY2012.

We extract and process minerals, oil and gas from our production operations located primarily in Australia, the Americas and southern Africa. We sell our products globally with sales and marketing taking place principally through our hub in Singapore.

~~The following table shows the revenue by location of our customers.~~

   Revenue by location of customer
Year ended 30 June
       2012            2011            2010
   US$M    US$M    US$M
Australia
   5,318       5,487       4,515
United Kingdom
   956       1,043       1,289
Rest of Europe
   7,419       8,370       8,554
China
   21,617       20,261       13,236
Japan
   8,920       9,002       5,336
Rest of Asia
   15,035       15,805       9,840
North America
   8,099       6,167       5,547
South America
   2,013       2,592       2,013
Southern Africa
   1,437       1,548       1,227
Rest of world
   1,412       1,464       1,241






Total revenue
   72,226       71,739       52,798

We operate through Customer Sector Groups (CSGs), which are generally aligned with the commodities we extract and market. In May 2012, we announced that our Stainless Steel Materials and Aluminium CSGs would consolidate into a single CSG named Aluminium and Nickel. In this Report, Aluminium and Stainless Steel Materials are separate reportable segments.


~~Customer Sector Groups~~		~~Principal activities~~
~~Petroleum~~		~~Exploration, development and production of oil and gas~~

~~Aluminium~~		~~Mining of bauxite, refining of bauxite into alumina and smelting of alumina into aluminium metal~~

~~Base Metals~~		~~Mining of copper, silver, lead, zinc, molybdenum, uranium and gold~~

~~Diamonds and Specialty Products~~		~~Mining of diamonds and titanium minerals; potash development~~

~~Stainless Steel Materials~~		~~Mining and production of nickel products~~

~~Iron Ore~~		~~Mining of iron ore~~

~~Manganese~~		~~Mining of manganese ore and production of manganese metal and alloys~~

~~Metallurgical Coal~~		~~Mining of metallurgical coal~~

~~Energy Coal~~		~~Mining of thermal (energy) coal~~

~~The work of our CSGs is supported by our Minerals Exploration and Marketing teams and Group Functions.~~

A discussion on our CSGs is located in section 2.2 ‘Business overview’. A discussion of our Marketing and Minerals Exploration functions is located in sections 2.4 ‘Marketing’ and 2.5 ‘Minerals exploration’, respectively.

~~3.2 Our strategy~~

Our purpose as a corporation is to create long-term shareholder value through the discovery, acquisition, development and marketing of natural resources. We sell into globally integrated markets and wherever possible operate at full capacity. Our unique position in the resources industry is due to our proven strategy.

Our strategy is to own and operate large, long-life, low-cost, expandable, upstream assets diversified by commodity, geography and market, and to pursue growth opportunities consistent with our core skills by:

~~discovering resources through our exploration activities;~~

~~developing and converting them in our CSGs;~~

~~developing customer and market-focused solutions through our Marketing teams;~~

~~adding shareholder value beyond the capacity of these groups through the activities of the Group Functions.~~

~~In pursuing our strategy, we are guided by~~~~Our BHP Billiton Charter~~ ~~values of Sustainability, Integrity, Respect, Performance, Simplicity and Accountability.~~

Our overriding commitment is to safety: ensuring the safety of our people, respecting our environment and the communities in which we work. This commitment transcends everything we do and guides every aspect of our work.

~~Our commitment to simplicity and accountability allows us to focus on the most important drivers of value while empowering our people to operate within their authority and make a difference.~~

~~Our purpose and commitments are pursued through our six strategic drivers:~~

•

~~People~~ – the foundation of our business is our people. We require people to find resources, develop those resources, operate the businesses that produce our products, and then deliver those products to our customers. Talented and motivated people are our most precious resource.

Mt Keith reserves were: Proven Reserves 60m x 40m, Probable Reserves 80m x 80m.

•⁽³⁾

~~Licence~~Ore delivered to ~~operate~~ – we aim to ensure that the communities in which we operate value our citizenship. Licence to operate means win-win relationships and partnerships. This includes a central focus on health, safety, environment and the community, and making a positive difference to our host communities.

process plant.

•⁽⁴⁾

~~World-class assets~~ ~~– our world-class assets provide~~Metallurgical recoveries for Mt Keith for FY2015 were 58% at 17% concentrate grade. Metallurgical recoveries differ from the ~~cash flows that are required~~recovery assumptions applied to ~~build new projects,~~generate the reserves due to contribute to the economies of the countries in which we operate, to meet our obligations to our employees, suppliers and partners, and ultimately to pay dividends to our shareholders. We maintain high-quality assets by managing them in the most effective and efficient way.

variable ore quality.

•⁽⁵⁾

~~Financial strength and discipline~~Leinster (including Cliffs) – ~~we seek~~Ore Reserves were not reported due to ~~maintain a solid ‘A’ credit rating, which balances financial flexibility~~being uneconomic after testing with the ~~cost of finance. Our capital management priorities are:~~

3 year average historical nickel price.

2.4 Major projects

~~reinvest in our extensive pipeline~~Major projects

At the end of ~~world-class projects that carry attractive rates of return regardless of the economic climate;~~

~~ensure a solid balance sheet;~~

~~return excess capital to shareholders.~~

•
~~Project pipeline~~ – we are focused on delivering an enhanced resource endowment to underpin future generations of growth. We have an abundance of tier one resources in stable countries that provide us with a unique set of options to deliver brownfield growth.

•

~~Growth options~~ – we use exploration, technology and our global footprint to look beyond our current pipeline to secure a foundation of growth for future generations. We pursue growth options in several ways – covering the range from extending existing operations to new projects in emerging regions, through exploration, technology and, on occasion, merger and acquisition activity.

~~3.3 Key measures~~

~~Our management and Board monitor a range of financial and operational performance indicators, reported on a monthly basis, to measure performance over time.~~

~~Overall financial success~~

~~We use several financial measures to monitor the financial success of our overall strategy. The two key measures are Underlying EBIT and Profit after taxation attributable to members of the~~FY2015, BHP Billiton had three brownfield major projects under development and one major ‘pre-development’ project in evaluation (Jansen Potash) with a combined budget of US$7.0 billion. The Group ~~(Attributable profit).~~

Year ended 30 June
US$M except where stated
   2012 2011 2010
Revenue
   72,226    71,739    52,798
Profit from operations
   23,752    31,816    20,031
Underlying EBIT⁽¹⁾
   27,238    31,980    19,719
Attributable profit
   15,417    23,648    12,722
Net operating cash flow⁽²⁾
   24,384    30,080    16,890
Underlying EBIT margin^(1)(3)(6)
   39.4 % 47.0 % 40.7 %
Underlying return on capital⁽⁴⁾⁽⁶⁾
   23.0 % 38.5 % 26.4 %
Gearing
   26.0 % 9.2 % 6.3 %
Basic earnings per share (US cents)
   289.6    429.1    228.6

⁽¹⁾

Underlying EBIT is earnings before net finance costs, taxation and any exceptional items. Underlying EBIT is not an IFRS measure of profitability, financial performance, or liquidity and may be defined and used in differing ways by different entities. Underlying EBIT is included in the 2012 Consolidated Financial Statements as required by IFRS 8 ‘Operating Segments’. We believe that Underlying EBIT provides useful information, but should not be considered as an indication of, or alternative to, Attributable profit as an indicator of operating performance. Our use of Underlying EBIT is explained in section 3.6.2.

⁽²⁾	~~Net operating cash flows are after net interest and taxation.~~

⁽³⁾	~~Underlying EBIT margin is a non-IFRS measure. It comprises Underlying EBIT, excluding third party EBIT, divided by revenue, excluding third party product revenue.~~

Year ended 30 June
   2012 2011 2010
   US$M US$M US$M
Revenue – Group production
   68,747    67,903    48,193
Underlying EBIT
   27,238    31,980    19,719
Profit from operations (EBIT) – Third party products
   (126 ) (98 ) (111 )


Profit from operations – Group production, excluding exceptional items
   27,112    31,882    19,608


Underlying EBIT margin
   39.4 % 47.0 % 40.7 %

⁽⁴⁾
Underlying return on capital is a non-IFRS measure. It represents net profit after tax, excluding exceptional items and net finance costs (after tax), divided by average capital employed. Capital employed is net assets plus net debt.

Year ended 30 June
   2012 2011 2010
   US$M US$M US$M
Profit after taxation excluding exceptional items and net finance costs:

Profit after taxation
   15,532    23,946    13,009
Net exceptional items after taxation
   1,741    (1,964 ) (253 )


Profit after taxation excluding exceptional items⁽⁵⁾⁽⁶⁾
   17,273    21,982    12,756


Net finance costs
   730    561    459
Income tax benefit of net finance costs^(a)
   (239 ) (153 ) (139 )


Net finance costs (after taxation)
   491    408    320


Profit after taxation excluding exceptional items and net finance costs ⁽⁶⁾
   17,764    22,390    13,076


Capital employed:

Net assets
   67,085    57,755    49,329
Net debt^(b)
   23,607    5,823    3,308


Capital employed
   90,692    63,578    52,637


Average capital employed
   77,135    58,108    49,467


Underlying return on capital
   23.0 % 38.5 % 26.4 %

^(a)

Calculated at a nominal tax rate of 30 per cent adjusted for non-deductibility/assessability of exchange variations on net debt of US$(65) million (2011: US$51 million; 2010: US$(5) million). Refer to note 6 ‘Net finance costs’ to the financial statements.

^(b)

Net debt comprising Interest bearing liabilities less Cash and cash equivalents at 30 June 2012 includes US$120 million Cash in Assets classified as held for sale and US$178 million Interest bearing liabilities in Liabilities classified as held for sale.

⁽⁵⁾	~~Profit after taxation excluding exceptional items is a non-IFRS measure. It comprises Profit after taxation excluding exceptional items as defined in section 3.6.5.~~

⁽⁶⁾	~~Non-IFRS measures have not been subject to audit or review.~~

~~The following are other measures that assist us to monitor our overall performance.~~

~~Health, safety, environment and community~~

~~We monitor a comprehensive set of health, safety, environment and community (HSEC) indicators, and we seek to be transparent~~completed the Escondida Oxide Leach Area Project (OLAP) in ~~the reporting of our performance. Two key measures are the total recordable injury frequency and community investment.~~

Year ended 30 June
2012 2011 2010
Total recordable injury frequency
4.7 5.0 5.3
Community investment (US$M)
214.1 195.5 200.5

Further information about these measures can be found in section 2.8 ‘Sustainability’. These measures are a subset of Our Performance, which can be found in our Sustainability Report 2012 at www.bhpbilliton.com.

~~Production~~

~~A summary of our actual production volumes for FY2012~~November 2014 and the ~~previous two financial years is shown below. Further details appear~~Escondida Organic Growth Project 1 (OGP1) in ~~section 2.3 ‘Production’.~~

Year ended 30 June
   2012    2011    2010
Total Petroleum production (millions of barrels of oil equivalent)
   222.3       159.4       158.6
Alumina (’000 tonnes)
   4,152       4,010       3,841
Aluminium (’000 tonnes)
   1,153       1,246       1,241
Copper (’000 tonnes)
   1,094.5       1,139.4       1,075.2
Nickel (’000 tonnes)
   157.9       152.7       176.2
Iron ore (’000 tonnes)
   159,478       134,406       124,962
Manganese alloys (’000 tonnes)
   602       753       583
Manganese ores (’000 tonnes)
   7,931       7,093       6,124
Metallurgical coal (’000 tonnes)
   33,230       32,678       37,381
Energy coal (’000 tonnes)
   71,111       69,500       66,131

~~Financial strength~~May 2015. In January 2015, first coal was loaded through the expanded Hay Point Coal Terminal and ~~discipline~~

Financial strength is measured by Attributable profit and Underlying EBIT as overall measures, along with liquidity and capital management. Our credit rating, gearing and net debt are discussed in section 3.7.3. The final dividend declared for FY2012 maintains our progressive dividend policy.

~~Project pipeline and growth options~~

~~Our~~the project pipeline focuses on commodities that are expected to be high-margin and create significant future value. The details of our project pipeline are located in sections 3.7.2 and 2.2 ‘Business overview’, with a summary presented below.

Year ended 30 June
   2012    2011    2010
Project pipeline and growth options (major projects)

Number of projects approved during the year
   8       11       2
Number of projects currently under development (approved in prior years)
   12       7       8
Number of completed projects
   6       3       5
Budgeted capital expenditure for projects (approved in the year) (US$M)
   7,468       12,942       695
Budgeted capital expenditure for projects under development (approved in prior years) (US$M)
   15,323       11,575       10,075
Capital expenditure of completed projects (US$M)
   9,160       1,202       4,738

~~We expanded our shale oil and gas operations during FY2012 when we acquired Petrohawk Energy Corporation (Petrohawk). The purchase price~~ was US$12.0 billion, excluding the assumption of net debt of US$3.8 billion. Petrohawk’s operations have been combined with the operations of our Fayetteville shale gas interests, which we acquired in FY2011 for US$4.8 billion, to form our Onshore US business.

~~3.4 External factors and trends affecting our results~~

The following section describes some of the external factors and trends that have had a material impact on our financial condition and results of operations. We operate our business in a dynamic and changing environment and with information that is rarely97.6 per cent complete and exact. We primarily manage the risks discussed in this section under our portfolio management approach, which relies on the effects of diversification, rather than individual risk management programs. Details of our risk factors may be found in section 1.5.1 ‘Risk factors’. Details of our financial risk management strategies and financial instruments outstanding at 30 June ~~2012 may be found~~2015.

BHP Billiton’s share of capital and exploration expenditure declined by 24 percent during FY2015, to US$11.0 billion. Capital and exploration expenditure is expected to decline to US$8.5 billion in ~~section 1.5.2 ‘Management of principal risks’ and in note 28 ‘Financial risk management’ to the financial statements.~~

FY2016.

~~3.4.1 Commodity prices~~

During FY2012, commodity markets were influenced by ongoing, unresolved sovereign debt concerns in Europe, a continuing gradual slowdown in China and uncertainty about the pace and sustainability of the US recovery, among other factors. In the case of steelmaking raw materials, Chinese demand growth decelerated, and combined with robust supply growth from seaborne sources, resulted in lower raw material prices than the previous year. The metals commodities attracted lower prices than the previous year as a result of declining demand in Europe and slower demand growth in China. For energy commodities, geopolitical tensions provided price support for crude oil, while US gas prices declined with unfavourable supply and demand conditions, despite significant coal to gas switching in the power sector.

The following table shows prices of our most significant commodities for the years ended 30 June 2012, 2011 and 2010. These prices represent selected quoted prices from the relevant sources as indicated. These prices will differ from the realised prices on the sale of the Group’s production due to differences in quotational periods, quality of products, delivery terms and the range of quoted prices that are used for contracting sales in different markets.

Year ended 30 June
   2012
Closing    2011
Closing    2012
Average    2011
Average    2010
Average
Aluminium (LME cash) (US$/t)
   1,835       2,509       2,168       2,375       2,018
Alumina⁽¹⁾⁽²⁾ (US$/t)
   305       386       334       369       314
Copper (LME cash) (US$/lb)
   3.45       4.22       3.71       3.92       3.04
Crude oil (WTI)⁽³⁾ (US$/bbl)
   84.96       95.42       94.97       89.47       75.14
Energy coal⁽⁴⁾ (US$/t)
   89.22       120.97       111.95       120.42       86.00
Natural gas Henry Hub⁽⁵⁾ (US$/MMBtu)
   2.81       4.39       3.05       4.16       4.21
Natural gas Asian Spot LNG⁽⁶⁾ (US$/MMBtu)
   14.95       13.80       16.25       10.41       6.12
Iron ore⁽⁷⁾ (US$/dmt)
   135.25       170.75       151.17       162.98       118.61
Manganese Alloys⁽⁸⁾ (US$/t)
   1,250       1,320       1,260       1,319       1,328
Manganese Ores⁽⁹⁾ (US$/dmtu)
   5.06       5.24       4.90       6.29       6.46
Metallurgical coal^(10)(11) (US$/t)
   176.5       272.5       210.45       244.47       146.75
Nickel (LME cash) (US$/lb)
   7.47       10.49       8.77       10.86       8.78

⁽¹⁾	~~2012 Platts PAX Free on Board (FOB) Australia.~~

⁽²⁾	~~2011 and 2010 CRU FOB Australia.~~

⁽³⁾	~~New York Mercantile Exchange West Texas Intermediate FOB Cushing.~~

⁽⁴⁾	~~GlobalCoal FOB Newcastle 6,000kcal/kg NCV – typically applies to coal sales in the Asia Pacific market.~~

⁽⁵⁾	~~Platts Gas based on Henry Hub – typically applies to gas sales in the US gas market.~~

⁽⁶⁾	~~Platts Liquefied Natural Gas Delivery Ex-Ship (DES) Japan/Korea Marker – typically applies to Asian LNG spot sales.~~

⁽⁷⁾	~~Platts 62 per cent Fe Cost and Freight (CFR) China – used for fines.~~

⁽⁸⁾	~~Bulk FerroAlloy high-carbon ferromanganese (HCFeMn) US ex-warehouse.~~

⁽⁹⁾	~~CRU Cost Insurance Freight (CIF) China import (M+1) 43 per cent contained.~~

⁽¹⁰⁾	~~2012 and 2011 Platts 64 Mid Volatile Index Hard coking coal FOB Australia.~~

⁽¹¹⁾	~~2010 Tex Reports Hard coking coal FOB Australia.~~

The following summarises the pricing trends of our most significant commodities for FY2012. Where prices have decreased by more than 10 per cent since 30 June 2012, a more current price as at 31 August 2012 is indicated in the discussion below.

~~Aluminium:~~ The London Metals Exchange (LME) aluminium cash settlement price decreased 27 per cent during FY2012. Ongoing macroeconomic weakness underpinned by slow Chinese growth and instability of the Eurozone, coupled with a well-supplied market, have contributed to falling price levels. Despite several Western smelter capacity curtailments, global supply has risen through the year, with production up seven per cent, driven predominantly by Chinese operations. Amidst stable underlying demand, LME aluminium stocks rose by nine per cent during FY2012 as warehouse financing deals remained attractive for investors.

~~Alumina:~~ The Platts FOB Australia price decreased 21 per cent during FY2012 against a backdrop of macroeconomic uncertainty and oversupply of alumina in the market. The alumina market remained oversupplied, with the increase in demand more than offset by increased refinery production, predominantly in China.

~~Copper:~~ The LME copper cash settlement price decreased 18 per cent during FY2012 mainly driven by weakening Chinese end-use demand growth and decreased consumption in developed countries. Mine supply growth has been relatively flat due to a high level of disruptions in thewhich delivered first half of FY2012, which has provided some support to prices. Chinese refined imports grew strongly during FY2012 following a major de-stock in FY2011, leading to a build-up of inventories in China and a relatively tight ex-China global market.

~~Crude oil:~~ The New York Mercantile Exchange West Texas Intermediate (WTI) crude oil price decreased 11 per cent during FY2012. Broader macroeconomic uncertainty and increased US crude oil production were key drivers of this lower price. Geopolitical tensions supported WTI prices above US$100/bbl during the second half of FY2012 but had decreasing impact in May and June. An eight per cent increase in US commercial crude oil inventories over FY2012 added further downward pressure to the WTI price.

~~Energy coal:~~ The Global Coal Newcastle FOB price decreased by 26 per cent during FY2012. In the energy coal market, FY2012 saw a strong supply side performance by all major producing regions that combined with favourable freight rates to ease the delivered cost of coal. Compounding this was the deterioration in the global economy, which underpinned the weakness in overall demand, albeit partially offset by significant Chinese coal imports and better than anticipated European demand.

~~Gas:~~ The Platts US Henry Hub natural gas price decreased by 36 per cent during FY2012. This was driven by seasonal demand as a result of the fourth mildest winter on record in the United States and high production output. June 2012 storage levels were 27 per cent higher than the same time last year and were 25 per cent higher than the five-year average. The Asian liquefied natural gas spot price increased by eight per cent during FY2012, principally driven by incremental Japanese demand, as gas fired power generation was increasingly used to substitute suspended nuclear power capacity. The supply environment was also tight, driven by delays to greenfield projects, Middle East plant maintenance and disruptions and the limited availability of shipping to divert Atlantic cargoes to the Asian market. Since 30 June 2012, the Asian liquefied natural gas spot price has decreased to US$13.10/MMBtu on 31 August 2012.

~~Iron ore:~~ The Platts 62 per cent iron ore CFR China price decreased by 21 per cent during FY2012, driven principally by increasing supply from traditional sources (Australia and Brazil). In absolute terms, global iron ore demand increased in line with rising pig iron production, as China maintained high steel output. In India, iron ore exports fell sharply following an export ban in the Karnataka state and a rise in export duties. Market transparency was enhanced by the launch of two new trading platforms for physical iron ore, namely GlobalOre and China Beijing Metals Exchange. Since 30 June 2012, the Platts 62 per cent iron ore CFR China price has decreased to US$90.50/dmt on 31 August 2012.

~~Manganese:~~ During FY2012, the CRU CIF China 43 per cent ore import price (M+1) decreased by three per cent and the US spot high-carbon ferromanganese alloy price decreased by five per cent, as global steel production growth rates fell amid weakening macroeconomic conditions. Manganese ore and alloy demand weakened in the first half of FY2012 as steel output contracted and major alloy exporters made production cuts in response to rising power costs and falling alloy prices. Rising ore prices were supported during the last quarter of the year by a recovery in Chinese steel output and a tighter ore supply market, particularly from exporters in Australia, Gabon and Brazil. Lower import availability led to a large decline in ore inventory levels at the ports.

~~Metallurgical coal:~~ The Platts 64 Mid Volatile Index for hard coking coal FOB Australia decreased by 35 per cent during FY2012, driven principally by recovering supply from Australia after flooding and strong supply from the United States, incentivised by elevated coking coal prices. Metallurgical coal demand weakened in line with steel production during the ~~first half~~2015 financial year

Business

Project and ownership

Capacity⁽¹⁾

Capital
expenditure
(US$M)⁽¹⁾

Date of initial production

Actual ⁽²⁾

Budget

Actual

Target

Copper

Escondida Oxide Leach Area Project (Chile) 57.5%

New dynamic leaching pad and mineral handling system. Maintains oxide leaching capacity

899

933

⁽³⁾

Q4 CY14

H2 CY14

⁽³⁾

Escondida Organic Growth Project 1 (Chile) 57.5%

Replaces the Los Colorados concentrator with a new 152,000 tonnes per day plant

4,279

4,199

⁽³⁾

Q2 CY15

H1 CY15

Coal

Hay Point Stage Three Expansion (Australia) 50%

Increases port capacity from 44 million tonnes per annum to 55 million tonnes per annum and reduces storm vulnerability

1,505

⁽³⁾⁽⁴⁾

Q1 CY15

H1 CY15

⁽³⁾

6,683

6,637

Projects in execution at the end of ~~FY2012, and remained low into~~ the second half of FY2012 particularly as non-Chinese steel production remained soft. Despite some lingering constraints to supply from Australia, availability of coking coal from the United States and Canada remained ample amid subdued demand. Since 30 June 2012, the Platts 64 Mid Volatile Index for hard coking coal FOB Australia price has decreased to US$136.50/t on 31 August 2012.

~~Nickel:~~ LME cash settlement nickel prices decreased 29 per cent during FY2012. Demand for nickel continued to grow, but at lower rates in light of weaker macroeconomic conditions and slower growth in China. Price declined due to the fact that this demand growth was outpaced by increasing supply tonnages coming from Chinese nickel pig iron as well as new production from greenfield projects which began ramping-up.

The following table indicates the estimated impact on FY2012 Profit after taxation of changes in the prices of our most significant commodities. With the exception of price-linked costs, the sensitivities below assume that all other variables, such as exchange rate, costs, volumes and taxation, remain constant. There is an inter-relationship between changes in commodity prices and changes in currencies that is not reflected in the sensitivities below. Volumes are based on FY2012 actual results and sale prices of our commodities under a mix of short-, medium- and long-term contracts. Movements in commodity prices can cause movements in exchange rates and vice versa. These sensitivities should therefore be used with care.2015 financial year

~~Estimated impact on FY2012 profit after taxation of changes of:~~Business

~~US$M~~

Project and ownership

Capacity⁽¹⁾

Capital expenditure
(US$M)⁽¹⁾

Date of initial production

~~US$1/bbl on oil price~~Projects under development

Budget

Target

~~US¢10/MMBtu on US~~Petroleum

North West Shelf Greater Western Flank-A (Australia) 16.67% (non-operator)

To maintain LNG plant throughput from the North West Shelf operations

400

CY16

Bass Strait Longford Gas Conditioning Plant (Australia) 50%(non-operator)

Designed to process approximately 400 million cubic feet per day of high CO₂ gas ~~price~~

520

CY16

Copper

Escondida Water Supply (Chile) 57.5%

New desalination facility to ensure continued water supply to Escondida

3,430

CY17

4,350

��

Other projects in progress at the end of the 2015 financial year


Business	Project and ownership		Scope	Capital expenditure (US$M)⁽¹⁾
~~US¢1/lb on aluminium price~~Projects under development		18		Budget
~~US¢1/lb on copper price~~Potash	Jansen Potash (Canada) 100%		Investment to finish the excavation and lining of the production and service shafts, and to continue the installation of essential surface infrastructure and utilities		172,600
				~~US¢1/lb on nickel price~~
					26,950
~~US$1/t on iron ore price~~		~~110~~
~~US$1/t on manganese alloy~~		~~0.5~~
~~US¢10/dmtu on manganese ore~~		21
~~US$1/t on metallurgical coal price~~		23
~~US$1/t on energy coal price~~		28

~~3.4.2 Exchange rates~~

We are exposed to exchange rate transaction risk on foreign currency sales and purchases as we believe that active currency hedging does not provide long-term benefits to our shareholders. Because a majority of our sales are denominated in US dollars, and the US dollar plays a dominant role in our business, we borrow and hold surplus cash predominantly in US dollars to provide a natural hedge. Operating costs and costs of local equipment are influenced by the fluctuations in local currencies, primarily the Australian dollar, Brazilian real, Chilean peso and South African rand. Foreign exchange gains and losses reflected in operating costs owing to fluctuations in the local currencies relative to the US dollar may potentially offset one another. The Australian dollar, Brazilian real, Chilean peso and South African rand weakened against the US dollar during FY2012.

We are also exposed to exchange rate translation risk in relation to net monetary liabilities, being our foreign currency denominated monetary assets and liabilities, including debt and other long-term liabilities (other than closure and rehabilitation provisions at operating sites where foreign currency gains and losses are capitalised in property, plant and equipment). Details of our exposure to foreign currency fluctuations are contained within note 28 ‘Financial risk management’ to the financial statements.

~~3.4.3 Changes in product demand and supply~~

Concerns surrounding the stability of the Eurozone and the decline in economic activity that accompanied the managed slowdown of growth in China led to significant market volatility in FY2012. In China, the government has introduced stimulatory measures aimed at supporting sustainable growth. The successful containment of inflation, looser monetary policy and evidence of a recovery in infrastructure investment should be positive for commodities demand in the short to medium term. Similarly, there are encouraging signs that the US housing market may have stabilised, which should benefit the world’s largest economy if it leads to an improvement in consumer and business confidence.

Our positive longer-term view is unchanged as urbanisation and industrialisation across the developing world is expected to remain the primary driver of global economic growth. While the rate of expansion within China has adjusted to a more sustainable level as its economy has matured, economic growth in this decade is expected to rise substantially in absolute terms given the higher starting base.

Our forecast of supply additions to meet anticipated demand varies by commodity. We have analysed whether existing supply capacity up to the end of CY2011 and low-cost capacity additions through to CY2015 will be sufficient to meet anticipated demand growth through to 2020.

In the case of aluminium, we expect the forecast demand growth to be met by capacity additions through to CY2015. As such, we see the aluminium market changing at the variable cost of production for the foreseeable future. With iron ore, we expect approximately three-quarters of the demand growth to be met by low-cost supply by CY2015. As such, we expect going forward that iron ore supply will meet demand in due course and that the scarcity pricing seen in recent years is unlikely to be repeated. With copper, only about a quarter of demand growth through 2020 has currently been met by existing low-cost supply, and even by CY2015 40 per cent of this demand growth is not expected to be met by new low-cost supply. Resource depletion and resource degradation continue to constrain the pace of low-cost supply addition, and therefore prices are expected to be at a level high enough to induce additional supply through the development of greenfield mines.

~~3.4.4 Operating costs~~

~~Operating costs for the last three years are set out below.~~

   2012 2011 2010
   US$M US$M US$M
Raw materials and consumables used
   8,483    8,148    6,371
Employee benefits expense
   6,663    5,299    4,661
External services (including transportation)
   14,716    11,705    9,538
Third party commodity purchases
   3,381    3,758    4,478
Net foreign exchange (gains)/losses
   (355 ) 1,074    112
Government royalties paid and payable
   3,051    2,887    1,653
Depreciation and amortisation expense
   6,408    5,039    4,759
Exploration and evaluation expenditure
   1,746    1,054    1,285
Impairment of assets
   3,619    1    (539 )
Other operating expenses
   1,668    1,489    977


Total expenses
   49,380    40,454    33,295


Less exceptional items
   (3,786 ) (164 ) 312


Total expenses excluding exceptional items
   45,594    40,290    33,607

Our operating costs excluding exceptional items have increased at a rate of 11.8 per cent per annum over the last three years. During FY2012, total costs excluding exceptional items, the impacts of inflation, exchange rate volatility and non-cash items, have increased by US$2.7 billion due to industry-wide cost pressure. Labour and contractor cost increases accounted for over one-third of this increase in FY2012, while industrial action at Queensland Coal, Australia, created additional pressure.

The increase in costs in FY2012 was affected by major outages and disruptions. The highest rate of cost escalation was in those businesses with a lower rate of capacity utilisation. We are implementing broad measures across the Group that seek to substantially reduce operating costs and non-essential expenditure in FY2013.

We have been quick to respond to the change in the operating environment during FY2012 and acted decisively by closing energy intensive silicomanganese alloy production capacity in South Africa and by temporarily closing capacity at TEMCO, Australia. In addition, metallurgical coal production at Norwich Park, Australia, was suspended following a review of the mine’s profitability and, since 30 June 2012, we have also announced that mining at BMA’s Gregory open-cut mine will cease production from 10 October 2012. The viability of other high-cost operations is being assessed and additional measures are being implemented that are expected to substantially reduce operating costs and non-essential expenditure across the business. In conjunction with safety and volumes, cost control continues to be a key area of focus for each area of operation.

~~3.4.5 Capital expenditure~~

Capital and exploration expenditure are both important in pursuing our strategy. Capital and exploration expenditure is disclosed for each CSG in the table below (presented on an accruals basis). The most significant increase over the three years has been in Petroleum, with other significant increases in Iron Ore, Metallurgical Coal and Base Metals.

Year ended 30 June
   2012    2011    2010
   US$M    US$M    US$M
Capital and exploration expenditure⁽¹⁾

Petroleum
   7,185       2,541       2,768
Aluminium
   854       1,335       1,024
Base Metals
   2,980       1,670       936
Diamonds and Specialty Products
   825       400       222
Stainless Steel Materials
   581       718       320
Iron Ore
   5,921       3,777       3,944
Manganese
   427       289       210
Metallurgical Coal
   2,956       1,242       683
Energy Coal
   919       784       905
Group and unallocated items
   27       94       87






BHP Billiton Group
   22,675       12,850       11,099

⁽¹⁾

Capital and exploration expenditure includes accrued capital expenditure and excludes capitalised interest. Exploration expenditure is capitalised in accordance with our accounting policies, as set out in note 1 ‘Accounting policies’ in the financial statements. All other exploration expenditure is expensed in the period.

~~Capital expenditure encompasses expenditure on major projects, as set out in section 3.7.2, and capital expenditure on sustaining and other items.~~

Year ended 30 June
   2012    2011    2010
   US$M    US$M    US$M
Capital expenditure

Growth
   17,735       9,366       8,063
Sustaining and other
   2,488       2,244       1,703






Total
   20,223       11,610       9,766






Exploration expenditure

Petroleum
   1,355       557       817
Minerals
   1,097       683       516






Total
   2,452       1,240       1,333






Total capital and exploration expenditure
   22,675       12,850       11,099

~~The forecast capital and exploration expenditure for FY2013 is US$22.0 billion.~~

The Group has a portfolio of development options beyond those projects in execution and a significant number of these are embedded within our existing footprint. As our current capital expenditure commitments decline, future capital will be allocated to those options that maximise shareholder value, while also considering the balance between short- and long-term returns.

~~In reviewing our rate of forward capital deployment, we have made the following decisions regarding our major projects:~~

~~We will investigate an alternative, less capital-intensive design of the Olympic Dam, Australia, open-pit expansion, involving new technologies, to substantially improve the economics of the project.~~

~~We will delay indefinitely the 2.5 million tonnes per annum (mtpa) (100 per cent basis) expansion of Peak Downs associated with the Caval Ridge mine development, Australia.~~

~~We have slowed down work on the Western Australia Iron Ore (WAIO) Outer Harbour project at Port Hedland, Australia, and shifted our focus to maximising the potential capacity of the Inner Harbour.~~

~~We will seek to adjust our rate of forward capital deployment in line with our forward estimate of cash flow generation. No major project approvals are expected during FY2013.~~

~~3.4.6 Exploration and development of resources~~

Most of our revenues and profits are related to our oil and gas and minerals operations, therefore our results and financial condition are directly related to the success of our exploration efforts and our ability to replace existing reserves. However, there are no guarantees that our exploration program will be successful. When we identify an economic deposit, there are often significant challenges and hurdles entailed in its development, such as negotiating rights to extract ore with governments and landowners, design and construction of required infrastructure, utilisation of new technologies in processing and building customer support.

Exploration expense represents that portion of exploration expenditure that is not capitalised in accordance with our accounting policies, as set out in note 1 ‘Accounting policies’ to the financial statements.

~~Over the past three years, exploration expense has increased, with a total expense of US$3.8 billion. Exploration expense for each CSG over the three-year period is set out below.~~

Year ended 30 June
   2012    2011    2010
   US$M    US$M    US$M
Exploration expense

Petroleum⁽¹⁾
   818       477       562
Aluminium
   2       6       5
Base Metals
   324       266       173
Diamonds and Specialty Products
   227       81       95
Stainless Steel Materials
   57       60       52
Iron Ore
   135       60       62
Manganese
   9       11       26
Metallurgical Coal
   148       70       30
Energy Coal
   26       23       24
Group and unallocated items
   –       –       –






BHP Billiton Group
   1,746       1,054       1,029

⁽¹⁾	~~Includes US$144 million (2011: US$73 million, 2010: reversal of US$1 million) exploration expense previously capitalised, written off as impaired.~~

During FY2012, Minerals greenfield exploration has focused on copper targets in South America, nickel and copper targets in Australia and iron ore and potash targets globally. Petroleum exploration activities focused on offshore Western Australia, the Gulf of Mexico, South East Asia and our recently acquired Onshore US business.

~~Exploration expenditure for FY2013 is expected to be approximately US$1.5 billion, of which approximately half is for offshore oil and gas and the other half is for Minerals.~~

~~3.4.7 Interest rates~~

We are exposed to interest rate risk on our outstanding borrowings and investments. Our policy on interest rate exposure is for interest on our borrowings to be on a US dollar floating interest rate basis. Deviation from our policy requires the prior approval of our Financial Risk Management Committee and is managed within our Cash Flow at Risk (CFaR) framework, which is described in note 28 ‘Financial risk management’ to the financial statements. When required under this strategy, we use interest rate swaps, including cross currency interest rate swaps, to convert a fixed rate exposure to a floating rate exposure, as well as using swaptions to manage the fixed interest rate exposure. As at 30 June 2012, the Group holds US$4.3 billion (2011: US$827 million) of centrally managed fixed interest rate borrowings, as well as US$4.0 billion (2011: US$650 million) of other fixed interest rate borrowings, that have not been swapped to floating interest rates, arising from debt raised during FY2012, debt assumed as part of the acquisition of Petrohawk and debt raised prior to the DLC merger.

Our earnings are sensitive to changes in interest rates on the floating interest rate component of the Group’s net borrowings. Based on the net debt position as at 30 June 2012, taking into account interest rate swaps and cross currency interest rate swaps, it is estimated that a one percentage point increase in the US LIBOR interest rate will decrease the Group’s profit after taxation by US$103 million (2011: decrease of US$25 million). This assumes that the change in interest rates is effective from the beginning of the financial year and the fixed/floating mix and balances are constant over the year. However, interest rates and the net debt profile of the Group may not remain constant in the coming financial year and therefore such sensitivity analysis should be used with care.

~~3.4.8 Freight markets~~

The bulk freight market is typically categorised by the size of the vessel. Capesize vessels are typically classified as having deadweight above 150 thousand deadweight tonnes (kdwt) compared with Panamax and Supramax vessels, which are 60 to 100 kdwt and 50 to 60 kdwt, respectively. Freight rates have dropped considerably over the three-year period as set out below.

Year ended 30 June
   2012
Closing    2011
Closing    2010
Closing
Rate (US$ per day)

Capesize average 4 Time Charter rate
   3,988       12,732       24,239
Panamax average 4 Time Charter rate
   7,835       12,823       22,113
Supramax average 6 Time Charter rate
   13,145       13,682       21,607

Although the demand for bulk commodities was strong, the freight market experienced oversupply due to the many newly built vessels entering the market. The total dry bulk fleet grew by 14 per cent year-on-year in CY2011, thereby outpacing seaborne trade growth.

~~3.4.9 Health, safety, environment and community~~

We are subject to extensive regulation surrounding the health and safety of our people and the environment. We make every effort to comply with the regulations and, where less stringent than our standards, exceed applicable legal and other requirements. However, regulatory standards and community expectations are constantly evolving. As a result, we may be exposed to increased litigation, compliance costs and unforeseen environmental rehabilitation expenses, despite our best efforts to work with governments, community groups and scientists to keep pace with regulations, law and public expectations.

~~Further information about our compliance with HSEC regulations can be found in section 2.8 ‘Sustainability’.~~

~~3.4.10 Insurance~~

During FY2012, we maintained an insurance program with policies encompassing property damage, business interruption, sabotage and terrorism, marine cargo, construction, public and certain other liabilities and directors and officers’ exposures. The program includes a combination of self-insurance via subsidiary captive insurance companies, industry mutuals and external market reinsurance above our reinsurance level. Mandates are established as to risk retention levels, policy cover and, where applicable, reinsurance counter parties. As part of our portfolio risk management approach, we regularly conduct an assessment of maximum foreseeable loss potential, cash flow at risk, loss experience, claims received and insurance premiums paid, and will make adjustments to the balance of self-insurance and reinsurance as required.

The Group continues to be largely self-insured for losses arising from property damage and business interruption, sabotage and terrorism, marine cargo and construction. For these risks, we internally insure our operations (for wholly owned assets and for our share of joint venture assets) via our captive insurance companies. Any losses incurred will consequently impact the financial statements as they arise.

During FY2012, insurance claims relating to extreme weather across central Queensland in 2008 were settled. Proceeds of US$300 million have been treated as an exceptional item – refer to section 3.6.5 ‘Exceptional items’.

~~3.5 Application of critical accounting policies~~

The preparation of our consolidated financial statements requires management to make estimates and judgements that affect the reported amounts of assets and liabilities, the disclosure of contingent liabilities at the date of the financial statements and the reported revenue and expenses during the periods presented therein. On an ongoing

basis, management evaluates its estimates and judgements in relation to assets, liabilities, contingent liabilities, revenue and expenses. Management bases its estimates and judgements on historical experience and on various other factors it believes to be reasonable under the circumstances, the results of which form the basis of making judgements about the carrying values of assets and liabilities that are not readily apparent from other sources. Actual results may differ from these estimates under different assumptions and conditions.

We have identified the following critical accounting policies under which significant judgements, estimates and assumptions are made and where actual results may differ from these estimates under different assumptions and conditions and may materially affect financial results or the financial position reported in future periods:

~~reserve estimates;~~

~~exploration and evaluation expenditure;~~

~~development expenditure;~~

~~property, plant and equipment and intangible assets – recoverable amount;~~

~~defined benefit pension schemes;~~

~~provision for closure and rehabilitation;~~

~~taxation.~~

In accordance with IFRS, we are required to include information regarding the nature of the estimates and judgements and potential impacts on our financial results or financial position in the financial statements. This information can be found in note 1 ‘Accounting policies’ to the financial statements.

~~3.6 Operating results~~

~~The following tables provide a summary of the CSG Revenue and Underlying EBIT for FY2012 and the two prior corresponding periods. Our use of Underlying EBIT is explained in section 3.6.2.~~

Year ended 30 June
   2012    2011    2010
   US$M    US$M    US$M
Revenue⁽¹⁾

Petroleum
   12,937       10,737       8,782
Aluminium
   4,766       5,221       4,353
Base Metals
   11,596       14,152       10,409
Diamonds and Specialty Products
   1,326       1,517       1,272
Stainless Steel Materials
   2,993       3,861       3,617
Iron Ore
   22,601       20,412       11,139
Manganese
   2,152       2,423       2,150
Metallurgical Coal
   7,576       7,573       6,059
Energy Coal
   6,022       5,507       4,265
Group and unallocated items⁽²⁾⁽³⁾
   257       336       752






BHP Billiton Group
   72,226       71,739       52,798

Year ended 30 June
   2012 2011 2010
   US$M US$M US$M
Underlying EBIT⁽¹⁾

Petroleum
   6,348    6,330    4,573
Aluminium
   (291 ) 266    406
Base Metals
   3,965    6,790    4,632
Diamonds and Specialty Products
   199    587    485
Stainless Steel Materials
   32    588    668
Iron Ore
   14,201    13,328    6,001
Manganese
   235    697    712
Metallurgical Coal
   1,570    2,670    2,053
Energy Coal
   1,227    1,129    730
Group and unallocated items⁽²⁾⁽³⁾
   (248 ) (405 ) (541 )


BHP Billiton Group
   27,238    31,980    19,719

⁽¹⁾	~~Includes the sale of third party product.~~

⁽²⁾⁽¹⁾

~~Revenue that is not~~Unless noted otherwise, references to capacity are on a 100 per cent basis, references to capital expenditure from subsidiaries are reported ~~in business segments principally includes sales of freight~~on a 100 per cent basis and ~~fuel~~references to ~~third parties.~~

capital expenditure from joint operations are reported on a proportionate consolidation basis.

⁽²⁾	Number subject to finalisation.

⁽³⁾	~~Includes consolidation adjustments, unallocated items and external sales for the Group’s freight, transport and logistics operations and certain closed operations.~~ As per revised budget and/or schedule.

~~3.6.1 Consolidated~~

⁽⁴⁾	Excludes announced pre-commitment funding.

2.5 Business performance

The discussion of results for our Businesses is set out in section 1.12 of this Annual Report with further information below.

2.5.1 Group Revenue and Underlying EBIT

Year ended 30 June ~~2012~~2015 compared with year ended 30 June ~~2011~~2014

~~Our strategy~~An analysis of the financial performance of the Group for FY2015 compared to ~~own~~FY2014 is included in section 1.15.3.

The following table reconciles our statutory income statement to the principal factors that affected Underlying EBIT for FY2015. For further information on our use of Underlying EBIT, see section 1.11.1 of this Annual Report.


	Revenue US$M			Total expenses, other income and share of equity accounted investments US$M			Profit from operations US$M			Exceptional Items US$M			Underlying EBIT US$M
For the year ended 30 June 2014 (Restated)
Revenue		56,762
Other income					1,225
Expenses excluding net finance costs					(36,523	)
Share of operating profit of equity accounted investments					1,185

Total expenses, other income and share of equity accounted investments					(34,113	)

Profit from operations								22,649
Exceptional items											(551	)

Underlying EBIT														22,098

Changes in volumes:
Productivity		2,774			(1,554	)		1,220			–			1,220
Growth		3,421			(1,599	)		1,822			–			1,822

		6,195			(3,153	)		3,042			–			3,042

Net Price impact:
Change in sales prices		(17,046	)		613			(16,433	)		–			(16,433	)
Price-linked costs		–			1,209			1,209			–			1,209

		(17,046	)		1,822			(15,224	)		–			(15,224	)

Change in controllable cash costs:
Operating cash costs		–			2,678			2,678			–			2,678
Exploration and business development		–			29			29			–			29

		–			2,707			2,707			–			2,707

Change in other costs:
Exchange rates		(87	)		1,654			1,567			–			1,567
Inflation on costs		–			(433	)		(433	)		–			(433	)
Fuel and energy		–			518			518			–			518
Non-cash		–			(1,304	)		(1,304	)		–			(1,304	)
One-off items		–			(456	)		(456	)		–			(456	)

		(87	)		(21	)		(108	)		–			(108	)

Asset sales		–			(72	)		(72	)		–			(72	)
Ceased and sold operations		(448	)		470			22			–			22
Exceptional items		–			(3,747	)		(3,747	)		3,747			–
Profit from equity accounted investments		–			(637	)		(637	)		–			(637	)
Other		(740	)		778			38			–			38

For the year ended 30 June 2015
Revenue		44,636
Other Income					496
Expenses excluding net finance costs					(37,010	)
Share of operating profit of equity accounted investments					548

Total expenses, other income and share of equity accounted investments					(35,966	)

Profit from operations								8,670
Exceptional items											3,196

Underlying EBIT														11,866

Management believes the following information presented by each Business provides meaningful indicators of the underlying performance of the assets, including equity accounted investments, of each reportable segment. Information relating to equity accounted investments has been provided on a ‘proportionate consolidation’ basis to provide insight into the drivers of the equity accounted results from these operations. Segment information is reported on a statutory basis in accordance with IFRS 8 ‘Operating Segments’ and ~~operate large, long-life, low-cost, expandable, upstream~~consequently the tables below include adjustments to reconcile the proportionate consolidation information to the statutory segment results.

As discussed in section 1.11.1 of this Annual Report, Underlying EBIT is one measure used by management to assess the performance of our Businesses, make decisions on the allocation of resources and assess operational management. Underlying EBIT at the segment or statutory level is reported net of the Group’s share of net finance costs and taxation of equity accounted investments.

Year ended 30 June 2014 compared with year ended 30 June 2013

Comparative financial information for FY2014 and FY2013 has been restated for the effects of the application of IFRS 5/AASB 5 ‘Non-current Assets Held for Sale and Discontinued Operations’ following the demerger of South32, unless otherwise noted. The Consolidated Balance Sheet for these periods is not required to be and has not been restated, for further information refer to note 41 ‘Basis of preparation and measurement’ to the Financial Statements.

Information in this section has been presented on a Continuing operations basis to exclude the contribution from assets ~~diversified by commodity, geography and market remained a major point~~that were demerged with South32, unless otherwise noted. Details of ~~differentiation, particularly~~the contribution of the South32 assets to the Group’s results are disclosed in note 29 ‘Discontinued operations’ to the ~~current, more challenging economic environment.~~Financial Statements.

Revenue in FY2014 was US$~~72.2~~56.8 billion, an increase of US$~~487 million,~~2.9 billion, or ~~0.7~~five per cent, from US$~~71.7~~53.9 billion in the corresponding period. The revenue increase was primarily reflected in the Iron Ore and Petroleum and Potash Businesses, with increases of US$~~2.2~~2.8 billion ~~in both our Petroleum~~ and ~~Iron Ore businesses~~US$1.6 billion, respectively. These increases were ~~partially~~ offset by decreases in ~~other businesses,~~our Copper Business of US$383 million, in ~~particular~~ our ~~Base Metals and Stainless Steel Materials businesses~~Coal Business of US$~~2.6 billion~~11 million and the loss of revenue of our disposed former Diamonds and Specialty Products Business of US$~~868 million, respectively.~~325 million.

The increase in revenue in Iron Ore related primarily to higher sales volumes of US$3.4 billion, offset by lower realised prices of US$1.2 billion. Revenue increases in Petroleum related primarily to US$2.2 billion of revenue in Onshore US for FY2012, an increase of US$2.1 billion from FY2011. The impact of higher realised prices in Petroleum’s conventional (primarily offshore) business was largely offset by lower sales volumes.

~~The revenue decrease in Base Metals reflected lower sales volumes of US$861 million and lower realised prices of US$1.5 billion. The decrease in revenue in Stainless Steel Materials~~ was primarily due to an increase in sales volumes of 17 per cent to 202 Mt, which contributed to an increase in revenue of US$3.2 billion, partially offset by a six per cent decline in average realised price of iron ore to US$103 per wet metric tonne (FOB), which reduced revenue by US$522 million. The increase in revenue in Petroleum was primarily due to an increase in volume of four per cent in FY2014 to 246 MMboe, which contributed to an increase in revenue of US$1.4 billion, and to higher realised prices, which contributed to an additional increase of US$219 million. The decrease in other businesses mainly reflected lower realised ~~prices.~~prices in our Copper Business of US$1.0 billion and Coal Business of US$1.1 billion.

~~Further description~~

Overall, the US$2.9 billion increase in revenue in FY2014 can be attributed to US$6.3 billion related to increased volumes, which are within our control, offset primarily by US$2.6 billion related to prices, which are uncontrollable, US$468 million for ceased and sold operations, and US$128 million for exchange rates.


Year ended 30 June	2014 US$M Restated			2013 US$M Restated
Year ended 30 June	2014 US$M Restated			2013 US$M Restated
Raw materials and consumables used		5,540			5,407
Employee benefits expense		5,413			5,578
External services (including transportation)⁽¹⁾		9,899			10,202
Third party commodity purchases		1,702			1,158
Net foreign exchange losses/(gains)		168			(187	)
Fair value change on derivatives		(122	)		63
Government royalties paid and payable		2,412			2,179
Depreciation and amortisation expense		7,716			6,067
Exploration and evaluation expenditure		698			1,026
Impairment of assets⁽²⁾		478			3,286
Operating lease rentals		665			679
Other operating expenses⁽³⁾		1,954			1,371

Total expenses		36,523			36,829

Less exceptional items		–			(2,862	)

Total expenses excluding exceptional items		36,523			33,967

⁽¹⁾	Includes exceptional items of US$ nil (2013: US$96 million).

⁽²⁾	Includes exceptional items of US$ nil (2013: US$2,924 million).

⁽³⁾	Includes exceptional items of US$ nil (2013: credit of US$158 million).

Total expenses decreased from US$36.8 billion in FY2013 to US$36.5 billion in FY2014. Excluding exceptional items, the majority of which related to impairments in FY2013, total expenses have increased by US$2.6 billion or eight per cent during FY2014 from US$33.9 billion to US$36.5 billion.

The majority of the increase relates to non-cash expenses for depreciation and amortisation of US$1.6 billion and changes to provisions for mine site rehabilitation of US$300 million. Increases in other non-cash charges also included provisions for restructuring and a lower capitalisation rate for deferred stripping at Escondida and Pampa Norte. Increases in costs attributable to inflation were US$575 million.

Higher expenses associated with increased production across our four major Businesses were partially offset by reduced operating costs. Our focus on reducing operating costs through productivity initiatives saw cost efficiencies in our Businesses, in particular our Coal Business.

Additional increases in Total expenses were recognised in Third party commodity purchases of US$544 million and Other operating expenses (excluding exceptionals) of US$425 million. In total operating costs were decreased by favourable exchange rate impacts of US$1.3 billion.

Other income decreased from US$3.8 billion in FY2013 to US$1.2 billion due to exceptional items in FY2013, the majority of which relates to gains on the ~~changes in revenue is included in~~sale of assets. For further information, refer to note 5 ‘Other income’ to the ~~analysis of Underlying EBIT for the Group in section 3.6.2 and for the CSGs in section 3.6.6.~~Financial Statements.

~~Our Attributable profit of~~Profit from operations increased by US$~~15.4 billion represented a decrease of 34.8~~672 million, or three per cent, from US$~~23.6~~22.0 billion into US$22.6 billion. Exceptional items during FY2014 comprised of a gross exceptional income on the ~~corresponding period.~~

~~Attributable profit in FY2012 included a number~~sale of ~~exceptional items: an impairment of the Fayetteville, US, dry gas assets acquired from Chesapeake Energy in March 2011 of US$1.8 billion (US$2.8 billion before tax); an~~our Pinto Valley

~~impairment~~mining operation of ~~the Nickel West, Australia, assets~~US$551 million, compared with gross exceptional charges of US$~~355~~297 million ~~(US$449 million before tax) and a US$342 million (US$452 million before tax) charge for the suspension or early closure of~~in FY2013. FY2014 Profit from operations ~~and the change in status of specific projects, which included an impairment of the Olympic Dam Project of US$242 million (US$346 million before tax).~~

Other exceptional items included the settlement of insurance claims at Queensland Coal, Australia, which resulted in other income of US$199 million (US$284 million before tax), while a US$637 million non-cash income tax credit was recognised following the passage of Australia’s Minerals Resource Rent Tax (MRRT) and Petroleum Resource Rent Tax (PRRT) extension into legislation in March 2012.

~~Attributable profit~~ excluding exceptional items, ~~(comprising Profit after taxation attributable~~which we refer to ~~members of BHP Billiton Group less Exceptional items~~ as ~~described in section 3.6.5) of US$17.1 billion represented a decrease of 21.1~~Underlying EBIT, increased by 1.9 per cent, ~~from~~or US$~~21.7 billion in FY2011. The~~418 million, to US$~~4.6 billion decrease in Attributable profit excluding exceptional items primarily reflects the decrease in~~ 22.1 billion.

Underlying EBIT ~~of US$4.8 billion.~~

The decrease in Underlying EBIT from the prior year is a result of weaknesses in the price of, and demand for, commodities and industry-wide cost pressure. The rate of cost escalation was most severe in those CSGs that experienced disruptions, outages or grade-related issues. The increased revenue for Onshore US, from US$107 million in FY2011 to US$2.2 billion in FY2012, did not result in additional EBIT due to the impact of lower realised gas prices in the United States. An analysis of the change in Underlying EBIT for the Group is set out in section 3.6.2 and for the CSGs in section 3.6.6.

Net operating cash flow of US$24.4 billion declined by 18.9 per cent, while Underlying return on capital was 23.0 per cent. The value of the Group’s diversified strategy was reflected in the Group’s Underlying EBIT margin, which remained at a robust 39.4 per cent.

~~Year ended 30 June 2011 compared with year ended 30 June 2010~~

Revenue was US$71.7 billion, an increase of US$19.9 billion, representing 35.9 per cent from US$52.8 billion in the corresponding period. Increases were experienced across all our CSGs, with US$9.3 billion for Iron Ore being the most significant. Other significant increases were in Base Metals (US$3.7 billion), Petroleum (US$2.0 billion) and Metallurgical Coal (US$1.5 billion).

Our Attributable profit of US$23.6 billion represented an increase of 85.9 per cent from the corresponding period. Attributable profit excluding exceptional items of US$21.7 billion represented an increase of 73.9 per cent from the corresponding period, while Underlying return on capital, excluding investment associated with projects not yet in production, increased to 50 per cent. The strong increase in the Group’s Underlying EBIT margin to 47 per cent emphasised the quality of BHP Billiton’s diversified portfolio.

An ongoing commitment to invest through all points of the economic cycle delivered record annual production across four commodities and 10 operations. Our decision to invest in our WAIO business during the depths of the global financial crisis facilitated an eleventh consecutive annual increase in iron ore production, as prices continued to test new highs. Three major projects delivered first production in FY2011, including the New South Wales Energy Coal MAC20 Project, Australia, which was completed ahead of schedule.

Robust demand, industry-wide cost pressures and persistent supply side constraints continued to support the fundamentals for the majority of BHP Billiton’s core commodities. In that context, another strong year of growth in Chinese crude steel production ensured steelmaking material prices were the major contributing factor to the US$17.2 billion price-related increase in Underlying EBIT.

However, we regularly highlighted our belief that costs tend to lag the commodity price cycle as consumable, labour and contractor costs are broadly correlated with the mining industry’s level of activity. In the environment

at that time, tight labour and raw material markets were presenting a challenge for all operators, and BHP Billiton was not immune from that trend. The devaluation of the US dollar and inflation reduced Underlying EBIT by a further US$3.2 billion.

~~Record operating cash flow of US$30.1 billion continued to create substantial flexibility for the Group.~~

~~3.6.2 Consolidated results – Underlying EBIT~~

In discussing the operating results of ~~our business,~~the Group, we focus on a financial measure we refer to as Underlying EBIT. Underlying EBIT is the key measure that management uses internally to assess the performance of our ~~business,~~Businesses, make decisions on the allocation of resources and assess operational management. Management uses this measure because financing structures and tax regimes differ across our assets and substantial components of our tax and interest charges are levied at a Group level rather than an operational level.

The following table reconciles Underlying EBIT to Profit from operations.


Year ended 30 June	2012			2011			2010		2014 US$M Restated		2013 US$M Restated
Year ended 30 June									2014 US$M Restated		2013 US$M Restated
Year ended 30 June										22,098		21,680
Exceptional items (before taxation) – refer section 1.15.3										551		297
	US$M			US$M			US$M
Underlying EBIT		27,238			31,980			19,719
Exceptional items (before taxation) – refer section 3.6.5		(3,486	)		(164	)		312
Profit from operations (EBIT)		23,752			31,816			20,031		22,649		21,977

Attributable profit increased by 23 per cent to US$13.8 billion mainly driven by a decrease in the Group’s effective tax rate.

Net operating cash flows from Continuing operations after interest and tax increased by 24 per cent to US$23.6 billion in FY2014. A US$2.3 billion increase in cash generated from operations (after changes in working capital balances) and a US$1.7 billion decrease in net taxes paid were the major contributors to the increase. We delivered a substantial US$7.1 billion increase in free cash flow, being Net operating cash flows less Net investing cash flows, despite weaker commodity prices. Capital and exploration expenditure (BHP Billiton share) declined to US$14.6 billion for the period.

We finished the period with net debt of US$25.8 billion (2013: US$27.5 billion), which included finance leases of US$1.3 billion (2013: US$137 million), for a gearing ratio of 23 per cent (2013: 27 per cent). IFRS 5/AASB 5 ‘Non-current Assets Held for Sale and Discontinued Operations’ does not require the Consolidated Balance Sheet to be restated for comparative periods. The ~~following table describes the approximate impact~~FY2014 and FY2013 figures therefore includes assets and liabilities of the ~~principal factors that affected~~Businesses demerged with South32. For information relating to Discontinued operations refer to note 29 ‘Discontinued operations’ to the Financial Statements.

2.5.2 Underlying EBIT ~~for FY2012 and FY2011.~~

Year ended 30 June
   2012 2011
   US$M US$M
Underlying EBIT as reported in the prior year
   31,980    19,719
Change in volumes:

Increase in volumes
   2,529    841
Decrease in volumes
   (2,221 ) (1,422 )


   308    (581 )


Net price impact:

Change in sales prices
   (2,213 ) 18,648
Price-linked costs
   253    (1,420 )


   (1,960 ) 17,228


Change in costs:

Costs (rate and usage)
   (3,138 ) (1,412 )
Exchange rates
   820    (2,526 )
Inflation on costs
   (764 ) (635 )


   (3,082 ) (4,573 )


Asset sales
   78    (85 )
Ceased and sold operations
   347    (140 )
New and acquired operations⁽¹⁾
   (86 ) 1,153
Exploration and business development
   (819 ) (328 )
Other
   472    (413 )


Underlying EBIT
   27,238    31,980

⁽¹⁾	~~Assets are reported as New and acquired operations until there is a full-year period for comparison. Accordingly, Petrohawk and Fayetteville (for FY2012 and FY2011) are in New and acquired operations.~~

The method of calculation of the factors that affected Underlying EBIT and the financial statement line items of Revenue, Other income and Expenses (excluding net finance costs) that are affected by the factors are as follows.


~~Factor affecting Underlying EBIT~~	~~Method of calculation~~	~~Financial~~ ~~statement~~ ~~line item~~ ~~affected~~
~~Volumes~~	~~Change in volumes for each operation from the corresponding period to the current period multiplied by prior year Underlying EBIT margin.~~	~~Revenue and~~ ~~Expenses~~

~~Change in sales prices~~	~~Change in average realised price for each operation from the corresponding period to the current period multiplied by current period volumes.~~	~~Revenue~~

~~Price-linked costs~~	~~As for change in sales prices.~~	~~Expenses~~

~~Costs (rate and usage)~~	~~Change in total costs, other than those included in other categories below, for each operation from the corresponding period to the current period.~~	~~Expenses~~

~~Exchange rates~~	Change in exchange rate multiplied by current period local currency revenue and expenses – the majority of the Group’s selling prices are denominated in US dollars and so there is little impact of exchange rate changes on Revenue.	~~Revenue and~~ ~~Expenses~~

~~Inflation on costs~~	Change in inflation rate applied to expenses, other than depreciation and amortisation, price-linked costs, exploration and business development expenses, expenses in ceased and sold and expenses in new and acquired operations.	~~Expenses~~

~~Asset sales~~	~~Profit/loss on the sale of assets or operations in the current period minus profit/loss on sale in the corresponding period.~~	~~Other income~~

~~Ceased and sold operations~~	~~Underlying EBIT for operations that are ceased or sold operations in the current period minus Underlying EBIT for operations that are ceased or sold in the corresponding period.~~	~~Revenue,~~ ~~Other income~~ ~~and Expenses~~

~~New and acquired operations~~	~~Underlying EBIT for operations that are new or acquired in the current period minus Underlying EBIT for operations that are new or acquired in the corresponding period.~~	~~Revenue,~~ ~~Other income~~ ~~and Expenses~~

~~Exploration and business development~~	~~Exploration and business development expense in the current period minus exploration and business development expense in the corresponding period.~~	~~Expenses~~

~~Other~~	~~Variances not explained by the above factors.~~	~~Expenses~~

~~The following commentary provides description of the principal factors outlined in the table above for FY2012 and FY2011.~~

Year ended 30 June ~~2012~~2015 compared with year ended 30 June ~~2011~~2014

An analysis of the consolidated EBIT for FY2015 compared to FY2014 is included in section 1.15.3.

Year ended 30 June 2014 compared with year ended 30 June 2013

For FY2014, Underlying EBIT ~~for FY2012 was US$27.2 billion, compared with US$32.0 billion in the corresponding period, a decrease of 14.8 per cent.~~

~~Volumes~~

Disciplined investment throughout the economic cycle has established strong momentum in our major businesses, demonstrated by a twelfth consecutive annual production record at WAIO and record annual production at another nine operations. In aggregate, volumes increased Underlying EBIT by US$308 million in the period.

~~WAIO shipments rose to a record annualised rate of 179 million tonnes (Mt) in the June 2012 quarter (100~~declined 1.9 per cent ~~basis). The resultant 23 Mt (BHP Billiton share) uplift in WAIO shipments increased Underlying EBIT by~~to US$~~2.4 billion in FY2012.~~22.1 billion.

Downtime at our non-operated facilities in the Gulf of Mexico, US, and the North West Shelf, Australia, and natural field decline, particularly at Pyrenees, Australia, were the major contributors to the volume related US$1.1 billion

A reduction in Underlying EBIT for the Petroleum business. The Atlantis and Mad Dog, both US, facilities resumed production in August 2012. In Base Metals, annual copper production records were set at Antamina and Spence, Chile, although lower grades and industrial action constrained performance at Escondida. An overall decline in Base Metals volumescommodity prices reduced Underlying EBIT by US$~~509 million~~2.6 billion. This was offset by cost improvements which underpinned a decrease in operating cash costs of US$1.1 billion and a decrease in exploration and business development costs of US$398 million. In addition, higher volumes attributed to our development projects coming on line and through productivity efficiencies at existing assets, primarily in Iron Ore and Petroleum, contributed an additional US$3.0 billion to Underlying EBIT. This was offset by increased depreciation and amortisation which reduced Underlying EBIT by US$1.6 billion.

Prices

Lower average prices reduced Underlying EBIT by US$2.6 billion in FY2014.

In metallurgical coal, an increase in seaborne supply and the resilience of higher cost, along with uneconomic capacity led to a 19 per cent and 14 per cent decline in the ~~period.~~

average realised price of hard coking coal and weak coking coal, respectively. The ~~impact on EBIT arising from~~average price received for thermal coal also declined by 14 per cent during the ~~increase in volume relating to the acquisition of our US Onshore business is included under the heading ‘New and acquired operations’.~~

~~Prices~~

~~Prices for many of BHP Billiton’s products declined during FY2012 as global economic growth slowed and concerns surrounding the economic outlook increased.~~period. In total, lower average realised prices in our Coal Business reduced Underlying EBIT by US$2.0 billion in FY2012, net of price-linked costs. The impact was most apparent in our Base Metals and Iron Ore businesses where weaker prices reduced Underlying EBIT by US$1.6 billion and US$1.3 billion, respectively. No respite was provided for our Aluminium, Manganese and Stainless Steel Materials businesses, where lower realised prices reduced Underlying EBIT by a combined US$1.2 billion.

~~In Petroleum, a 19~~A five per cent ~~increase~~decline in the average realised price of ~~oil and a 29 per cent rise in~~copper reflected the average realised price of liquefied natural gas contributed to a US$1.5 billion increase in Underlying EBIT in FY2012. In addition, stronger thermal and metallurgical coal realised prices increased Underlying EBIT by a combined US$434 million, net of price-linked costs.

~~Costs~~

Industry-wide cost pressure resulted in a decline in Underlying EBIT of US$3.1 billion, particularly in Base Metals and in Metallurgical Coal, where industrial action at Queensland Coal and Escondida created additional pressure on costs.

Higher costs, excluding the impacts of inflation, exchange rate volatility and non-cash items, reduced Underlying EBIT by US$2.7 billion in FY2012. Labour and contractor cost increases and higher raw material costs accounted for more than half of this increase.

The Group has been quick to respond to the change in the operating environment and has acted decisively by closing energy intensive silicomanganese alloy production capacity in South Africa and by temporarily closing capacity at TEMCO. In addition, metallurgical coal production at Norwich Park was suspended following a reviewnear-term rebalancing of the ~~mine’s profitability.~~

~~Non-cash items, which included foreign exchange rate related adjustments to~~market, while the ~~carrying value~~acceleration of ~~inventory and higher depreciation associated with the completion of major projects, reduced Underlying EBIT by a further US$435 million in FY2012.~~

~~Exchange rates~~

The cost related impact of the stronger Australian dollar reduced Underlying EBIT by US$565 million in FY2012. However, the positive restatement of monetary items in the balance sheet that followed the general strengthening of the US dollar against a basket of currencies at the end of the period resulted in a US$1.1 billion increase in Underlying EBIT. In total, exchange rate volatility increased Underlying EBIT by US$820 million.

~~Average and closing exchange rates for FY2012 and FY2011 are detailed in note 1 ‘Accounting policies’ to the financial statements.~~

~~Inflation~~low-cost, seaborne iron ore supply growth, predominantly from Australia’s Pilbara region, weighed on ~~costs~~

Inflationary pressure had an unfavourable impact on all CSGs and reduced Underlying EBIT by US$764 million during FY2012. The pressure was most notable in Australia and South Africa, which accounted for 75 per cent of the total impact.

~~Asset sales~~

The contribution of asset sales to Underlying EBIT increased by US$78 million from the corresponding period and primarily reflected the receipt of a post-closing payment that followed the 2006 divestment of our interests in Cascade and Chinook, US.

~~Ceased and sold operations~~

A favourable foreign exchange related restatement and partial release of the Newcastle steelworks, Australia, rehabilitation provision accounted for the majority of the US$347 million increase in Underlying EBIT.

~~New and acquired operations~~

Assets are reported as new and acquired operations until there is a full-year period for comparison. New and acquired operations reduced Underlying EBIT by US$86 million in FY2012. Iron Ore’s acquisition of the HWE business in Western Australia increased Underlying EBIT by US$97 million, which was more than offset by a decrease in Underlying EBIT for the Onshore US business of US$183 million – being a loss of US$140 million in FY2012 compared with a profit of US$43 million in FY2011.

~~The additional revenue of US$2.1 billion for Onshore US in FY2012 did not result in additional EBIT due to the impact of lower realised gas~~ prices in the ~~United States.~~

~~Exploration and business development~~

~~Exploration expense increased by US$662 million to US$1.7 billion in FY2012. Within Minerals (US$928 million expense), greenfield exploration continued on~~June 2014 half year. In total, lower average realised prices for copper ~~targets in South America, nickel and copper targets in Australia,~~ and iron ore ~~and potash targets globally.~~

Petroleum exploration expense was US$818 million and included a US$144 million impairment of exploration previously capitalised. Our activities focused on offshore Western Australia, the Gulf of Mexico, South East Asia and our recently acquired Onshore US business.

~~A general increase in the level of business development expenditure reduced Underlying EBIT by a further US$157 million in FY2012.~~

~~Other~~

The absence of specific provisions and non-cash charges that were reported in the Aluminium and Base Metals businesses in FY2011 largely accounted for a US$472 million increase in Underlying EBIT in the period.

~~Year ended 30 June 2011 compared with year ended 30 June 2010~~

~~Underlying EBIT for FY2011 was US$32.0 billion, compared with US$19.7 billion in the corresponding period, an increase of 62.2 per cent.~~

~~Volumes~~

BHP Billiton achieved production records across four commodities and 10 operations during FY2011. WAIO shipments rose to a record annualised rate of 155 mtpa in the June 2011 quarter and, when combined with strong operating performance at Samarco, Brazil, enabled iron ore volumes to contribute an additional US$572 million to Underlying EBIT.

The completion and successful ramp-up of the MAC20 Project ahead of schedule underpinned record production at New South Wales Energy Coal in the period. When considered in conjunction with a 13 per cent increase in South Africa Coal production, Energy Coal volumes increased Underlying EBIT by US$177 million in FY2011.

However, broader challenges continued to delay the supply response of the industry over the 12-month period. For example, metallurgical coal supply was significantly affected by persistent wet weather in the Bowen Basin, Australia, while ongoing permitting delays in the Gulf of Mexico continued to impact drilling activity. In aggregate, volumes reduced BHP Billiton Underlying EBIT by US$581 million in FY2011 despite generally strong operating performance.

~~Prices~~

Robust demand driven by the emerging economies, a general elevation and steepening of global (commodity) cost curves and the persistent theme of supply side constraint, were all catalysts for higher commodity prices that increased Underlying EBIT by US$18.6 billion in the period. Another strong year of growth in Chinese crude steel production ensured steelmaking material prices were the major contributing factor, as they alone increased Underlying EBIT by US$11.1 billion. Price-linked costs (including royalties) reduced Underlying EBIT by US$1.4 billion.

~~Costs~~The value of diversification was again evident as higher average realised prices for our petroleum products increased Underlying EBIT by US$219 million. The average price achieved for our natural gas sales book, covering domestic and international markets, increased by 16 per cent.

~~Excluding the impact of a weaker US dollar, inflation and an increase in non-cash items,~~Price-linked costs decreased Underlying EBIT by US$~~1.2~~111 million during the period, primarily reflecting higher royalty charges in our Petroleum and Iron Ore Businesses.

Volumes

Volume efficiencies attributed to productivity and the ramp-up of major projects, underpinned an increase in production in a number of Businesses in FY2014 and an additional US$3.0 billion in Underlying EBIT. WAIO was the major contributor as the ramp-up of the Jimblebar mining hub and a series of productivity initiatives raised the capacity of our integrated supply chain and supported a US$1.8 billion increase in Underlying EBIT. Despite the impact of natural field decline, stronger volumes in our Petroleum Business generated an additional US$994 million of Underlying EBIT, reflecting 73 per cent growth in Onshore US liquids volumes and a near doubling of production at Atlantis.

Controllable cash costs

A broad-based improvement in productivity underpinned a decrease in controllable cash costs of US$1.5 billion during the period, including a decrease in operating cash costs of US$1.1 billion and a decrease in exploration and business development costs of US$398 million.

Operating cash costs

The Group’s commitment to further improve the competitive position of its assets delivered tangible results in FY2014 as operating cash costs declined by US$1.1 billion.

~~BHP Billiton has regularly highlighted its belief that costs tend to lag the commodity price cycle as consumable,~~ A general increase in labour and contractor ~~costs were broadly correlated with~~productivity had the ~~mining industry’s level of activity. In the FY2011 environment of elevated commodity prices, tight labour and raw material markets were presenting a challenge for all operators.~~

~~Higher fuel and energy prices (of which BHP Billiton was a net beneficiary), together with increased maintenance, labour and contractor costs, accounted for the majority of the~~greatest impact, ~~and reduced~~increasing Underlying EBIT by US$~~878 million.~~1.3 billion.

~~Cost performance~~

Exploration and business development

The Group’s exploration expenditure declined by 25 per cent in FY2014 to US$986 million as we sharpened our focus on greenfield copper porphyry targets in Chile and Peru, and high impact liquids opportunities in the ~~large bulk commodity businesses was heavily influenced by the ability to leverage infrastructure~~Gulf of Mexico, Western Australia and ~~maximise volumes. In this regard, the weather related disruption at our Queensland Coal, Australia, business had a negative impact on unit costs~~Trinidad and Tobago. The associated reduction in the ~~period. The major cost offset was related to the recovery in operating performance that followed last year’s Clark Shaft outage at Olympic Dam.~~

~~Non-cash items, predominantly depreciation, reduced~~Group’s exploration expense increased Underlying EBIT by ~~a further~~ US$~~255 million and reflected the ongoing delivery of our organic growth program.~~328 million.

Other costs

Exchange rates

A ~~weaker~~stronger US dollar ~~against producer currencies reduced~~increased Underlying EBIT by US$~~2.5~~1.2 billion ~~which~~and included a US$735 million variance related to the restatement of monetary items in the balance sheet. The Australian operations were the most heavily impacted. The strong Australian dollar reduced Underlying EBIT by US$2.1 billion, which included a US$640 million variance related to the restatement of monetary items in the balance sheet. The absolute impact on costs as a result of the restatement of monetary items in the balance sheet, ~~was a loss of~~which reduced Underlying EBIT by US$~~807 million in FY2011.~~

352 million. Average and closing exchange rates for ~~FY2011~~FY2014 and ~~FY2010~~FY2013 are detailed in note ~~1 ‘Accounting policies’~~42 ‘Functional and presentation currency’ to the ~~financial statements.~~Financial Statements.

Inflation on costs

~~Inflationary pressure on costs across all businesses~~Inflation had an unfavourable impact on all Businesses and reduced Underlying EBIT ofby US$~~635 million. The pressure~~575 million during FY2014. This was most ~~evident~~notable in Australia and ~~South Africa,~~Chile, which accounted for ~~over two-thirds~~85 per cent of the total ~~impact.~~variance.

Non-cash

An increase in non-cash charges reduced Underlying EBIT by US$1.7 billion during the period.

A US$631 million increase in the depreciation and amortisation charge at Onshore US reflected the ramp-up of liquids production and the progressive development of our Permian acreage. We continue to expect the depreciation rate in the Permian to normalise at a lower level as reserves are booked and the production rate grows towards 100 Mboe per day over the medium term. The completion and progressive ramp-up of several major projects in our Iron Ore and Coal Businesses resulted in an US$704 million increase in the depreciation and amortisation expense during the period.

Depreciation and amortisation expense included the following impairment charges: a US$184 million charge related to minor Gulf of Mexico assets; and a US$68 million charge associated with our decision to allow the exclusivity agreement for Terminal 5 at the Port of Vancouver (United States) to lapse.

A US$300 million charge related to the revision of mine site rehabilitation provisions for the Group’s North American closed mines and a lower capitalisation rate for deferred stripping at Escondida and Pampa Norte also contributed to the increase in non-cash charges.

Asset sales

The ~~profit on~~divestment of Liverpool Bay more than accounted for the ~~sale of assets was~~ US$8561 million ~~lower than the corresponding period largely due to the dissolution of the Douglas Tavistock Joint Venture, South Africa, which increased~~increase in Underlying EBIT ~~in the prior period.~~related to asset sales.

Ceased and sold operations

~~The currency revaluation of rehabilitation~~Underlying EBIT from ceased and ~~closure provisions for ceased~~sold operations ~~was~~decreased by US$349 million in FY2014 and largely reflected: a US$143 million negative adjustment to the ~~major driver~~Browse divestment price and the closure of the ~~US$140 million reduction~~Nickel West Leinster Perseverance underground mine in ~~Underlying EBIT.~~November 2013.

~~New and acquired operations~~

Assets are reported as new and acquired operations until there is a full-year comparison. New operations increased Underlying EBIT by US$1.2 billion primarily due to strong performance at the BHP Billiton operated Pyrenees oil facility and the inaugural contribution from the recently acquired Fayetteville shale assets.

~~Exploration and business development~~

Group exploration expense increased marginally in FY2011 to US$1.1 billion. Within Minerals (US$577 million expense), the focus centred upon copper targets in South America, Mongolia and Zambia; nickel and copper targets in Australia; and diamond targets in Canada. Exploration for iron ore, potash, uranium and manganese was undertaken in a number of regions, including Australia, Asia, Africa and the Americas.

Petroleum exploration expense was US$477 million and included a US$73 million impairment of exploration previously capitalised. Exploration drilling activity was delayed in the Gulf of Mexico due to new regulatory permitting processes, but was partially offset by an increase in the acquisition and processing of geophysical data.

Expenditure on business development reduced Underlying EBIT by an additional US$303 million compared with the prior period as Base Metals progressed a number of its development options, including Olympic Dam Project (ODP1) and the Spence Hypogene project, Chile. Increased activity on the Scarborough and Browse liquefied natural gas projects, both Australia, in FY2011 also contributed to the rise in the business development expense.

~~Other~~

Other items decreased Underlying EBIT by US$413 million and included provisions totalling US$189 million related to indirect taxes in the Aluminium and Iron Ore businesses and Colombian net worth tax in Stainless Steel Materials and Energy Coal.

~~3.6.3~~2.5.3 Net finance costs

Year ended 30 June ~~2012~~2015 compared with year ended 30 June ~~2011~~2014

~~Net~~An analysis of net finance costs ~~increased~~for FY2015 compared to ~~US$730 million from US$561 million~~FY2014 is included in the corresponding period. This was primarily driven by increased net interest expense on higher net debt, partially offset by exchange rate variations on net debt. At 30 June 2012 net debt, comprising interest bearing liabilities less cash and cash equivalents, was US$23.6 billion, which represented an increase of US$17.8 billion compared with the net debt position at 30 June 2011.section 1.15.3.

Year ended 30 June ~~2011~~2014 compared with year ended 30 June ~~2010~~2013

Net finance costs ~~increased to~~of US$~~561~~914 million decreased by US$235 million from ~~US$459 million in~~ the ~~corresponding~~prior period. This was primarily ~~driven~~due to a decrease of US$299 million in net interest expense, partially offset by ~~exchange rate variations on net debt and lower amounts~~less interest capitalised of ~~interest capitalised.~~US$108 million.

~~3.6.4~~2.5.4 Taxation expense

Year ended 30 June ~~2012~~2015 compared with year ended 30 June ~~2011~~2014

An analysis of taxation expenses for FY2015 compared to FY2014 is included in section 1.15.3.

Year ended 30 June 2014 compared with year ended 30 June 2013

Total taxation expense, including royalty-related taxation, ~~exceptional items and~~ exchange rate movements and exceptional items, was US$~~7.5~~6.8 billion, representing ana statutory effective tax rate of ~~32.5~~31.2 per cent ~~(2011: 23.4~~(30 June 2013: 32.1 per cent).

Exchange rate movements increased taxation expense by US$250 million (2011: decrease of US$1.5 billion). The reduced impact compared with FY2011 was predominantly due to eligible Australian entities electing to adopt a US dollar tax functional currency from 1 July 2011.

Exceptional items decreased taxation expense by US$1.7 billion (2011: decrease of US$2.1 billion), predominantly due to the recognition of tax benefits of US$1.2 billion arising from the impairments of goodwill and other assets in relation to the Fayetteville shale gas assets, Nickel West and the Olympic Dam expansion project and the recognition of a net income tax benefit of US$637 million on enactment of the MRRT and PRRT extension legislation in Australia.

Government imposed royalty arrangements calculated by reference to profits ~~after adjustment for temporary differences~~ are reported as royalty-related taxation. ~~Royalty-related taxation (excluding exceptional items) contributed US$889 million to~~The Minerals Resource Rent Tax (MRRT) reduced taxation expense ~~representing an~~by US$198 million in FY2014 (30 June 2013: increase of US$180 million) as royalty-related credits in the Coal Business more than offset Iron Ore MRRT expense for the period. This included the remeasurement of deferred tax assets associated with the MRRT which decreased taxation expense by US$170 million in the period (30 June 2013: increase of US$12 million).

The Group’s adjusted effective tax rate, which excludes the influence of ~~3.9~~exchange rate movements, exceptional items and the remeasurement of deferred tax assets associated with the MRRT, was 32.2 per cent ~~(2011: US$828 million and 2.6~~(30 June 2013: 33.8 per cent).

Adjusted effective tax rate is not an IFRS measure and is reconciled to the statutory effective tax rate below:


Year ended 30 June	2014 Restated					2013 Restated
	Profit before tax US$M	Income tax expense US$M	%			Profit before tax US$M	Income tax expense US$M	%
	Profit before tax US$M	Income tax expense US$M	%			Profit before tax US$M	Income tax expense US$M	%
Statutory effective tax rate	21,735	(6,780)		31.2	%	20,828	(6,696)		32.1	%
Less:
Exchange rate movements	–	(34)				–	134
Remeasurement of deferred tax assets associated with the MRRT	–	(170)				–	12
Exceptional items	(551)	166				�� (297)	(384)

Adjusted effective tax rate	21,184	(6,818)		32.2	%	20,531	(6,934)		33.8	%

Other royalty and excise arrangements that ~~did~~are not ~~have these characteristics,~~profit based are recognised as operating costs within Profit before taxation. These amounted to US$~~3.1~~2.4 billion during the period ~~(2011:~~(30 June 2013: US$~~2.9~~2.2 billion).

2.5.5 Exceptional items

~~Year~~Years ended 30 June ~~2011 compared with year ended~~2015 and 30 June ~~2010~~2014

~~Total taxation expense, including royalty-related taxation and~~An analysis of the ~~predominantly non-cash~~ exceptional items for FY2015 and ~~exchange rate movements,~~FY2014 are included in section 1.15.3.

Year ended 30 June 2013
   Gross
US$M Tax
US$M Net
US$M

Exceptional items by category

Sale of Yeelirrie uranium deposit
   420    –    420
Sale of Richards Bay Minerals
   1,212    (183 ) 1,029
Sale of diamonds business
   (97 ) (42 ) (139 )
Sale of East and West Browse Joint Ventures
   1,539    (188 ) 1,351
Impairment of Nickel West assets
   (1,698 ) 454    (1,244 )
Impairment of Permian Basin assets
   (266 ) 99    (167 )
Other impairments arising from capital project review
   (971 ) 291    (680 )
Newcastle steelworks rehabilitation
   158    (47 ) 111


   297    384    681

The Group announced the sale of its wholly owned Yeelirrie uranium deposit resulting in a gain on sale of US$420 million, while the associated tax expense was ~~US$7.3 billion, representing an effective~~offset by the recognition of deferred tax ~~rate~~benefits on available tax losses.

The Group announced it had completed the sale of ~~23.4~~its 37.76 per cent ~~(2010: 33.5~~effective interest in Richards Bay Minerals resulting in a gain on sale of US$1.0 billion (after tax expense).

The Group announced the sale of its diamonds business, comprising its interests in the EKATI Diamond Mine and Diamond Marketing operations. The transaction was completed on 10 April 2013 for an aggregate cash consideration of US$553 million (after adjustments). An impairment charge of US$139 million (after tax expense) was recognised based on the final consideration.

The Group signed a definitive agreement to sell its 8.33 per ~~cent).~~

~~Exchange rate movements decreased taxation expense by~~cent interest in the East Browse Joint Venture and 20 per cent interest in the West Browse Joint Venture resulting in a gain on sale of US$1.5 billion ~~(2010: increase~~being recognised in FY2013. The associated tax expense of US$~~106 million), predominantly due to the revaluation of local currency deferred tax assets arising from future tax depreciation of US$2.5 billion,~~462 million was partly offset by the ~~revaluation~~recognition of ~~local currency tax liabilities and~~ deferred tax ~~balances arising from other monetary items~~benefits on available tax losses of US$241 million and ~~temporary differences, which amounted to US$1.0 billion.~~

~~Exceptional items decreased taxation expense by US$2.1 billion (2010: increase of US$59 million), predominantly due to~~ the ~~reversal~~derecognition of deferred tax liabilities of US$~~1.5 billion following the election~~33 million. The final sales price was determined during FY2014 requiring a loss of ~~eligible Australian entities to adopt a US dollar tax functional currency, as well as the release of tax provisions of~~ US$~~718~~143 million ~~following the Group’s position being confirmed with respect to Australian Taxation Office (ATO) amended assessments.~~recognised in FY2014.

~~Royalty-related taxation contributed US$828 million to taxation expense, representing an effective rate of 2.6 per cent (2010: US$451 million and 2.3 per cent).~~

~~Other royalty and excise arrangements amounted to US$2.9 billion during the period (2010: US$1.7 billion).~~

~~3.6.5 Exceptional items~~

~~Year ended 30 June 2012~~

Year ended 30 June 2012
   Gross Tax Net
   US$M US$M US$M
Exceptional items by category

Impairment of Fayetteville goodwill and other assets
   (2,835 ) 996    (1,839 )
Impairment of Nickel West goodwill and other assets
   (449 ) 94    (355 )
Suspension or early closure of operations and the change in status of specific projects ⁽¹⁾
   (502 ) 108    (394 )
Settlement of insurance claims⁽¹⁾
   300    (90 ) 210
Recognition of deferred tax assets on enactment of MRRT and PRRT extension legislation in Australia
   –    637    637


   (3,486 ) 1,745    (1,741 )

⁽¹⁾	~~Includes amounts attributable to non-controlling interests of US$(34) million (US$7 million tax expense).~~

As a result of expected continued strength in the ~~fall in United States domestic gas~~Australian dollar and weak nickel prices, ~~and the Company’s decision to adjust its development plans,~~ the Group ~~has~~ recognised ~~impairments of goodwill and other assets in relation to its Fayetteville shale gas assets. A total~~an impairment charge of US$~~2.8~~1.2 billion ~~(US$996~~(after tax benefit) at Nickel West in FY2013.

An impairment charge of US$167 million (after tax benefit) was recognised as the performance of specific evaluation wells in ~~FY2012.~~

~~The Group has recognised impairments of goodwill and other assets at Nickel West as a result~~certain areas of the ~~continued downturn in~~Permian Basin (United States) did not support economic development.

In FY2013, WAIO refocused its attention on the ~~nickel price~~capital efficient expansion opportunity that exists within the Port Hedland inner harbour, and ~~margin deterioration. A total impairment charge of US$449 million (US$94 million tax benefit) was recognised in FY2012.~~

~~As part of our regular portfolio review, various operations~~all early works associated with the outer harbour development option were suspended. This revision to the WAIO development sequence and ~~projects around the Group have either been suspended, closed early or changed in status. These include:~~ the change in status of the Olympic Dam expansion project; the temporary suspension of production at TEMCO and the permanent closure of the Metalloys South Plant in South Africa; the indefinite cessation of production at Norwich Park; and the suspension of other minor capital ~~projects. As a result,~~projects across the Group resulted in the recognition of impairment charges of US$~~422~~604 million ~~(US$84 million tax benefit), idle capacity~~

~~costs and inventory write-down of US$40 million (US$12 million~~(after tax benefit) and other restructuring costs of US$4076 million ~~(US$12~~(after tax benefit) in FY2013, of which US$580 million (after tax benefit) were ~~recognised in FY2012 of which US$346 million (US$104 million tax benefit)~~ related to ~~Olympic Dam.~~WAIO.

During 2008, the extreme weather across the central Queensland coalfields in Australia affected production from the BHP Billiton Mitsubishi Alliance (BMA) and BHP Billiton Mitsui Coal (BMC) operations. The Group settled insurance claims in respect of the lost production, and insurance claim income of US$300 million (US$90 million tax expense) was recognised in FY2012.

The Australian MRRT and PRRT extension legislation was enacted in March 2012. Under the legislation, the Group is entitled to a deduction against future MRRT and PRRT liabilities based on the market value of its coal, iron ore and petroleum assets. A deferred tax asset, and an associated net income tax benefit of US$637 million, was recognised in FY2012 to reflect the future deductibility of these market values for MRRT and PRRT purposes, to the extent they are considered recoverable.

~~Refer to note 3 ‘Exceptional items’ to the financial statements for more information.~~

~~Year ended 30 June 2011~~

Year ended 30 June 2011
   Gross Tax Net
   US$M US$M US$M
Exceptional items by category

Withdrawn offer for PotashCorp
   (314 ) –    (314 )
Newcastle steelworks rehabilitation
   150    (45 ) 105
Release of income tax provisions
   –    718    718
Reversal of deferred tax liabilities
   –    1,455    1,455


   (164 ) 2,128    1,964

The Group withdrew its offer for Potash Corporation of Saskatchewan (PotashCorp) on 15 November 2010 following the Board’s conclusion that the condition of the offer relating to receipt of a net benefit as determined by the Minister of Industry under the Investment Canada Act could not be satisfied. The Group incurred fees associated with the US$45 billion debt facility (US$240 million), investment bankers’, lawyers’ and accountants’ fees, printing expenses and other charges (US$74 million) in progressing this matter during the period up to the withdrawal of the offer, which were expensed as operating costs in FY2011.

The Group recognised a decrease of US$~~150~~158 million ~~(US$45 million~~(before tax ~~charge)~~expense) to its rehabilitation obligations in respect of former operations at the Newcastle steelworks ~~Australia, following a full review of~~(Australia). This followed the ~~progress~~completion of the Hunter River Remediation ~~project, Australia,~~Project and ~~estimated costs~~reaching agreement with the Environment Protection Authority in March 2013 regarding the necessary scope of work to ~~completion.~~repeal the Environmental Classification at Steel River.

~~The ATO issued amended assessments in prior years denying bad debt deductions arising from the investments in Beenup~~


Year ended 30 June 2013 US$M	Sale of assets		Impairment of goodwill and other assets			Restructuring costs			Closure and rehabilitation provisions released		Gross
Sale of Yeelirrie uranium deposit		420		–			–			–		420
Sale of Richards Bay Minerals		1,212		–			–			–		1,212
Sale of diamonds business		–		(97	)		–			–		(97	)
Sale of East and West Browse Joint Ventures		1,539		–			–			–		1,539
Impairment of Nickel West assets		–		(1,698	)		–			–		(1,698	)
Impairment of Permian Basin assets		–		(266	)		–			–		(266	)
Other impairments arising from capital project review		–		(863	)		(108	)		–		(971	)
Newcastle steelworks rehabilitation		–		–			–			158		158

		3,171		(2,924	)		(108	)		158		297

2.5.6 Petroleum and Boodarie Iron, both Australia, and the denial of capital allowance claims made on the Boodarie Iron project. The Group challenged the assessments and was successful on all counts before the Full Federal Court. The ATO obtained special leave in September 2010 to appeal to the High Court in respectPotash Business

An analysis of the ~~denial~~financial performance of ~~capital allowance claims made on the Boodarie Iron project. The Group’s position~~our Petroleum and Potash Business for FY2015 compared to FY2014 is included in respect of the capital allowance claims on the Boodarie Iron project was confirmed by the High Court in June 2011. As a result of these appeals, US$138 million was released from the Group’s income tax provision in September 2010 and US$580 million in June 2011.

Consistent with the functional currency of the Group’s operations, eligible Australian entities elected to adopt a US dollar tax functional currency from 1 July 2011. As a result, a deferred tax liability relating to certain US dollar denominated financial arrangements was derecognised, resulting in a credit to income tax expense of US$1.5 billion.section 1.12.2.

Financial information for the Petroleum and Potash Business for FY2015 and FY2014 is presented below.

Year ended
30 June 2015
US$M
Revenue ⁽ⁱ⁾ Underlying
EBITDA D&A Underlying
EBIT Net
operating
assets Capital
expenditure Exploration
gross ⁽ⁱⁱ⁾ Exploration
to profit ⁽ⁱⁱⁱ⁾
Australia Production Unit ^(iv)
1,003    862    337    525    1,091    44
Bass Strait
1,291    1,025    127    898    3,055    328
North West Shelf
1,899    1,351    186    1,165    1,400    135
Atlantis
1,071    904    368    536    2,146    354
Shenzi
973    868    287    581    1,399    268
Mad Dog
175    87    34    53    581    101
Eagle Ford ^(v)
2,932    1,792    2,172    (380 ) 10,754    2,315
Permian ^(v)(vi)
263    69    502    (433 ) 1,096    773
Haynesville^(v)(vi)
532    13    554    (541 ) 5,916    411
Fayetteville^(v)
448    162    195    (33 ) 2,960    183
Trinidad/Tobago ^(iv)
220    159    28    131    827    10
Algeria
309    247    38    209    97    23
Exploration
–    (481 ) 48    (529 ) 733    –
Other^(vii)(viii)
276    98    342    (244 ) 2,518    78

Total Petroleum
11,392    7,156    5,218    1,938    34,573    5,023    567    529

Potash
–    (178 ) 6    (184 ) 2,684    336    3    3
Other^(ix)
–    47    –    47    (970 ) –    –    –

Total Petroleum and Potash from Group production
11,392    7,025    5,224    1,801    36,287    5,359    570    532

Third party products
69    1    –    1    –    –

Total Petroleum and Potash
11,461    7,026    5,224    1,802    36,287    5,359    570    532

Adjustment for equity accounted investments ^(x)
(14 ) (3 ) (3 ) –    –    –    –    –

Total Petroleum and Potash statutory result
11,447    7,023    5,221    1,802    36,287    5,359    570    532

Year ended
30 June 2014
(Restated)
US$M
Revenue ⁽ⁱ⁾ Underlying
EBITDA D&A Underlying
EBIT Net
operating
assets Capital
expenditure Exploration
gross ⁽ⁱⁱ⁾ Exploration
to profit ⁽ⁱⁱⁱ⁾
Australia Production Unit ^(iv)
1,418    1,220    309    911    1,464    419
Bass Strait
1,885    1,555    132    1,423    2,864    259
North West Shelf^(xi)
2,432    1,599    175    1,424    1,691    193
Atlantis
1,535    1,407    335    1,072    2,272    385
Shenzi
1,430    1,281    243    1,038    1,598    210
Mad Dog
217    171    16    155    461    68
Onshore US^(v)
4,264    2,270    2,426    (156 ) 23,377    4,226
Trinidad/Tobago^(iv)
273    374    52    322    709    8
Algeria
465    396    30    366    104    19
Exploration
–    (369 ) 113    (482 ) 464    –
Other^{(vii)(viii)(xii)}
491    220    426    (206 ) 3,264    92

Total Petroleum
14,410    10,124    4,257    5,867    38,268    5,879    600    497

Potash
–    (211 ) 74    (285 ) 2,255    544    47    47
Other^(ix)
–    (298 ) –    (298 ) (1,009 ) –    –    –

Total Petroleum and Potash from Group production
14,410    9,615    4,331    5,284    39,514    6,423    647    544

Third party products
437    3    –    3    –    –

Total Petroleum and Potash
14,847    9,618    4,331    5,287    39,514    6,423    647    544

Adjustment for equity accounted investments ^(x)
(14 ) (3 ) (3 ) –    –    –    –    –

Total Petroleum and Potash statutory result
14,833    9,615    4,328    5,287    39,514    6,423    647    544

⁽ⁱ⁾ Petroleum revenue from Group production includes: crude oil US$6,592 million (2014: US$8,645 million), natural gas US$2,489 million (2014: US$3,119 million), LNG US$1,366 million (2014: US$1,614 million), NGL US$665 million (2014: US$916 million) and other US$266 million (2014: US$102 million).
⁽ⁱⁱ⁾ Includes US$86 million of capitalised exploration (2014: US$231 million).
⁽ⁱⁱⁱ⁾ Includes US$48 million of exploration expenditure previously capitalised, written off as impaired (included in depreciation and amortisation) (2014: US$128 million).
^(iv) Australia Production Unit includes Macedon, Pyrenees, Minerva and Stybarrow. Comparative period has been restated to report Australia Production Unit and Trinidad/Tobago separately from Other.
^(v) For FY2015 onwards Onshore US has been reported separately between Eagle Ford, Permian, Haynesville and Fayetteville.
^(vi) Includes US$328 million of impairments associated with the divestment of assets in North Louisiana (Haynesville) and the Pecos field (Permian).
^(vii) Predominantly divisional activities, business development, Pakistan, UK, Neptune, Genesis and ceased and sold operations. Also includes the Caesar oil pipeline and the Cleopatra gas pipeline which are equity accounted investments and are reported on a proportionate consolidation basis (with the exception of net operating assets).
^(viii) Goodwill associated with Onshore US of US$3,026 million is included in Other Net operating assets (2014: US$3,568 million).
^(ix) Includes closed mining and smelting operations in Canada and the United States.
^(x)
Total Petroleum and Potash segment Revenue excludes US$14 million (2014: US$14 million) revenue related to the Caesar oil pipeline and the Cleopatra gas pipeline. Total Petroleum and Potash segment
Underlying EBITDA includes US$3 million (2014: US$3 million) D&A related to the Caesar oil pipeline and the Cleopatra gas pipeline.
^(xi) Includes an expense of US$143 million incurred in May 2014 related to the purchase price adjustment for the Browse asset sale completed in the 2013 financial year.
^(xii) Includes an expense of US$112 million incurred in November 2013 related to the closure of the UK pension plan. Also includes a gain of US$120 million related to the sale of the Liverpool Bay asset in March 2014.

Year ended 30 June ~~2010~~

Year ended 30 June 2010
   Gross Tax Net
   US$M US$M US$M
Exceptional items by category

Pinal Creek rehabilitation
   186    (53 ) 133
Disposal of the Ravensthorpe nickel operation
   653    (196 ) 457
Restructuring of operations and deferral of projects
   (298 ) 12    (286 )
Renegotiation of power supply agreements
   (229 ) 50    (179 )
Release of income tax provisions
   –    128    128


   312    (59 ) 253

During FY2010, a settlement was reached in relation to the Pinal Creek, US, groundwater contamination, which resulted in other parties taking on full responsibility for groundwater rehabilitation and partly funding the Group for past and future rehabilitation costs incurred. As a result, a gain of US$186 million (US$53 million tax expense) was recognised reflecting the release of rehabilitation provisions and cash received.

The Group sold the Ravensthorpe nickel operations, Australia, during FY2010. As a result of the sale, impairment charges recognised as exceptional items in FY2009 were partially reversed totalling US$611 million (US$183 million tax expense). In addition, certain obligations that remained with the Group were mitigated and related provisions released, together with minor net operating costs this resulted in a gain of US$42 million (US$13 million tax expense).

Continuing power supply constraints impacting the Group’s three aluminium smelters in southern Africa, and temporary delays with the Guinea alumina project, gave rise to charges for the impairment of property, plant and equipment and restructuring provisions. A total charge of US$298 million (US$12 million tax benefit) was recognised by the Group in FY2010.

Renegotiation of long-term power supply arrangements in southern Africa impacted the value of embedded derivatives contained within those arrangements. A total charge of US$229 million (US$50 million tax benefit) was recognised by the Group in FY2010.

The ATO issued amended assessments in prior years denying bad debt deductions arising from the investments in Hartley, Zimbabwe, Beenup and Boodarie Iron and the denial of capital allowance claims made on the Boodarie Iron project. BHP Billiton lodged objections and was successful on all counts in the Federal Court and the Full Federal Court. The ATO did not seek to appeal the Boodarie Iron bad debt disallowance to the High Court, which resulted in a release of US$128 million from the Group’s income tax provisions. The ATO sought special leave to appeal to the High Court in relation to the Beenup bad debt disallowance and the denial of the capital allowance claims on the Boodarie Iron project and was granted special leave only in relation to the denial of the capital allowance claims on the Boodarie Iron project.

~~3.6.6 Customer Sector Group summary~~

The discussion of results for our CSGs is set out below and focuses on Underlying EBIT. The factors affecting Underlying EBIT have also affected revenue, except where stated. For further information on our CSG results, including depreciation, refer note 2 ‘Segment reporting’ to the financial statements.

~~Petroleum~~

~~Year ended 30 June 2012~~2014 compared with year ended 30 June ~~2011~~2013

~~In combination with our worldwide conventional oil~~Petroleum and ~~gas operations, the integration of the Eagle Ford, Haynesville and Permian assets from the Petrohawk acquisition strengthened our operating position in the~~

Potash revenue increased by US$1.6 billion to US$14.8 billion, mainly due to Onshore US, which increased by 43 per cent to US$4.3 billion, and ~~combined with the Fayetteville field contributed~~Atlantis, which increased by 80 per cent to US$1.5 billion.

The increase in revenue primarily resulted from an increase in volume of four per cent in FY2014 to 246 MMboe. A 16 MMboe increase in liquids production was underpinned by a 4073 per cent increase in ~~Petroleum~~Onshore US liquids volumes and a near doubling of production ~~to 222.3 million barrels~~at Atlantis. Natural gas volumes declined by four per cent as the delivery of ~~oil equivalent (MMboe) for FY2012. Our total production averaged 608,000 barrels of oil equivalent per day. This achievement was realised despite extended downtime~~first gas from Macedon partially offset lower demand at ~~our non-operated facilities in the Gulf of Mexico.~~

~~Underlying EBIT for FY2012 was unchanged from the prior period at US$6.3 billion. This financial performance was achieved despite~~Bass Strait and natural field decline at ~~Pyrenees and the substantial deferral~~Haynesville.

The average realised price of ~~high margin production due~~natural gas across our portfolio increased by 16 per cent to ~~extended downtime in the Gulf of Mexico and the North West Shelf. Higher prices for our offshore production increased Underlying EBIT by~~ US$~~1.5 billion largely as~~4.35 per thousand standard cubic feet (Mscf). This included a ~~result of a 19~~25 per cent increase in the average realised price of ~~oil to US$110.66 per barrel and a 29 per cent rise in the average realised price of liquefied~~US natural gas to US$~~14.23~~4.10 per ~~thousand standard cubic feet (scf). For US natural gas, our average realised price in FY2012~~Mscf. This increase was ~~US$2.82 per thousand scf~~⁽¹⁾.

Capital expenditure across our offshore and onshore businesses totalled US$5.8 billion in FY2012. Spending in major capital projects across our conventional portfolio was US$2.5 billion and primarily included projects in Western Australia and the Gulf of Mexico, US.

Exploration and development expenditure specifically within our Onshore US business totalled US$3.7 billion in FY2012 and is expected to rise to US$4.0 billion in FY2013. At the end of FY2012, over 80 per cent of the activity of our approximately 40 drilling rigs in the Onshore US business was focused on the liquids-rich Eagle Ford and Permian fields.

We achieved success in our conventional exploration program in FY2012 as seven of 12 wells encountered hydrocarbons. The associated rise in our level of activity resulted in a US$798 million increase in gross exploration spend for the period to US$1,355 million. Capitalised exploration costs increased from US$153 million in FY2011 to US$681 million in FY2012. A US$775 million high-impact exploration program, in our conventional business, largely focused on the Gulf of Mexico and Western Australia, will target large prospective resources in FY2013. During FY2013, our Onshore US business will focus on development wells rather than exploration.

Petroleum production is forecast to increase to approximately 240 MMboe in FY2013, despite the deferral of Onshore US natural gas drilling at Haynesville and Fayetteville. The forecast increase in production is expected to include a 15 per cent rise in valuable liquids production, which will be underpinned by the recommencement of operations at Mad Dog and Atlantis and an increase in activity in our liquids rich Onshore US acreage. The strong liquids growth potential of our Onshore US business was demonstrated by the 60 per cent increase in liquids production, to more than 40 thousand barrels per day over the 10-month period since the acquisition of Petrohawk.

~~Year ended 30 June 2011 compared with year ended 30 June 2010~~

The successful integration of the Fayetteville Shale gas assets, the start-up of the Angostura Gas Phase II project on schedule and strong underlying performance from existing assets, delivered 159.4 MMboe for FY2011, the fourth consecutive increase in annual petroleum production. BHP Billiton brought the first new deepwater well into production since the Gulf of Mexico moratorium was enacted in May 2010 and this important milestone, achieved at the BHP Billiton operated Shenzi field, US, followed previous regulatory approvals for water injection and production well drilling.

Underlying EBIT of US$6.3 billion represented an increase of US$1.8 billion or 38.4 per cent when compared with the prior period. Higher average realised prices were a major contributor to the increase in Underlying EBIT (US$1.5 billion, net of price-linked costs) and reflected a 28 per cent increase in oil prices to US$93.29 per barrel, a 22 per cent increase in realised liquefied natural gas prices to US$11.03 per thousand scf, and a 17 per cent increase in natural gas prices to US$4.00 per thousand scf. BHP Billiton’s operating capability was further underscored by the success of Pyrenees although natural field decline worldwide was further impacted by the deferral of high volume wells in the Gulf of Mexico.

⁽¹⁾	~~See New and acquired operations in section 3.6.2 for further information~~

~~Gross exploration spend of US$557 million was similarly impacted, although an increase in seismic acquisition and processing~~ partially offset ~~the decrease in drilling activity. Recommencement of development drilling at Atlantis, US, was still pending although~~by a ~~step out exploration well at Mad Dog, US, was underway.~~

~~Aluminium~~

~~Year ended 30 June 2012 compared with year ended 30 June 2011~~

~~Record annual production at the Alumar refinery, Brazil, contributed to a~~ four per cent increase in total alumina production in FY2012. Metal production was lower as potline capacity at Hillside, South Africa, was temporarily curtailed following a major unplanned outage in the March 2012 quarter.

Underlying EBIT for FY2012 decreased by US$557 million to a loss of US$291 million as weaker prices and cost escalation drove significant margin compression. An eight per cent reduction in the average realised price of aluminium (to US$2,314 per tonne) and a three per cent decline in the average realised price of ~~alumina (to~~oil to US$~~333~~102 per ~~tonne) reduced~~ bbl, a one per cent decline in the average realised price of LNG to US$14.67 per Mscf and a seven per cent decline in the average realised price of natural gas liquids (NGL) to US$42.28 per barrel.

Underlying EBIT for Petroleum decreased by US$~~245~~115 million to US$5.9 billion in FY2014. Price-related increases, net of price-linked ~~costs. Higher raw material~~ costs, contributed US$113 million to Underlying EBIT and volumes contributed an additional US$994 million, although this was partially offset by an increase in depreciation and amortisation expense at Onshore US that reflected the ramp-up of liquids production and the progressive development of our Permian acreage. In this regard, our position within our focus area in the Permian increased by 25 per cent in the period to 74 thousand net acres.

Additional charges were also recognised during the period, including: a US$184 million impairment of minor Gulf of Mexico assets; a US$143 million adjustment to the Browse divestment proceeds; and a US$112 million UK pension plan expense. The Group also incurred a charge of US$135 million for ~~inputs such as coke~~underutilised gas pipeline capacity, primarily in the Haynesville.

The Onshore US Underlying EBIT for FY2014 was a loss of US$156 million compared with a loss in FY2013 of US$287 million. The Onshore US Underlying EBITDA for FY2014 was US$2.3 billion compared with US$1.5 billion in FY2013. Second half June 2014 EBITDA increased by more than 60 per cent to US$1.4 billion. As a result, Onshore US generated an Underlying EBIT of US$142 million during the second half of FY2014. This included the aforementioned underutilised gas pipeline capacity charges.

In FY2014, approximately 75 per cent of Onshore US drilling and ~~caustic soda led~~development expenditure of US$4.2 billion was invested in the Eagle Ford, with the majority focused on our Black Hawk acreage. The repetitive, manufacturing-like nature of shale development is ideally suited to our productivity agenda. Drilling costs in the Black Hawk declined by 16 per cent to US$4.2 million per well during the period while spud to sales timing improved by 21 per cent.

Petroleum exploration expenditure for FY2014 was US$600 million, of which US$369 million was expensed. During the period, we signed a ~~further~~production sharing contract for Block 23b (60 per cent interest and operator) and farmed into Blocks 23a and 14 (70 per cent interest and operator) in Trinidad and Tobago.

During the period, we completed the divestment of our 46.1 per cent interest in Liverpool Bay and our South Midland acreage in the Permian basin, Onshore US. Combined proceeds of US$~~223~~182 million ~~decline~~were realised (before customary adjustments) and a gain on sale of US$116 million was recognised in Underlying EBIT. ~~Costs~~

Potash recorded an Underlying EBIT loss of US$583 million. This included: a US$68 million impairment associated with our decision to allow the ~~Hillside outage added~~exclusivity agreement for Terminal 5 at the Port of Vancouver (US) to lapse; and a US$300 million charge related to the ~~decline.~~revision of mine site rehabilitation provisions for the Group’s North American closed mines, which are managed by our Potash Business. In addition, exploration expense for Potash was US$47 million, a US$42 million reduction from FY2013.

The ~~Worsley Efficiency~~Jansen Potash Project was 30 per cent complete at the end of the period with significant progress made on surface infrastructure and ~~Growth project delivered first production during FY2012.~~shaft excavation continuing.

2.5.7 Copper Business

An analysis of the financial performance of our Copper Business for FY2015 compared to FY2014 is included in section 1.12.3.

Financial information for the Copper Business for FY2015 and FY2014 is presented below.

Year ended
30 June 2015
US$M
Revenue Underlying
EBITDA D&A Underlying
EBIT Net
operating
assets Capital
expenditure Exploration
gross Exploration
to profit
Escondida⁽ⁱ⁾
7,819    4,064    920    3,144    13,909    3,273
Pampa Norte⁽ⁱⁱ⁾
1,437    762    669    93    1,926    242
Antamina⁽ⁱⁱⁱ⁾
854    420    107    313    1,379    163
Olympic Dam
1,244    280    253    27    6,665    307
Other^(iii)(iv)
–    (152 ) 11    (163 ) (178 ) –

Total Copper from Group production
11,354    5,374    1,960    3,414    23,701    3,985

Third party products
953    23    –    23    –    –

Total Copper
12,307    5,397    1,960    3,437    23,701    3,985    91    91

Adjustment for equity accounted investments ^(v)
(854 ) (192 ) (108 ) (84 ) –    (163 ) (1 ) (1 )

Total Copper statutory result
11,453    5,205    1,852    3,353    23,701    3,822    90    90

Year ended
30 June 2014
(Restated)
US$M
Revenue Underlying
EBITDA D&A Underlying
EBIT Net
operating
assets Capital
expenditure Exploration
gross Exploration
to profit
Escondida⁽ⁱ⁾
8,085    4,754    760    3,994    11,779    3,186
Pampa Norte⁽ⁱⁱ⁾
1,796    785    429    356    2,575    336
Antamina⁽ⁱⁱⁱ⁾
1,261    818    84    734    1,341    262
Olympic Dam
1,777    299    265    34    6,320    167
Other^(iii)(iv)
101    (193 ) 7    (200 ) (18 ) 13

Total Copper from Group production
13,020    6,463    1,545    4,918    21,997    3,964

Third party products
1,030    8    –    8    –    –

Total Copper
14,050    6,471    1,545    4,926    21,997    3,964    113    113

Adjustment for equity accounted investments^(v)
(1,261 ) (344 ) (86 ) (258 ) –    (267 ) (2 ) (2 )

Total Copper statutory result
12,789    6,127    1,459    4,668    21,997    3,697    111    111

⁽ⁱ⁾ Escondida is consolidated under IFRS 10 and reported on a 100 per cent basis.
⁽ⁱⁱ⁾ Includes Spence and Cerro Colorado.
⁽ⁱⁱⁱ⁾ Antamina and Resolution are equity accounted investments and are reported on a proportionate consolidation basis (with the exception of net operating assets).
^(iv) Predominantly comprises divisional activities, greenfield exploration, business development and ceased and sold operations. Includes Pinto Valley and Resolution. Pinto Valley was sold effective 11 October 2013.
^(v) Total Copper segment Revenue excludes US$854 million (2014: US$1,261 million) revenue related to Antamina. Total Copper segment Underlying EBITDA includes US$108 million (2014: US$86 million) D&A and US$84 million (2014: US$258 million) net finance costs and taxation expense related to Antamina and Resolution that are also included in Underlying EBIT. Copper segment Capital expenditure excludes US$163 million (2014: US$267 million) and US$1 million (2014: US$2 million) Exploration expenditure related to Antamina and Resolution.

Year ended 30 June ~~2011~~2014 compared with year ended 30 June ~~2010~~2013

~~The ongoing ramp-up of the Alumar refinery, Brazil, contributed to a seven per cent increase~~Total copper production in ~~total alumina production for FY2011. Metal production remained largely unchanged with all operations running at or close to technical capacity.~~

Underlying EBIT was US$266 million, a decrease of US$140 million, or 34.5 per cent, when compared with the corresponding period. Higher prices and premia for aluminium had a favourable impact of US$559 million (net of price-linked costs), but were largely offset by a US$519 million increase in costs largely associated with the devaluation of the US dollar, inflation and rising raw material and energy costs. The average realised aluminium priceFY2014 increased by 19two per cent to ~~US$2,515 per tonne, while the average realised alumina price rose 21 per cent to US$342 per tonne. Underlying EBIT was unfavourably impacted by a provision related to indirect taxes in FY2011.~~

~~Base Metals~~

~~Year ended 30 June 2012 compared with year ended 30 June 2011~~

~~BHP Billiton established strong momentum in its Base Metals business in the June 2012 quarter.~~1.7 Mt. Escondida copper production increased by 22two per cent to 1.2 Mt as an improvement in mill throughput and concentrator utilisation offset a nine per cent decline in ore grades. Record mining rates at Olympic Dam underpinned an 11 per cent increase in copper production to 184 kt while Pampa Norte copper production of 233 kt was unchanged from the ~~March 2012 quarter as mining activities progressed towards higher grade ore, while quarterly material mined,~~prior period. Antamina achieved record annual mill throughput and copper production ~~records at Antamina added to the strong finish to the year. Annual copper production, however, declined marginally~~ in FY2012 as lower grades and industrial action constrained performance at Escondida for the first nine months of the year. Production from Pampa Norte, Olympic Dam and Cannington during FY2012 was in line with production in FY2011.FY2014.

~~Underlying EBIT for FY2012~~Copper revenue decreased by US$~~2.8 billion~~383 million to US$~~4.0~~12.8 billion. ~~A 14~~Revenue for Escondida decreased by six per cent ~~fall~~to US$8.1 billion. The decrease in revenue primarily resulted from a five per cent decline in the average realised price of copper to US$~~3.58~~3.22 per ~~pound was~~pound.

Lower average realised prices reduced Underlying EBIT by US$828 million, net of price-linked costs. In contrast, a stronger US dollar against the ~~major contributor~~Chilean peso and Australian dollar increased Underlying EBIT by US$296 million.

Underlying EBIT for FY2014 decreased by US$365 million to US$4.7 billion. Unit cash costs, which we calculate excluding revenue from by-products, at our operated copper assets declined by six per cent during FY2014 despite the ~~decline~~impact of the nine per cent reduction in ore grades at Escondida. Productivity cost efficiencies increased Underlying EBIT by US$186 million and reflected insourcing initiatives and the broader optimisation of contractor activities across the business. A reduction in exploration and business development expenditure increased Underlying EBIT by a further US$214 million as the Group sharpened its focus on greenfield copper porphyry targets in Chile and Peru. In contrast, an increase in non-cash charges reflected a lower capitalisation rate for deferred stripping at Escondida and Pampa Norte, and a general increase in depreciation and amortisation, and reduced Underlying EBIT by US$~~1.4 billion. General cost pressure across~~328 million during the ~~Base Metals portfolio, together with unit cost escalation specifically associated with industrial activity and lower ore grades at Escondida, reduced~~ period.

Underlying EBIT of Olympic Dam for FY2014 increased by US$~~841 million.~~38 million to US$34 million, where costs efficiencies offset the decrease in commodities prices.

At 30 June ~~2012,~~2014, the Group had ~~278,547 tonnes~~350 kt of outstanding copper sales that were revalued at a weighted average price of US$~~3.49~~3.19 per pound. The final price of these sales will be determined in ~~FY2013.~~FY2015. In addition, ~~239,156 tonnes~~386 kt of copper sales from ~~FY2011~~FY2013 were subject to a finalisation adjustment in ~~2012. This finalisation adjustment and the~~FY2014. These provisional pricing ~~impact as at 30 June 2012 decreased~~and finalisation adjustments increased Underlying EBIT by US$~~265~~73 million in FY2014 (FY2013: US$303 million decrease).

A gain on the sale of the Pinto Valley mining operation and the associated San Manuel Arizona Railroad Company of US$385 million (after tax) was recognised in FY2014 and was reported as an exceptional item.

2.5.8 Iron Ore Business

An analysis of the financial performance of our Iron Ore Business for FY2015 compared to FY2014 is included in section 1.12.4.

Financial information for the ~~period (2011: US$650 million gain).~~Iron Ore Business for FY2015 and FY2014 is presented below.

Escondida copper production is forecast to increase by approximately 20 per cent in FY2013. Successful completion of both the Escondida Ore Access and Laguna Seca Debottlenecking projects is expected to drive Escondida copper production to over 1.3 Mt (100 per cent basis) in FY2015.


Year ended 30 June 2015 US$M	Revenue			Underlying EBITDA			D&A			Underlying EBIT			Net operating assets		Capital expenditure			Exploration gross		Exploration to profit
Western Australia Iron Ore		14,438			8,297			1,713			6,584			22,804		1,911
Samarco⁽ⁱ⁾		1,406			695			118			577			1,044		170
Other⁽ⁱⁱ⁾		135			(8	)		3			(11	)		106		19

Total Iron Ore from Group production		15,979			8,984			1,834			7,150			23,954		2,100

Third party products⁽ⁱⁱⁱ⁾		180			(10	)		–			(10	)		–		–

Total Iron Ore		16,159			8,974			1,834			7,140			23,954		2,100			118		38

Adjustment for equity accounted investments^(iv)		(1,406	)		(326	)		(118	)		(208	)		–		(170	)		–		–

Total Iron Ore statutory result		14,753			8,648			1,716			6,932			23,954		1,930			118		38

Year ended
30 June 2014
(Restated)
US$M
Revenue Underlying
EBITDA D&A Underlying
EBIT Net
operating
assets Capital
expenditure Exploration
gross Exploration
to profit
Western Australia
Iron Ore^(v)
20,883    12,966    1,427    11,539    22,223    2,947
Samarco⁽ⁱ⁾
1,634    846    56    790    1,072    424
Other^(ii)(v)
130    (32 ) 2    (34 ) 95    –

Total Iron Ore from Group production
22,647    13,780    1,485    12,295    23,390    3,371

Third party products⁽ⁱⁱⁱ⁾
343    (3 ) –    (3 ) –    –

Total Iron Ore
22,990    13,777    1,485    12,292    23,390    3,371    169    56

Adjustment for equity accounted investments^(iv)
(1,634 ) (246 ) (56 ) (190 ) –    (422 ) –    –

Total Iron Ore statutory result
21,356    13,531    1,429    12,102    23,390    2,949    169    56

⁽ⁱ⁾	Samarco is an equity accounted investment and is reported on a proportionate consolidation basis (with the exception of net operating assets). This includes the wholly owned holding company of Samarco, which is consolidated.

⁽ⁱⁱ⁾	Predominantly comprises divisional activities, towage services, business development and ceased operations.

⁽ⁱⁱⁱ⁾

Includes inter-segment and external sales of contracted gas purchases.

^(iv)

Total Iron Ore segment Revenue excludes US$1,406 million (2014: US$1,634 million) revenue related to Samarco. Total Iron Ore segment Underlying EBITDA includes US$118 million (2014: US$56 million) D&A and US$208 million (2014: US$190 million) net finance costs and taxation expense related to Samarco that are also included in Underlying EBIT. Iron Ore segment Capital expenditure excludes US$170 million (2014: US$422 million) related to Samarco.

^(v)	The 30 June 2014 period has been restated to reallocate towage services from Western Australian Iron Ore to Other.

Year ended 30 June ~~2011~~2014 compared with year ended 30 June ~~2010~~2013

~~Copper~~Iron Ore revenue increased by US$2.8 billion to US$21.4 billion. Revenue for WAIO increased by US$2.6 billion, an increase of 13.9 per cent. An 18 per cent increase in WAIO sales volumes was the major contributor, which was partially offset by a six per cent decline in average realised price of iron ore to US$103 per wet metric tonne (FOB).

Iron ore production increased ~~during FY2011 as Olympic Dam, Australia, reported~~by 20 per cent in FY2014 to a record 204 Mt, exceeding initial full-year guidance by more than eight per cent. WAIO production of 225 Mt (100 per cent basis) represents a fourteenth consecutive annual ~~material mined~~record and ~~milling records. Strong operating performance~~ was ~~similarly reported at Pampa Norte, Chile,~~underpinned by the early commissioning of Jimblebar and ~~Antamina, Peru, where record annual milling rates mitigated~~our productivity agenda, which raised the ~~impact~~capacity of ~~lower grades. Total copper cathode production represented another record for the period.~~our integrated supply chain.

Underlying EBIT for ~~FY2011~~FY2014 increased by US$~~2.2 billion, or 46.6 per cent,~~993 million to US$~~6.8~~12.1 billion. ~~Higher~~The fall in the average realised ~~prices for all~~price of our core products favourably impacted Underlying EBIT by US$3.3 billion (net of price-linked costs). The supportive pricing environment was similarly reflected in a number of our key input costs with higher energy, fuel and contractor costs, the major offset. The devaluation of the US dollar and inflationiron ore reduced Underlying EBIT by US$~~418 million. In addition, BHP Billiton refined the basis on~~864 million, net of price-linked costs, although this was partially offset by a weaker Australian dollar which ~~the metal content of its leach pads is estimated at Escondida and Pampa Norte, both Chile, which resulted in a non-cash reduction in Underlying EBIT of US$168 million.~~

At 30 June 2011, the Group had 239,156 tonnes of outstanding copper sales that were revalued at a weighted average price of US$4.25 per pound. The final price of these sales was determined in FY2012. In addition, 236,584 tonnes of copper sales from FY2010 were subject to a finalisation adjustment in FY2011. The finalisation adjustment and provisional pricing impact increased Underlying EBIT by US$~~650 million~~383 million. Iron ore sales, on average, were linked to the index price for the ~~period.~~month of shipment, with price differentials reflecting product quality and the increase in WAIO sales volumes, adding US$1.8 billion to Underlying EBIT. Conversely, the progressive ramp-up of several major projects resulted in a US$425 million increase in

~~BHP Billiton’s Base Metals business is characterised by its large, tier one resource position~~

depreciation and ~~its numerous options for growth. In that context, a combined investment of US$492 million (BHP Billiton share) was approved~~amortisation expense during the ~~period~~period. Having redirected the WAIO supply-chain bottleneck away from the mines and back to the port, WAIO unit costs decreased by six per cent in FY2014 to US$27.53 per tonne. A 12 per cent reduction in unit costs to US$25.89 per tonne was achieved in the June 2014 half year.

2.5.9 Coal Business

An analysis of the financial performance of our Coal Business for FY2015 compared to FY2014 is included in section 1.12.5.

Financial information for the ~~Escondida Ore Access~~Coal Business for FY2015 and ~~Laguna Seca Debottlenecking projects, Chile.~~FY2014 is presented below.

~~Diamonds and Specialty Products~~


Year ended 30 June 2015 US$M	Revenue			Underlying EBITDA			D&A			Underlying EBIT			Net operating assets		Capital expenditure			Exploration gross		Exploration to profit
Queensland Coal		4,221			1,006			719			287			9,154		599
New Mexico		531			134			47			87			173		20
New South Wales Energy Coal⁽ⁱ⁾		1,225			303			161			142			1,322		121
Colombia⁽ⁱ⁾		719			231			105			126			924		73
Other⁽ⁱⁱ⁾		–			(91	)		1			(92	)		196		17

Total Coal from Group production		6,696			1,583			1,033			550			11,769		830

Third party products		7			–			–			–			–		–

Total Coal		6,703			1,583			1,033			550			11,769		830			20		20

Adjustment for equity accounted investments ⁽ⁱⁱⁱ⁾		(818	)		(341	)		(139	)		(202	)		–		(101	)		–		–

Total Coal statutory result		5,885			1,242			894			348			11,769		729			20		20


Year ended 30 June 2014 (Restated) US$M	Revenue			Underlying EBITDA			D&A			Underlying EBIT			Net operating assets		Capital expenditure			Exploration gross		Exploration to profit
Queensland Coal		4,666			949			514			435			9,115		1,790
New Mexico		520			105			46			59			202		26
New South Wales Energy Coal⁽ⁱ⁾		1,350			324			150			174			1,392		170
Colombia⁽ⁱ⁾		814			305			85			220			1,037		133
Other⁽ⁱⁱ⁾		–			(166	)		2			(168	)		162		34

Total Coal from Group production		7,350			1,517			797			720			11,908		2,153

Third party products		27			–			–			–			1		–

Total Coal		7,377			1,517			797			720			11,909		2,153			29		29

Adjustment for equity accounted investments ⁽ⁱⁱⁱ⁾		(814	)		(259	)		(114	)		(145	)		–		(182	)		–		–

Total Coal statutory result		6,563			1,258			683			575			11,909		1,971			29		29

⁽ⁱ⁾	Newcastle Coal Infrastructure Group and Cerrejón are equity accounted investments and are reported on a proportionate consolidation basis (with the exception of net operating assets).

⁽ⁱⁱ⁾ Predominantly comprises divisional activities and greenfield projects.

⁽ⁱⁱⁱ⁾

Total Coal segment Revenue excludes US$818 million (2014: US$814 million) revenue related to Newcastle Coal Infrastructure Group and Cerrejón. Total Coal segment Underlying EBITDA includes US$105 million (2014: US$85 million) D&A and US$126 million (2014: US$80 million) net finance costs and taxation expense related to Cerrejón, that are also included in Underlying EBIT. Total Coal segment Underlying EBITDA excludes US$34 million (2014: US$29 million) D&A and US$76 million (2014: US$65 million) total EBIT related to Newcastle Coal Infrastructure Group, that is excluded from Underlying EBIT. Coal segment Capital expenditure excludes US$101 million (2014: US$182 million) related to Newcastle Coal Infrastructure Group and Cerrejón.

Year ended 30 June ~~2012~~2014 compared with year ended 30 June ~~2011~~2013

~~As anticipated, diamond~~Metallurgical coal production increased by 26 per cent in ~~FY2012 was substantially lower than~~FY2014 to a record 38 Mt (BHP Billiton share). Record production and sales volumes at Queensland Coal reflected strong performance across all operations. This included first production from Caval Ridge, the successful ramp-up of Daunia and record production at Peak Downs, Saraji, South Walker Creek and Poitrel.

Energy coal production of 43 Mt for FY2014 increased by six percent from the prior period. ~~EKATI, Canada,~~Another year of robust performance was underpinned by a fifth consecutive annual production ~~is forecast~~record at New South Wales Energy Coal and record volumes at Cerrejón. Navajo Coal production declined following the permanent closure of three of the five power units at the Four Corners Power Plant.

Coal revenue for FY2014 decreased by US$11 million to ~~remain constrained~~US$6.6 billion. The decrease in revenues was driven by a 19 per cent reduction in the ~~medium term as~~average price for hard coking coal and 14 per cent reduction in the ~~operations extract lower grade material, consistent with the mine plan.~~average price received for both weak coking coal and thermal coal; this was partially offset by an increase in revenue of 5 per cent for Queensland Coal to US$4.7 billion.

Underlying EBIT for ~~FY2012 declined~~FY2014 increased by US$~~388~~151 million to US$~~199~~575 million ~~despite~~as productivity volume and cost efficiencies of US$1.1 billion were embedded during the period.

A stronger ~~diamond and titanium prices that~~US dollar against the Australian dollar increased Underlying EBIT by US$~~246~~403 million. ~~The decline~~This was offset by the reduction in ~~production at EKATI,~~the average price, which in total, reduced Underlying EBIT by US$~~357 million, was the major contributing factor to the compression of operating margins. Higher potash exploration and business development costs decreased Underlying EBIT by a further US$171 million.~~

The sale of our 37.8 per cent non-operated interest in Richards Bay Minerals to Rio Tinto was completed on 7 September 2012, at a price of US$1.9 billion before adjustments. The review of our diamonds business is ongoing.

~~Year ended 30 June 2011 compared with year ended 30 June 2010~~

EKATI, Canada, diamond production for FY2011 was 2.5 million carats, an 18 per cent decrease from the prior period. BHP Billiton expected lower average ore grades to impact EKATI production in the medium term, consistent with the mine plan.

Underlying EBIT for the Diamonds and Specialty Products business increased by 21.0 per cent to US$587 million. Strong demand and a shortage of rough diamonds resulted in higher prices, which increased Underlying EBIT by US$254 million. A 28 per cent increase in titanium prices added a further US$112 million to Underlying EBIT. Gross exploration expenditure was US$81 million, a decrease of US$14 million from the prior period.

~~BHP Billiton’s goal of becoming a significant producer in the potash market took another important step forward in FY2011.~~

The approval of a further US$488 million of pre-commitment funding during the Jansen Potash Project feasibility study phase provided funding for site preparation, the procurement of long lead time items and the initial sinking of the production and service shafts.

~~Stainless Steel Materials~~

~~Year ended 30 June 2012 compared with year ended 30 June 2011~~

~~The successful replacement of the Line 1 furnace at Cerro Matoso, Colombia, in September 2011 quarter led to an increase in annual nickel production.~~

Underlying EBIT for FY2012 decreased by US$556 million to US$32 million. A 22 per cent decline in the average realised nickel price reduced Underlying EBIT by US$584 million, net of price-linked costs. At Nickel West, Mt Keith, a reduction in mining activity and the commissioning of the Talc Redesign project delivered tangible cost benefits during the period. Construction of the new Kwinana hydrogen plant, Australia, was also completed in FY2012.

~~Year ended 30 June 2011 compared with year ended 30 June 2010~~

The Nickel West Kalgoorlie smelter, Australia, achieved record matte production during FY2011, while Cerro Matoso, Colombia, successfully progressed its planned furnace replacement into the commissioning phase.

Underlying EBIT decreased by US$80 million, or 12.0 per cent, to US$588 million for FY2011 as a weaker US dollar impacted both operating costs and year-end balance sheet revaluations. In total, the weaker US dollar and inflation reduced Underlying EBIT by US$227 million. The planned loss of production at Cerro Matoso and the absence of stockpiled concentrate sales at Nickel West that benefited FY2010 decreased Underlying EBIT by a combined US$122 million. Underlying EBIT at Cerro Matoso was impacted by a further US$53 million due to a provision related to the Colombian net worth tax and additional royalty charges. In contrast, a 24 per cent rise in the LME nickel price for the period increased Underlying EBIT by approximately US$435 million (net of price-linked costs).

~~Iron Ore~~

~~Year ended 30 June 2012 compared with year ended 30 June 2011~~

BHP Billiton’s commitment to invest throughout the economic cycle helped to deliver a twelfth consecutive annual production record in iron ore. WAIO shipments rose to a record annualised rate of 179 Mt in the June 2012 quarter (100 per cent basis). Consistently strong operating performance, the ramp-up of Ore Handling Plant 3 at Yandi, dual tracking of the Company’s rail infrastructure and additional ship loading capacity at Port Hedland contributed to the record result. Samarco’s, Brazil, three pellet plants continued to operate at capacity in the period.

Underlying EBIT for FY2012 increased by US$873 million to a record US$14.2 billion. Outstanding financial performance was underpinned by record production at WAIO, which increased Underlying EBIT by US$2.4 billion. This was partially offset by a seven per cent and five per cent decline in fines and lump prices, respectively, which reduced Underlying EBIT by US$1.31.1 billion, net of price-linked costs. ~~While~~

A sustainable increase in truck and wash plant utilisation rates underpinned the ~~acquisition of the HWE Mining subsidiaries~~improvement in ~~September 2012 eliminated third party~~productivity while a reduction in labour, contractor ~~margin, one-off integration~~and maintenance costs ~~and~~was also achieved. Redundancies totalling US$28 million were recognised in FY2014 while an increase in ~~exploration expense more than offset the cost savings achieved during the period.~~

WAIO production is forecast to increase by approximately five per cent in FY2013. Commissioning of the WAIO Port Hedland Inner Harbour Expansion project remains on schedule for the second half of CY2012 and is expected to increase our inner harbour capacity to 220 mtpa (100 per cent basis). Subsequent debottlenecking opportunities that are expected to enable us to maximise our capacity in the inner harbour continue to be assessed.

~~Year ended 30 June 2011 compared with year ended 30 June 2010~~

BHP Billiton’s commitment to invest through all phases of the economic cycle delivered an eleventh consecutive annual production record in iron ore. WAIO benefited from the dual tracking of the Company’s rail infrastructure, which substantially increased overall system capability. WAIO shipments rose to a record annualised rate of 155 mtpa (100 per cent basis) in the June quarter of FY2011, confirming the successful ramp-up of recently expanded capacity.

Underlying EBIT increased by 122.1 per cent to US$13.3 billion for FY2011 driven by record production and a significant improvement in iron ore prices. For the period, average realised iron ore prices increased Underlying EBIT by US$8.5 billion following the important transition to shorter-term, landed, market-based pricing. The significant appreciation in product prices and the adjustment of WAIO royalty rates contributed to a significant increase in price-linked costs, which reduced Underlying EBIT by US$648 million. Broader inflationary pressures and the devaluation of the US dollarnon-cash charges reduced Underlying EBIT by a further US$~~813~~176 million.

2.5.10 Other Assets

Nickel West production declined by four per cent following the closure of the Perseverance underground mine in November 2013.

Underlying EBIT for FY2014 increased by US$106 million ~~while non-cash depreciation also increased~~to (US$208) million mainly due to cost efficiencies and a favourable exchange rate movement, which was partially offset by costs associated with the ~~ramp-up~~closure of ~~expanded iron ore capacity.~~the Perseverance underground mine at Nickel West.

The investment approval for major projects totalling US$8.4 billion (BHP Billiton share) in FY2011 highlighted the Company’s commitment to accelerate the development of its tier one, low-cost and expandable iron ore operations. BHP Billiton also continued to lay the foundations for longer-term growth in the WAIO business with the release of its Public Environmental Review/Draft Environmental Impact Statement that sought Commonwealth and Western Australian Government approvals for the proposed development of an Outer Harbour facility in Port Hedland, Australia.

2.5.11 Cash flow analysis

~~Manganese~~

Year ended 30 June ~~2012~~2015 compared with year ended 30 June ~~2011~~2014

Consistently strong operating performance and improved plant availability at both GEMCO, Australia, and Hotazel, South Africa, underpinned annual ore production and sales records in FY2012. Alloy production was substantially lower than the corresponding period following the termination of energy intensive silicomanganese production at Metalloys and the temporary suspension of production at TEMCO.

Underlying EBIT for FY2012 decreased by US$462 million to US$235 million. A 22 per cent decline in the average realised price of ore and a 10 per cent decline in the average realised price of alloy reduced Underlying EBIT by US$400 million, net of price-linked costs. In contrast, record manganese ore sales increased Underlying EBIT by US$64 million.

~~The US$167 million (BHP Billiton share) GEMCO Expansion Phase 2 (GEEP2) project is expected to further solidify GEMCO as one~~An analysis of the ~~lowest cost and largest manganese mines~~cash flow for FY2015 compared to FY2014 is included in ~~the industry. On completion, the GEEP2 project will increase processing capacity from 4.2 to 4.8 mtpa (100 per cent basis), with first production anticipated on schedule in the second half of CY2013.~~

section 1.15.4.

Year ended 30 June ~~2011~~2014 compared with year ended 30 June ~~2010~~

Record annual ore production and sales reflected a full-year contribution from the GEEP1 project, Australia. Record annual sales were also achieved for manganese alloy as the business intensified its volume maximising strategy.

Underlying EBIT remained largely unchanged at US$697 million as stronger volumes and prices were offset by higher costs. Notably, controllable costs remained largely unchanged during the period, although the combined impact of a weaker US dollar and inflation reduced Underlying EBIT by US$186 million. Average realised ore and alloy prices increased by nine per cent and seven per cent, respectively, during FY2011.

~~Metallurgical Coal~~

~~Year ended 30 June 2012 compared with year ended 30 June 2011~~

A modest increase in metallurgical coal production was achieved in FY2012 despite numerous operating challenges. Production at Queensland Coal remained constrained largely as a result of industrial action, weather related downtime and geotechnical issues at Gregory Crinum. Record annual production at Illawarra Coal, Australia, followed successful commissioning of the West Cliff Coal Preparation Plant upgrade project.

Underlying EBIT for FY2012 decreased by US$1.1 billion to US$1.6 billion. Lower production volumes and higher operating costs at Queensland Coal reduced Underlying EBIT by US$1.1 billion. The progression of our development pipeline also led to an increase in exploration and business development costs in the period. In contrast, a six per cent increase in the price of hard coking coal increased Underlying EBIT by US$339 million, net of price-linked costs.

In July 2012, force majeure was lifted across all BMA sites. In addition, BMA and the unions reached a framework agreement that should guide the finalisation of the BMA Enterprise Agreement. Further work is underway to finalise local mine site details.

In response to the challenging external environment, the Group has chosen to delay the 2.5 mtpa (100 per cent basis) expansion of Peak Downs that is associated with the Caval Ridge mine development. The 5.5 mtpa (100 per cent basis) Caval Ridge mine remains on schedule to deliver first production in CY2014. Following a review of the Norwich Park mine’s profitability, we also announced the indefinite closure of this operation during the June 2012 quarter and the cessation of mining at the Gregory open-cut mine. We continue to review the viability of other Metallurgical Coal operations.

Despite these actions, the capacity of our Queensland Coal business is expected to rise substantially by the end of CY2014 as all other projects remain on schedule and budget (refer section 3.7.2 ‘Major projects’). BHP Billiton announced approval of the US$845 million Appin Area 9 project, Australia, in the period. This underground development is expected to sustain Illawarra Coal’s production capacity at nine mtpa with first production anticipated in CY2016.

~~Year ended 30 June 2011 compared with year ended 30 June 2010~~

The remnant effects of wet weather that persisted for much of FY2011 continued to restrict our Queensland Coal business, despite an unrelenting focus on recovery efforts. Although Queensland Coal production did recover strongly in the June 2011 quarter, total metallurgical coal production declined by 13 per cent in FY2011.

Underlying EBIT was US$2.7 billion, an increase of US$617 million, or 30.1 per cent, from the corresponding period. The increase was mainly attributable to the 48 per cent and 45 per cent improvement in average realised prices for hard coking coal and weak coking coal, respectively. In total, stronger prices increased Underlying EBIT by US$2.1 billion, net of price-linked costs. Uncontrollable factors were the major contributor to a

significant increase in operating costs. In that context, inflation and the weaker US dollar reduced Underlying EBIT by US$664 million, while the weather related disruption to production at Queensland Coal placed additional pressure on unit costs.

~~Energy Coal~~

~~Year ended 30 June 2012 compared with year ended 30 June 2011~~

Annual production records were achieved at two of our export oriented operations, Cerrejón Coal, Colombia, and New South Wales Energy Coal. The RX1 Project at New South Wales Energy Coal delivered first production during the June 2012 quarter, significantly ahead of schedule. This project capitalises on strong demand for high ash coal in our key growth markets.

Underlying EBIT for FY2012 increased by US$98 million to US$1.2 billion. Stronger volumes and a higher proportion of export sales, largely associated with improved rail performance at BECSA, South Africa, and the accelerated expansion of New South Wales Energy Coal, Australia, increased Underlying EBIT by US$152 million in the period. Higher average realised prices, most notably at Cerrejón Coal, contributed to a US$95 million increase in Underlying EBIT, net of price-linked costs. In contrast, higher labour and raw material costs contributed to a US$190 million reduction in Underlying EBIT.

During FY2012, BHP Billiton approved a further eight mtpa (100 per cent basis) expansion of Cerrejón Coal mine. The US$437 million project (BHP Billiton share) will increase export capacity to approximately 40 mtpa (100 per cent basis), with first production anticipated on schedule in CY2013. In addition, the partners approved the third phase of expansion of the Newcastle Coal Infrastructure Group’s (NCIG) coal handling facility in Newcastle, Australia.

~~Year ended 30 June 2011 compared with year ended 30 June 2010~~

Annual production and sales records for New South Wales Energy Coal followed the successful commissioning and ramp-up of the MAC20 Project, while strong performance at South Africa Coal delivered a 13 per cent increase in annual production.

Underlying EBIT increased by 54.7 per cent to US$1.1 billion in FY2011. The 31 per cent rise in average realised prices, which increased Underlying EBIT by US$917 million for the period, reflected a higher proportion of export sales as we continued to optimise our product mix in response to evolving market demand. Broad cost pressures were accentuated by an increase in cash and non-cash costs associated with the ramp-up of growth projects in Australia and South Africa. The weaker US dollar and inflation reduced Underlying EBIT by US$298 million, while a non-recurring charge related to the recognition of the Colombian net worth tax reduced Underlying EBIT by a further US$32 million. The dissolution of the Douglas Tavistock Joint Venture arrangement increased Underlying EBIT in the corresponding period by US$69 million.

The MAC20 Project was successfully completed during FY2011, ahead of schedule. The Company’s confidence in the outlook for demand in the Asia Pacific Basin was subsequently illustrated by the approval of the US$400 million RX1 Project, Australia, designed to get product to market rapidly, ahead of further coal preparation plant expansions. Further expansion of our world-class Cerrejón Coal operation to 40 mtpa (100 per cent basis) was approved by the partners in August 2011.

~~Group and unallocated items~~

~~This category represents corporate activities, including Group Treasury, Freight, Transport and Logistics operations.~~

~~Year ended 30 June 2012 compared with year ended 30 June 2011~~

The Underlying EBIT expense for Group and Unallocated in FY2012 decreased by US$157 million to US$248 million. Higher corporate and information technology costs were more than offset by a foreign exchange related restatement and partial release of the Newcastle steelworks rehabilitation provision.

~~Year ended 30 June 2011 compared with year ended 30 June 2010~~

The Underlying EBIT expense for Group and Unallocated decreased by US$136 million in FY2011 to US$405 million. The weaker US dollar and inflation had an unfavourable impact on Underlying EBIT of US$105 million. Self insurance claims related to the Clark Shaft incident at Olympic Dam reduced Underlying EBIT in the prior period by US$297 million.

~~3.6.7 Third party sales~~

Year ended 30 June⁽¹⁾
   2012 2011 2010
   US$M US$M US$M
Group production

Revenue
   68,747    67,903    48,193
Related operating costs
   (41,635 ) (36,021 ) (28,585 )


Operating profit (EBIT)
   27,112    31,882    19,608
Underlying EBIT Margin
   39.4 % 47.0 % 40.7 %


Third party products

Revenue
   3,479    3,836    4,605
Related operating costs
   (3,353 ) (3,738 ) (4,494 )


Operating profit (EBIT)
   126    98    111
Margin⁽²⁾
   3.6 % 2.6 % 2.4 %

⁽¹⁾	~~Excluding exceptional items.~~

⁽²⁾	~~Operating profit divided by revenue.~~

~~We engage in third party trading for the following reasons:~~

~~Production variability and occasional shortfalls from our own assets means that we sometimes source third party materials to ensure a steady supply of product to our customers.~~

~~To optimise our supply chain outcomes, we may buy physical product from third parties.~~

~~In order to support development of more liquid markets, we will sometimes source third party physical product and manage risk through both the physical and financial markets.~~

~~3.7 Liquidity and capital resources~~

As a result of our record production volumes and record prices in many of our key commodities over the past several years, we have generated very strong cash flows throughout our operations. Despite the changing economic and market conditions, our net operating cash flow in the year ended 30 June 2012 of US$24.4 billion reflected the strong cash generating capacity of the business throughout the economic cycle.

These cash flows have been fundamental to our ability to internally fund our existing operations, maintain a pipeline of growth projects and return capital to shareholders through dividends and, in prior years, share

buy-backs. Our priority for cash is to reinvest in the business. In line with our strategy, we have grown our business rapidly and consistently through project developments and acquisitions. Through a combination of borrowings and payments to shareholders, we manage our balance sheet with the goal of maintaining levels of gearing that we believe optimise our costs of capital and return on capital employed.

Net operating cash flows are our principal source of cash. We also raise funds from the debt markets to manage our liquidity position and to refinance existing debt. Our liquidity position is supported by our strong and stable credit rating and committed debt facilities.

~~3.7.1 Cash flow analysis~~

A full consolidated cash flow statement is contained in the financial statements. The explanatory notes appear in note 23 ‘Notes to the consolidated cash flow statement’ to the financial statements. A summary table has been presented below to show the key sources and uses of cash.

Year ended 30 June
   2012 2011 2010
   US$M US$M US$M
Cash generated from operations
   33,274    37,081    22,246
Dividends received and net interest paid
   (563 ) (443 ) (401 )
Taxation paid
   (8,327 ) (6,558 ) (4,955 )


Net operating cash flows
   24,384    30,080    16,890


Purchases of property plant and equipment
   (18,385 ) (11,147 ) (9,323 )
Exploration expenditure
   (2,452 ) (1,240 ) (1,333 )
Exploration expenditure expensed and included in operating cash flows
   1,602    981    1,030
Purchases of intangibles
   (220 ) (211 ) (85 )
Investment in financial assets
   (341 ) (238 ) (152 )
Investment in subsidiaries, operations and jointly controlled entities
   (12,556 ) (4,807 ) (508 )
Net proceeds from investing activities
   316    198    386


Net investing cash flows
   (32,036 ) (16,464 ) (9,985 )


Net proceeds from / (repayment of) interest bearing liabilities
   8,827    (577 ) (485 )
Share buy-back
   (83 ) (9,860 ) –
Dividends paid
   (5,933 ) (5,144 ) (4,895 )
Other financing activities
   (302 ) (437 ) 73


Net financing activities
   2,509    (16,018 ) (5,307 )


Net (decrease)/increase in cash and cash equivalents
   (5,143 ) (2,402 ) 1,598

~~Year ended 30 June 2012 compared with year ended 30 June 2011~~


Year ended 30 June	2014 US$M Restated			2013 US$M Restated
Year ended 30 June	2014 US$M Restated			2013 US$M Restated
Cash generated from operations		29,318			27,026
Dividends received		1,264			716
Net interest paid		(795	)		(848	)
Taxation paid		(6,147	)		(7,877	)

Net operating cash flows from Continuing operations		23,640			19,017

Net operating cash flows from Discontinued operations		1,724			1,137

Net operating cash flows		25,364			20,154

Purchases of property plant and equipment		(15,224	)		(21,104	)
Exploration expenditure		(986	)		(1,321	)
Exploration expenditure expensed and included in operating cash flows		698			1,026
Purchases of intangibles		(192	)		(380	)
Investment in financial assets		(1,168	)		(455	)
Investment in equity accounted investments		(44	)		(84	)
Net proceeds from investing activities		1,782			4,697

Net investing cash flows from Continuing operations		(15,134	)		(17,621	)

Net investing cash flows from Discontinued operations		(700	)		(1,105	)

Net investing cash flows		(15,834	)		(18,726	)

Net (repayment of)/proceeds from interest bearing liabilities		(1,011	)		7,255
Dividends paid		(6,506	)		(6,945	)
Contributions from non-controlling interests		1,435			73
Other financing activities		(354	)		(433	)

Net financing cash flows from Continuing operations		(6,436	)		(50	)

Net financing cash flows from Discontinued operations		(32	)		(148	)

Net financing cash flows		(6,468	)		(198	)

Net increase in cash and cash equivalents from Continuing operations		2,070			1,346

Net increase/(decrease) in cash and cash equivalents from Discontinued operations		992			(116	)

Net operating cash flows after interest and tax ~~decreased~~increased by ~~18.9~~24 per cent to US$~~24.4~~23.6 billion ~~for FY2012.~~in FY2014. A US$~~3.8~~2.3 billion ~~reduction~~increase in cash generated from operations (after changes in working capital balances) ~~was~~and a US$1.7 billion decrease in net taxes paid were the major ~~contributor~~contributors to the ~~decline. Higher~~increase. The decrease in net taxes paid was attributed to lower income tax ~~paid~~payments in the year of US$798 million in line with our lower effective tax rate and ~~increased royalty-related taxation payments further reduced net operating~~income tax refunds of US$848 million.

Net investing cash ~~flows after interest and tax~~outflows decreased by US$~~1.4~~2.5 billion ~~and~~to US$~~408 million, respectively.~~

~~Investing cash flows increased by~~15.1 billion during the period. This reflected a US$~~15.6~~5.9 billion ~~primarily driven by investment~~reduction in ~~subsidiaries and operations of US$12.6 billion in FY2012, the majority of which related to the purchase of Petrohawk, with a resulting cash outflow of US$12.0 billion. Capital~~capital and exploration expenditure ~~including exploration expenditure expensed and included~~partially offset by a decline in ~~operating cash flows, totalled~~proceeds from asset sales of US$~~20.8 billion in FY2012.~~2.9 billion. Expenditure on major growth projects ~~was~~totalled US$~~16.3~~13.0 billion, including US$~~5.1~~5.6 billion on ~~Petroleum~~petroleum projects and US$~~11.2~~7.4 billion on ~~Minerals~~minerals projects. ~~Capital~~Sustaining capital expenditure ~~on sustaining~~ and other items ~~was US$2.0 billion. The breakdown of capital and exploration expenditure by CSG is set out in section 3.4.5.~~

Net financing cash flows include proceeds from borrowings of US$13.3 billion partially offset by dividend payments of US$5.9 billion and debt repayments of US$4.3 billion. Proceeds from borrowings include the issuance of a three tranche Global Bond of US$3.0 billion, a five tranche Global Bond of US$5.25 billion, a two tranche Euro Bond of €2.0 billion and proceeds from Commercial Paper of US$995 million.

~~Net debt, comprising interest bearing liabilities less cash and cash equivalents, was US$23.6 billion, which is an increase of US$17.8 billion compared with the net debt position at 30 June 2011.~~

~~Year ended 30 June 2011 compared with year ended 30 June 2010~~

Net operating cash flows after interest and tax increased by 78.1 per cent to US$30.1 billion. This was primarily driven by an increase in cash generated from operations (before changes in working capital balances) of US$12.3 billion and changes in working capital balances having a positive year-on-year impact on operating cash flow of US$2.6 billion.

~~Capital and exploration expenditure, including exploration expenditure expensed and included in operating cash flows,~~ totalled US$12.4 billion for the year. Expenditure on major growth projects was US$9.1 billion, including US$1.8 billion on Petroleum projects and US$7.3 billion on Minerals projects. Capital expenditure on sustaining and other items was US$2.02.2 billion. Exploration expenditure was US$~~1.2 billion,~~986 million, including US$~~981~~698 million classified within net operating cash flows.

~~Financing~~Net financing cash flows of US$6.4 billion included ~~payments related~~the proceeds from interest bearing liabilities and contributions from non-controlling interests of US$1.4 billion. The contributions from non-controlling interests was due to the ~~US$10 billion capital management program, dividend payments~~sale of ~~US$5.1 billion~~shares in BHP Iron Ore (Jimblebar) Pty Ltd to ITOCHU and ~~net~~Mitsui of eight and seven percent, respectively, in the Jimblebar mining hub and resource. Proceeds from interest bearing liabilities included the issuance of a four tranche Global Bond of US$5.0 billion. These inflows were more than offset by debt repayments of US$~~577 million.~~

~~3.7.2 Major projects~~

~~We approved eight major projects during FY2012 for a total investment commitment~~7.0 billion and dividend payments to our shareholders of US$~~7.5 billion (BHP Billiton share). Pre-commitment funding of US$2.7 billion (BHP Billiton share) was also approved to further progress a series of development options.~~6.4 billion.

With 20 major projects currently in execution with a combined budget of US$22.8 billion, we are largely committed for FY2013. No major project approvals are expected over this timeframe. As our current expenditure commitments decline, we will seek to allocate future capital to those options that maximise shareholder value, while also considering the balance between short- and long-term returns.

~~In addition, our Onshore US business invested US$3.7 billion in exploration and development expenditure in FY2012 and expects to spend a further US$4.0 billion in FY2013.~~

Six major projects delivered first production in FY2012, namely: WAIO Rapid Growth Project 5, Worsley Efficiency and Growth, North West Shelf CWLH Life Extension and the New South Wales Energy Coal RX1 Project, all Australia, the Antamina Expansion, Peru, and the Escondida Ore Access project, Chile.

~~Projects that delivered first production during FY2012~~

Customer
Sector Group

Project

Capacity⁽¹⁾
Capital expenditure
(US$M)⁽¹⁾ Date for initial production ⁽²⁾
Budget Actual ⁽³⁾     Target         Actual
Petroleum
North West Shelf CWLH Life Extension, Australia, BHP Billiton – 16.67% Replacement vessel with capacity of 60,000 barrels per day of oil (bbl/d). 245    211    2011    Q3 2011
Aluminium

Worsley Efficiency and Growth, Australia,
BHP Billiton – 86%
1.1 mtpa of additional alumina capacity. 2,995 ⁽⁵⁾ 2,995    Q1 2012 ⁽⁵⁾ Q1 2012
Base Metals

Antamina Expansion, Peru,
BHP Billiton – 33.75%
Increases ore processing capacity to 130 ktpd. 435    435    Q1 2012 ⁽⁵⁾ Q1 2012

Escondida Ore Access, Chile,
BHP Billiton – 57.5%
The relocation of the in-pit crushing and conveyor infrastructure provides access to higher grade ore. 319    319    Q2 2012    Q2 2012
Iron Ore
WAIO Rapid Growth Project 5, Australia, BHP Billiton – 85% Project integrated into subsequent expansion approvals that will increase WAIO capacity to 220 mtpa ⁽⁴⁾. 4,800    4,800    H2 2011    Q3 2011
Energy Coal

RX1 Project, Australia,
BHP Billiton – 100%
Increases run-of-mine thermal coal production by approximately 4 mtpa. 400    400    H2 2012 ⁽⁵⁾ Q2 2012

9,194    9,160

⁽¹⁾	~~All references to capital expenditure are BHP Billiton’s share unless noted otherwise. All references to capacity are 100 per cent unless noted otherwise.~~

⁽²⁾	~~References are based on calendar years.~~

⁽³⁾	~~Number subject to finalisation.~~

⁽⁴⁾	~~Consistent with the revised scope of the iron ore development sequence.~~

⁽⁵⁾	~~As per revised budget and/or schedule. Refer to section 2.2.3 ‘Aluminium Customer Sector Group’.~~

~~Projects currently under development (approved in prior years)~~

Customer Sector Group

Project

Capacity⁽¹⁾
Budgeted
capital
expenditure
(US$M)⁽¹⁾ Target date
for initial
production ⁽²⁾
Petroleum

Macedon, Australia,
BHP Billiton – 71.43%
200 million cubic feet per day (MMcf/d) of gas. 1,050    2013
Bass Strait Kipper, Australia, BHP Billiton – 32.5% – 50% 10 Mbbl/d of condensate and processing capacity of 80 MMcf/d of gas. 900 ⁽³⁾ 2012 ⁽³⁾⁽⁴⁾
Bass Strait Turrum, Australia, BHP Billiton – 50% 11 Mbbl/d of condensate and processing capacity of 200 MMcf/d of gas. 1,350 ⁽³⁾ 2013 ⁽³⁾
North West Shelf North Rankin B Gas Compression, Australia, BHP Billiton – 16.67% 2,500 MMcf/d of gas. 850    2013
Diamonds & Specialty Products
EKATI Misery Open Pit Project, Canada, BHP Billiton – 80% Project consists of a pushback of the existing Misery open-pit, which was mined from 2001 to 2005. 323    2015
Iron Ore
WAIO Jimblebar mine Expansion (Australia) BHP Billiton – 96% Increases mining and processing capacity to 35 mtpa. 3,300 ⁽⁵⁾ Q1 2014
WAIO Port Hedland Inner Harbour Expansion, Australia, BHP Billiton – 85% Increases total inner harbour capacity to 220 mtpa with debottlenecking opportunities to 240 mtpa. 1,900 ⁽⁵⁾ H2 2012
WAIO Port Blending and Rail Yard Facilities, Australia, BHP Billiton – 85% Optimises resource and enhances efficiency across the WAIO supply chain. 1,400 ⁽⁵⁾ H2 2014
Samarco Fourth Pellet Plant, Brazil, BHP Billiton – 50% Increases iron ore pellet production capacity by 8.3 mtpa to 30.5 mtpa. 1,750    H1 2014
Metallurgical Coal
Daunia, Australia, BHP Billiton – 50% Greenfield mine development with capacity to produce 4.5 mtpa of export metallurgical coal. 800    2013
Broadmeadow Life Extension, Australia, BHP Billiton – 50% Increases productive capacity by 0.4 mtpa and extends the life of the mine by 21 years. 450    2013
Hay Point Stage Three Expansion, Australia, BHP Billiton – 50% Increases port capacity from 44 mtpa to 55 mtpa and reduces storm vulnerability. 1,250 ⁽⁵⁾ 2014

15,323

⁽¹⁾	~~All references to capital expenditure are BHP Billiton’s share unless noted otherwise. All references to capacity are 100 per cent unless noted otherwise.~~

⁽²⁾	~~References are based on calendar years.~~

⁽³⁾
~~As per revised budget and/or schedule. Refer to section 2.2.2 ‘Petroleum Customer Sector Group’.~~

⁽⁴⁾	~~Facilities ready for first production pending resolution of mercury content.~~

⁽⁵⁾	~~Excludes announced pre-commitment funding.~~

~~Projects approved during FY2012~~

Customer Sector Group

Project

Capacity⁽¹⁾
   Budgeted
capital
expenditure
(US$M)⁽¹⁾ Target date
for initial
production ⁽²⁾
Petroleum

North West Shelf Greater Western Flank-A, Australia,
BHP Billiton – 16.67%
   To maintain LNG plant throughput from the North West Shelf operations.    400    2016
Base Metals

Escondida Organic Growth project 1, Chile,
BHP Billiton – 57.5%
   Replaces the Los Colorados concentrator with a new 152 ktpd plant.    2,207    H1 2015

Escondida Oxide Leach Area project, Chile,
BHP Billiton – 57.5%
   New dynamic leaching pad and mineral handling system. Maintains oxide leaching capacity.    414    H1 2014
Iron Ore
   WAIO Orebody 24, Australia, BHP Billiton – 85%    Maintains iron ore production output from the Mt Newman Joint Venture operations.    698    H2 2012
Metallurgical Coal
   Caval Ridge, Australia, BHP Billiton – 50%    The greenfield mine will add 5.5 mtpa of export metallurgical coal as planned. The associated 2.5 mtpa expansion of Peak Downs has been delayed indefinitely.    2,100 ⁽³⁾ 2014

Appin Area 9, Australia,
BHP Billiton – 100%
   Maintains Illawarra Coal’s production capacity with a replacement mining domain and capacity to produce 3.5 mtpa of metallurgical coal.    845    2016
Energy Coal
   Cerrejón P40 project, Colombia, BHP Billiton – 33.3%    Increases saleable thermal coal production by 8 mtpa to approximately 40 mtpa.    437    2013
   Newcastle Third Port project Stage 3, Australia, BHP Billiton – 35.5%    Increases total coal terminal capacity from 53 mtpa to 66 mtpa.    367    2014


         7,468

⁽¹⁾	~~All references to capital expenditure are BHP Billiton’s share unless noted otherwise. All references to capacity are 100 per cent unless noted otherwise.~~

⁽²⁾	~~References are based on calendar years.~~

⁽³⁾	~~Capital expenditure under review following the decision to delay the 2.5 mtpa expansion of Peak Downs. Excludes announced pre-commitment funding.~~

~~Projects with pre-commitment funding~~

Customer Sector Group

Project
   Pre-commitment
funding
(US$M)⁽¹⁾    Development
project
approved
(US$M)⁽¹⁾
Petroleum
   Mad Dog Phase 2, US    708       –
Base Metals
   Olympic Dam Project, Australia⁽²⁾    1,200       –
Iron Ore
   WAIO Port, Rail and Jimblebar mine, Australia    2,300       2,300
   WAIO Outer Harbour, Australia⁽²⁾    779       –
Diamonds and Specialty Products
   Jansen Potash, Canada    728       –
Metallurgical Coal
   Caval Ridge and Hay Point, Australia ⁽²⁾    267       267




      5,982       2,567

⁽¹⁾	~~All references to capital expenditure are BHP Billiton’s share unless noted otherwise.~~

⁽²⁾	~~Additional information on these projects can be found in section 3.4.5.~~

~~3.7.3~~2.5.12 Net debt and sources of liquidity

~~Our policies on~~Year ended 30 June 2015 compared with year ended 30 June 2014

An analysis of the gearing and net debt ~~and treasury management are as follows:~~for FY2015 compared to FY2014 is included in section 1.15.5.

Year ended 30 June 2014 compared with year ended 30 June 2013

~~a commitment to a solid ‘A’ credit rating;~~

~~gearing to be a maximum of 40 per cent;~~

~~diversification of funding sources;~~

~~generally to maintain borrowings and excess cash in US dollars.~~

Gearing and net debt

~~30 June 2012 compared with 30 June 2011~~

Net debt, comprising Interest bearing liabilities less Cash and cash equivalents, was US$~~23.6~~25.8 billion, which represented ~~an increase~~a decrease of US$~~17.8~~1.7 billion compared with the net debt position at 30 June ~~2011.~~2013. Gearing, which is the ratio of net debt to net debt plus net assets, was ~~26.0~~23.2 per cent at 30 June ~~2012,~~2014, compared with ~~9.2~~26.8 per cent at 30 June ~~2011.~~2013. IFRS 5/AASB 5 ‘Non-current Assets Held for Sale and Discontinued Operations’ does not require the Consolidated Balance Sheet to be restated for comparative periods. The ~~primary reason for~~FY2014 and FY2013 figures therefore includes assets and liabilities of the ~~increase in gearing during FY2012 was~~Businesses demerged with South32. For information relating to Discontinued operations refer to note 29 ‘Discontinued operations’ to the ~~purchase of Petrohawk for US$12.0 billion and assumption of net debt of US$3.8 billion.~~Financial Statements.

Cash at bank and in hand less overdrafts at 30 June ~~2012~~2014 was US$~~4.9~~8.8 billion compared with US$~~10.1~~5.7 billion at 30 June ~~2011. Included within this are short-term deposits at 30 June 2012 of US$3.3 billion compared with US$8.7 billion at 30 June 2011.~~

~~30 June 2011 compared with 30 June 2010~~

Net debt, comprising Interest bearing liabilities less Cash and cash equivalents, was US$5.8 billion, which was an increase of US$2.5 billion compared with the net debt position at 30 June 2010. Gearing, which is the ratio of net debt to net debt plus net assets, was 9.2 per cent at 30 June 2011, compared with 6.3 per cent at 30 June 2010.

~~Cash at bank and in hand less overdrafts at 30 June 2011 was US$10.1 billion compared with US$12.5 billion at 30 June 2010.~~2013. Included within this were short-term deposits at 30 June ~~2011~~2014 of US$~~8.7~~7.1 billion compared with US$~~11.1~~3.2 billion at 30 June ~~2010.~~2013.

Funding sources

During ~~FY2012 we made~~FY2014, the ~~following debt issues:~~

~~In November 2011, we~~Group issued a ~~three~~four tranche Global ~~Bond. The Global~~ Bond ~~comprised~~totalling US$~~1.0~~5.0 billion ~~1.125 per cent~~comprising US$500 million Senior ~~Notes due 2014, US$750 million 1.875 per cent Senior~~Floating Rate Notes due 2016 ~~and US$1.25 billion 3.250 per cent Senior Notes due 2021.~~

~~In February 2012, we issued a five tranche Global Bond. This comprised US$1.0 billion,~~paying interest at three month US dollar LIBOR plus 2725 basis points, ~~Senior Floating Rate Notes due 2014,~~ US$~~1.0 billion 1.000~~500 million 2.050 per cent Senior Notes due ~~2015,~~2018, US$~~1.25~~1.5 billion ~~1.625~~3.850 per cent Senior Notes due ~~2017,~~2023, and US$~~1.0~~2.5 billion ~~2.875~~5.000 per cent Senior Notes due ~~2022~~2043.

3 Corporate Governance Statement

3.1 Governance at BHP Billiton

Dear Shareholder

At BHP Billiton, we have a governance framework that goes beyond an interest in governance for its own sake or the need to comply with regulatory requirements. We believe that high-quality governance supports long-term value creation. Simply put, we think good governance is good business, and ~~US$1.0 billion 4.125 per cent Senior Notes due 2042.~~our approach is to adopt what we consider to be the best of the prevailing governance standards in Australia, the United Kingdom and the United States.

In ~~May 2012,~~the same spirit, we ~~issued~~do not see governance as just a ~~two tranche Euro Bond. This comprised €1.25 billion 2.125 per cent Euro Bonds due 2018~~matter for the Board. Good governance is also the responsibility of executive management and ~~€750 million 3.000 per cent Euro Bonds due 2024.~~

~~Following~~is embedded throughout the ~~acquisition~~organisation.

The diagram on the following page describes the governance framework at BHP Billiton. It shows the interaction between the shareholders and the Board, demonstrates how the Board Committee structure facilitates the relationship between the Board and the Chief Executive Officer (CEO) and illustrates the flow of ~~Petrohawk Energy Corporation during FY2012 we assumed an additional US$3.8 billion of Interest bearing liabilities (refer note 24 ‘Business Combinations’~~delegation from shareholders. We have robust processes in place to ensure that the delegation flows through the Board and its committees to the ~~financial statements).~~CEO and Group Management Committee (GMC) and into the organisation. At the same time, accountability flows upwards from the Company to shareholders. This process helps to ensure alignment with shareholders.

~~None~~As part of our corporate planning cycle, we include a range of scenarios that are reviewed annually and updated by the Group ~~level borrowing facilities~~with executive management involvement. The scenarios, and the governance process supporting them, also form part of the Board agenda.

These scenarios provide a lens to assess the performance of our business portfolio. They include assumptions around commodity prices, currencies, costs, tax rates and the price of carbon and ranges for a number of risks the Group faces. These include global growth, levels of trade, geopolitical situations, climate change and technology. All of the scenarios are ~~subject~~used to inform BHP Billiton’s strategy and the resilience of our diversified asset portfolio over the short and long term.

Regardless of which direction the world may take, we will always be guided byOur BHP Billiton Chartervalues, including our value of Sustainability, in how we operate our business, interact with our stakeholders and plan for the future.

We live the values ofOur Charter and adhere to the standards of conduct required by our BHP BillitonCode of Business Conduct.

BHP Billiton governance structure

Sir John Buchanan

On 13 July 2015, Sir John Buchanan sadly passed away after an illness. Sir John was a Director of BHP Billiton from February 2003 until the time of his death. He provided wise counsel to his fellow Directors and to management. He made an invaluable contribution as a Director having regard to his long-standing relationships in the investor community, his strategic approach and his financial ~~covenants. Certain specific financing facilities~~and business acumen. His many years of experience gave him great insight and perspective when addressing key governance issues. He was a true gentleman and all of us at BHP Billiton miss him greatly.

Ongoing renewal

As noted in ~~relation to specific businesses are~~last year’s Annual Report, David Crawford retired from the ~~subject~~Board at the 2014 BHP Billiton Limited Annual General Meeting (AGM). This followed his appointment as Chairman-designate of ~~financial covenants~~South32. Following shareholder approval for the demerger, Keith Rumble also became a Non-executive Director of South32. He retired from the Board of BHP Billiton with effect from 22 May 2015.

On 14 August 2015, we announced that ~~vary from facility to facility, but which~~Carlos Cordeiro would be ~~considered normal~~retiring from the Board after the 2015 AGMs. On behalf of all shareholders, I thank Carlos for ~~such facilities.~~

~~Our maturity profile for US dollar Global Bonds~~his service to the Board and ~~Euro Bonds~~the Group over many years, and wish him all the best for the ~~following five~~future. We also announced that Anita Frew had been appointed to the Board effective 15 September 2015. Anita has over 18 years’ experience as a director and chairman on public company boards across a range of global sectors, including chemicals, engineering and finance. She is currently Deputy Chairman of Lloyds Banking Group and Chairman of Croda International Plc, the speciality chemicals group. Her appointment reflects the structured and rigorous approach adopted by BHP Billiton to Board succession planning, having regard to the skills, experience and attributes required to effectively govern and manage risk within the business.

We also announced in August 2015 that Shriti Vadera had been appointed as Senior Independent Director of BHP Billiton Plc. The Board believes that Shriti’s skills and attributes, as well as her experience with BHP Billiton over the past four years, will enable her to support the Chairman and the Board in this important governance role. It was also announced that Shriti had been appointed a member of the Nomination and Governance Committee.

A number of other changes were made to the composition of our Board committees during FY2015. Sir John Buchanan stepped down from his role as Chairman of the Remuneration Committee, but remained a member of

that Committee. Carolyn Hewson was appointed Chairman of the Remuneration Committee with effect from 1 January 2015. At the same time, Carolyn stepped down from the Risk and Audit Committee, and Malcolm Broomhead joined the Risk and Audit Committee. Pat Davies was appointed to the Sustainability Committee also with effect from 1 January 2015 and Keith Rumble left the Sustainability Committee at the time he retired from the Board. Further information is set out ~~below.~~in section 3.14 of this Annual Report.

In relation to gender diversity, the Board set a goal of increasing the number of women on the Board to at least three. With the appointment of Anita Frew, who joined the Board on 15 September 2015, that goal was met. More details about the Board’s diversity of skills and experience are set out in section 3.8 of this Annual Report.

Year ended 30 June
   2013    2014    2015    2016    2017
   US$M    US$M    US$M    US$M    US$M
Global Bonds
   1,600       2,704       3,389       1,050       2,750
Euro Bonds
   –       788       –       1,353       –










   1,600       3,492       3,389       2,403       2,750

~~Additional~~Continuous improvement

The Board has a commitment to ongoing improvement. This year, the Board undertook a review of the Finance Committee and it was decided that with effect from 1 January 2015, a separate focused committee was no longer required by the Board. The work around capital management (funding, liquidity, balance sheet management and dividends) has become part of the terms of reference for the Risk and Audit Committee. Given the established capital prioritisation process, it is considered appropriate that decisions on investments and divestments remain with the full Board, subject to future delegation.

In addition, we conducted an internal review of compliance with theBoard Governance Document and an externally facilitated evaluation of the Board committees and individual Directors. The assessments determined that each of the committees continues to function effectively. Potential enhancements related to continuing to ensure that the Board, the Group and its systems and processes are right-sized for a simplified BHP Billiton following the demerger of South32. Further information, ~~regarding~~including outcomes of the ~~maturity profile~~Board committee evaluation and the Director assessment, is set out in sections 3.11 and 3.14.

I hope you find this description of our ~~debt obligations~~corporate governance useful and ~~details of our standby and support agreements is included in note 28 ‘Financial risk management’~~look forward to ~~the financial statements.~~receiving any feedback that fellow shareholders may have.

~~The Group’s credit ratings are currently A1/P-1 (Moody’s) and A+/A-1 (Standard & Poor’s). The ratings outlook from both agencies has not changed during FY2012.~~Jac Nasser AO

~~3.7.4 Quantitative and qualitative disclosures about market risk~~Chairman

We identified our primary market risks in section 3.4. A description of how we manage our market risks, including both quantitative and qualitative information about our market risk sensitive instruments outstanding at 30 June 2012, is contained in note 28 ‘Financial risk management’ to the financial statements.

10 September 2015

~~3.7.5 Portfolio management~~

Our strategy is focused on long-life, low-cost, expandable, upstream assets and we continually review our portfolio to identify assets that no longer fit this strategy. These activities continued during the year, with proceeds amounting to US$316 million being realised from divestments of property, plant and equipment and financial assets. We will purchase interests in assets where they fit our strategy.

On 20 August 2011, we completed the acquisition of Petrohawk for net consideration of US$12.0 billion, excluding the assumption of Petrohawk’s net debt of US3.8 billion. Petrohawk is an oil and natural gas company based in the United States.

On 30 September 2011, we finalised the purchase of the HWE mining services business (HWE Mining), comprising three entities and other property, plant and equipment, which provided contract mining services to WAIO for net consideration of US$449 million.

On 27 August 2012, we announced an agreement to sell our wholly owned Yeelirrie uranium deposit in Western Australia to Cameco Corporation for US$430 million. The sale is subject to relevant approvals from the Australian Foreign Investment Review Board and Government of Western Australia.

The sale of our 37.8 per cent non-operated interest in Richards Bay Minerals, South Africa, to Rio Tinto was completed on 7 September 2012, at a price of US$1.9 billion before adjustments. The review of our diamonds business is ongoing. Other targeted divestments are being considered. These actions demonstrate the Group’s intention to further simplify the portfolio.

~~3.7.6 Dividend and capital management~~

The Group’s priorities for capital management remain unchanged: firstly, to invest in high-return growth opportunities throughout the economic cycle; secondly, to maintain our solid ‘A’ credit rating and to grow our progressive dividend; and finally, to return excess capital to shareholders.

The disciplined application of these priorities within the framework of our strategy has not only facilitated strong growth in the business, but has also enabled the Company to return US$53.8 billion to shareholders in the form of dividends and share buy-backs over the last 10 years.

On 22 August 2012, the Board declared a final dividend for the year of 57 US cents per share. Together with the interim dividend of 55 US cents per share paid to shareholders on 22 March 2012, this brings the total dividend declared for the year to 112 US cents per share, a 10.9 per cent increase over the previous year’s full-year dividend of 101 US cents per share.

~~The increase in the final dividend to 57 US cents per share took the compound annual growth rate of our progressive dividend to 26 per cent over that same 10-year period.~~

Year ended 30 June
   2012    2011
2010

Dividends declared in respect of the period (US cents per share)

Interim dividend
   55.0       46.0       42.0
Final dividend
   57.0       55.0       45.0






   112.0       101.0       87.0

The consistent and disciplined manner in which we return excess capital to shareholders was further illustrated by the completion of our expanded US$10 billion capital management program on 29 June 2011, six months ahead of schedule. Completion of the substantial program in such a timely manner highlighted our commitment to maintain an appropriate capital structure, irrespective of the economic cycle. Since 2004, the Group has repurchased a cumulative US$22.6 billion of Limited and Plc shares, representing 15 per cent of then issued capital.

~~3.8 Off-balance sheet arrangements and contractual commitments~~

Information in relation to our material off-balance sheet arrangements, principally contingent liabilities, commitments for capital expenditure and other expenditure and commitments under leases at 30 June 2012 is provided in note 21 ‘Contingent liabilities’ and note 22 ‘Commitments’ to the financial statements.

~~3.9 Subsidiaries and related party transactions~~

~~Subsidiary information~~

~~Information about our significant subsidiaries is included in note 25 ‘Subsidiaries’ to the financial statements.~~

~~Related party transactions~~

~~Related party transactions are outlined in note 31 ‘Related party transactions’ to the financial statements.~~

~~3.10 Significant changes~~

Other than the matters outlined above or elsewhere in this Report, no matters or circumstances have arisen since the end of the year that have significantly affected, or may significantly affect, the operations, results of operations or state of affairs of the Group in subsequent accounting periods.

43.2 Board of Directors and Group Management Committee

~~4.1~~3.2.1 Board of Directors

Jac NasserAO, BBus, Hon DT, 6467

~~Term of office:~~Chairman and Independent Non-executive Director

Director of BHP Billiton Limited and BHP Billiton Plc since June 2006. ~~Jac Nasser was appointed~~Appointed Chairman of BHP Billiton Limited and BHP Billiton Plc on 31 March 2010.

~~Independent:~~ ~~Yes~~

Skills and experience:

Following a 33-year career with Ford Motor Company in ~~various~~ leadership positions in Europe, Australia, Asia, South America and the United States, Mr Nasser served as a member of the Board of Directors and as President and Chief Executive Officer of Ford Motor Company from 1998 to 2001. ~~Mr Nasser~~He has more than ~~30 years’~~three decades of experience in large-scale global businesses and a decade of private equity investment and operating expertise.

Other directorships and offices (current and recent):

~~Director~~Member of ~~British Sky Broadcasting Group plc~~Australian Prime Minister’s Business Advisory Council (since ~~November 2002)~~December 2013).

Director of 21st Century Fox (since June 2013).

~~Non-executive advisory partner~~

Director of Koç Holding A.Ş. (since March ~~2010) of~~2015).

Former Non-executive Consultant (March 2010 to August 2014) to One Equity Partners ~~‘JPMorgan Chase & Co’s Private Equity Business’~~ (Partner from November 2002 until March 2010).

Member of the International Advisory Council of Allianz Aktiengesellschaft (since February 2001).

Former Director of ~~Brambles Limited~~British Sky Broadcasting Group plc (from ~~March 2004~~November 2002 to ~~January 2008)~~November 2012).

Board Committee membership:

Chairman of the Nomination and Governance Committee.

Andrew MackenzieBSc (Geology), PhD (Chemistry), 58

~~Marius Kloppers~~Non-independent ~~BE (Chem), MBA, PhD (Materials Science), 50~~

~~Term of office:~~Director of BHP Billiton Limited and BHP Billiton Plc since ~~January 2006. Marius Kloppers~~May 2013. Mr Mackenzie was appointed Chief Executive Officer on ~~1 October 2007.~~10 May 2013.

~~Independent:~~ No

Skills and experience:

Mr ~~Kloppers~~Mackenzie has ~~extensive knowledge of the mining industry~~over 30 years’ experience in oil and ofgas, petrochemicals and minerals. He joined BHP ~~Billiton’s operations. Active~~Billiton in ~~the mining~~November 2008 as Chief Executive Non-Ferrous and ~~resources industry since 1993,~~commenced as Chief Executive Officer in May 2013. Prior to BHP Billiton, Mr Mackenzie worked at Rio Tinto, where he was appointed Chief Commercial Officer in December 2003 and Group President Non-Ferrous Materials and Executive Director in January 2006. Mr Kloppers was previously Chief Marketing Officer, Group Executive of Billiton Plc, Chief Executive of ~~Samancor Manganese~~Diamonds and Minerals, and BP, where he held ~~various positions at Billiton Aluminium,~~a number of senior roles, including ~~Chief Operating Officer~~Group Vice President for Technology and ~~General Manager of Hillside Aluminium.~~Engineering, and Group Vice President for Chemicals.

Other directorships and offices (current and recent):

Director of the Grattan Institute (since May 2013).

~~Chairman~~

Director of the International Council on Mining and Metals (since May 2013).

Former Non-executive Director of Centrica plc (from September 2005 to May 2013).

Board Committee membership:

None.

Malcolm BrindedMA, 62

Independent Non-executive Director

Director of BHP Billiton Limited and BHP Billiton Plc since April 2014.

Skills and experience:

Mr Brinded has extensive experience in energy, governance and sustainability. He served as a member of the Board of Directors of Royal Dutch Shell plc from 2002 to 2012. During his 37-year career with Shell, Mr Brinded held various leadership positions in the United Kingdom, Europe, the Middle East and Asia, including Executive Director of Exploration and Production, Executive Director of Upstream International and Chairman and Upstream Managing Director of Shell UK.

Other directorships and offices (current and recent):

Former Director of Royal Dutch Shell plc (from July 2002 to March 2012, including as a Director of Royal Dutch Petroleum and Shell Transport and Trading Ltd prior to unification of Shell’s corporate structure).

Former Director of Shell Petroleum N.V. (from July 2002 to March 2012).

Director of CH2M Hill Companies, Ltd (since July 2012).

Director of Network Rail Ltd; Network Rail Infrastructure Ltd (since October ~~2011)~~2010).

Chairman of the Shell Foundation (from July 2009 and ~~former Deputy Chairman~~Trustee from June 2004).

Vice President of The Energy Institute, UK (from October ~~2008 to October 2011)~~2013).

Board Committee membership:

Member of the Sustainability Committee.

~~None.~~

Mr Broomhead has extensive experience in running industrial and mining companies with a global footprint and broad global experience in project development in many of the countries in which BHP Billiton operates. ~~Mr Broomhead~~He was Managing Director and Chief Executive Officer of Orica Limited from 2001 until September 2005. Prior to joining Orica, Mr Broomhead held a number of senior positions at North Limited, including Managing Director and Chief Executive Officer and, prior to that, held senior management positions with Halcrow (UK), MIM Holdings, Peko Wallsend and Industrial Equity.

Chairman of Asciano Limited (since October 2009).

Former Director of Coates Group Holdings Pty Ltd (from January 2008 to July 2013).

Director of the Walter and Eliza Hall Institute of Medical Research (since ~~January 2008)~~July 2014).

Member of the Sustainability Committee.

Member of the ~~Finance~~Risk and Audit Committee.

~~Term of office~~~~: Director of BHP Billiton Limited and BHP Billiton Plc since February 2003. Sir John Buchanan has been designated as the Senior Independent Director of BHP Billiton Plc since his appointment.~~

~~Skills and experience~~: Educated at Auckland, Oxford and Harvard, Sir John has broad international business experience gained in large and complex international businesses. He has substantial experience in the petroleum industry and knowledge of the international investor community. He has held various leadership roles in strategic, financial, operational and marketing positions, including executive experience in different countries. He is a former Executive Director and Group Chief Financial Officer of BP, Treasurer and Chief Executive of BP Finance and Chief Operating Officer of BP Chemicals.

~~Chairman of ARM Holdings Plc (UK) (since May 2012).~~

~~Chairman of Smith & Nephew Plc (since April 2006) and former Deputy Chairman (from February 2005 to April 2006).~~

~~Chairman of the International Chamber of Commerce (UK) (since May 2008).~~

~~Member of Advisory Board of Ondra Bank (since June 2009).~~

~~Chairman of the UK Trustees for the Christchurch Earthquake appeal.~~

~~Former Senior Independent Director and Deputy Chairman of Vodafone Group Plc (from July 2006 to July 2012) and Director (from April 2003 to July 2012).~~

~~Former Director of AstraZeneca Plc (from April 2002 to April 2010).~~

~~Chairman of the Remuneration Committee.~~

~~Member of the Nomination Committee.~~

Mr Cordeiro brings to the Board more than 30 years’ experience in providing strategic and financial advice to corporations, financial institutions and governments around the world. ~~Mr Cordeiro~~He was previously Partner and Managing Director of Goldman Sachs Group Inc and ~~Executive~~ Vice Chairman of Goldman Sachs (Asia) LLC.

Advisory Director of The Goldman Sachs Group Inc (since December 2001).

Non-executive Vice Chairman of Goldman Sachs (Asia) LLC (since December 2001).

Member of the Remuneration Committee.

~~Term of office~~~~: Director of BHP Limited since May 1994. Director of BHP Billiton Limited and BHP Billiton Plc since June 2001.~~

~~Skills and experience~~: David Crawford has extensive experience in risk management and business reorganisation. Mr Crawford has acted as a consultant, scheme manager, receiver and manager and liquidator to very large and complex groups of companies. Mr Crawford was previously Australian National Chairman of KPMG, Chartered Accountants.

~~Chairman of Australia Pacific Airports Corporation Limited (since May 2012).~~

~~Chairman of Lend Lease Corporation Limited (since May 2003) and Director (since July 2001).~~

~~Former Chairman of Foster’s Group Limited (from November 2007 to December 2011) and former Director of Foster’s Group Limited (from August 2001 to December 2011).~~

~~Former Director of Westpac Banking Corporation (from May 2002 to December 2007).~~

~~Former Chairman of National Foods Limited (Director from November 2001 to June 2005).~~

~~Chairman of the Finance Committee.~~

Mr Davies has broad experience in the natural resources sector across a number of geographies, commodities and markets. From July 2005 until June 2011, ~~Mr Davies~~he was Chief Executive of Sasol Limited, an international energy, chemical and mining company with operations in 38 countries and listings on the Johannesburg and New York stock exchanges. HeMr Davies began his career at Sasol in 1975 and held a number of diverse roles, including managing the ~~group’s~~group��s oil and gas businesses, before becoming Chief Executive in July 2005. ~~Mr Davies~~He is a former Director of various Sasol Group companies and joint ventures.

Former Director (from August 1997 to June 2011) and Chief Executive (from July 2005 to June 2011) of Sasol Limited.

Member of the Remuneration Committee.

Member of the Sustainability Committee.

Ms Frew has extensive board, strategy, marketing, governance and risk management experience in the chemicals, engineering, water and finance industries. She is the Chairman of Croda International Plc and Deputy Chairman of Lloyds Banking Group. She was until recently the Chairman of Victrex PLC, Senior Independent Director of Aberdeen Asset Management Plc and IMI Plc and a Non-executive Director of Northumbrian Water.

Chairman of Croda International Plc (since September 2015; Chairman Designate since March 2015).

Deputy Chairman of Lloyds Banking Group (since December 2010).

Former Senior Independent Director of Aberdeen Asset Management Plc (from October 2004 to September 2014).

Former Senior Independent Director of IMI Plc (from March 2006 to May 2015).

Former Chairman of Victrex Plc (from 2008 to October 2014).

Ms Hewson is a former investment banker and has over 30 years’ experience in the finance sector. ~~Ms Hewson~~She was previously an Executive Director of Schroders Australia Limited and has extensive financial markets, risk

management and investment management expertise. Ms Hewson is a ~~Non-executive~~former Director of ~~Stockland Group and~~ BT Investment Management ~~Limited. Ms Hewson previously served as a Director on the boards of~~Limited, Westpac Banking Corporation, AMP Limited, CSR Limited, AGL Energy Limited, the Australian Gas Light Company, South ~~Australia~~Australian Water and the Economic Development Board of South Australia. Ms Hewson is currently a member of the Advisory Board of Nanosonics Limited, a Director of the Australian Charities Fund Pty Limited, Patron and a Director of the Neurosurgical Research Foundation and Chair of the Westpac Foundation.

Member of Federal Government Growth Centres Advisory Committee (from January 2015).

Director of Stockland Group (since March 2009).

~~Director of BT Investment Management Limited~~Trustee Westpac Foundation (since ~~December 2007)~~May 2015).

Member of Australian Federal Government Financial Systems Inquiry (from January 2014 to December 2014).

Former Member of the Advisory Board of Nanosonics Limited ~~(since~~(from June ~~2007)~~2007 to August 2015).

Former Director of BT Investment Management Limited (from December 2007 to December 2013).

Former Director of Australian Charities Fund ~~Pty~~Operations Limited ~~(since~~(from June ~~2000)~~2000 to February 2014).

Former Director and Patron of the Neurosurgical Research Foundation ~~(since~~(from April ~~1993)~~1993 to December 2013).

Former Trustee and Chairman of Westpac Buckland Fund (from January 2011 to December 2013) and Chairman of Westpac Matching Gifts Limited (from August 2011 to December 2013), together known as the Westpac Foundation.

Former Director of Westpac Banking Corporation (from February 2003 to June 2012).

~~Former Director of AGL Energy Limited (from February 2006 to February 2009).~~

~~Chair of the Westpac Foundation (since January 2011).~~

~~Member~~Chairman of the ~~Risk and Audit~~Remuneration Committee.

Mr Maxsted is a corporate recovery specialist who has managed a number of Australia’s largest corporate insolvency and restructuring engagements and, until ~~recently,~~2011, continued to undertake consultancy work in the restructuring advisory field. ~~Mr Maxsted~~He was the Chief Executive Officer of KPMG Australia between 2001 and 2007. Mr Maxsted is currently Chairman of Westpac Banking Corporation and of Transurban Group. Mr Maxsted was on the Board of the Public Transport Corporation from 1995 to 2001 and in his capacity as Chairman from 1997 to 2001 had the responsibility of guiding the Public Transport Corporation through the final stages of a significant reform process. Mr Maxsted is the Board’s nominated ‘audit committee financial expert’ for the purposes of the US Securities and Exchange Commission Rules, and the Board is satisfied that he has recent and relevant financial experience for the purposes of the UK Financial ~~Services~~Conduct Authority’s Disclosure and Transparency Rules and the UK Corporate Governance Code.

Chairman of Westpac Banking Corporation (since December 2011) and a Director (since March 2008).

Chairman of Transurban Group (since August 2010) and a Director (since March 2008).

Director and Honorary Treasurer of Baker IDI Heart and Diabetes Institute (since June 2005).

~~Former KPMG Australia Chief Executive Officer (from January 2001 to December 2007).~~

Chairman of the Risk and Audit Committee.

~~Member of the Finance Committee.~~

Mr Murdy has a background in finance and accounting, where he has gained comprehensive experience in the financial management of mining, oil and gas companies during his career with Getty Oil, Apache Corporation and Newmont Mining Corporation. ~~Mr Murdy~~He served as the Chief Executive Officer of Newmont Mining Corporation from 2001 to 2007 and Chairman ~~of Newmont~~ from 2002 to 2007. Mr Murdy is also a former Chairman of the International Council on Mining and Metals, a former Director of the US National Mining Association and a former member of the Manufacturing Council of the US Department of Commerce.

Director of Weyerhaeuser Company (since January 2009).

Former Director of Qwest Communications International Inc (from September 2005 to April 2011).

~~Former Chief Executive Officer (from January 2001 to June 2007) and Chairman (from January 2002 to December 2007) of Newmont Mining Corporation.~~

~~Former Chairman of the International Council on Mining and Metals (from January 2004 to December 2006).~~

~~Former Director of the US National Mining Association (from January 2002 to December 2007).~~

Member of the Risk and Audit Committee.

~~Member of the Finance Committee.~~

~~Term of office~~~~: Director of BHP Billiton Limited and BHP Billiton Plc since September 2008.~~

~~Skills and experience~~: Keith Rumble was previously Chief Executive Officer of SUN Mining, a wholly owned entity of the SUN Group, a principal investor and private equity fund manager in Russia, India and other emerging and transforming markets. Mr Rumble has over 30 years’ experience in the resources industry, specifically in titanium and platinum mining, and is a former Chief Executive Officer of Impala Platinum (Pty) Ltd and former Chief Executive Officer of Rio Tinto Iron and Titanium Inc in Canada. He began his career at Richards Bay Minerals in 1980 and held various management positions before becoming Chief Executive Officer in 1996.

~~Board of Governors of Rhodes University (since April 2005).~~

~~Trustee of the World Wildlife Fund, South Africa (since October 2006).~~

~~Former Director of Aveng Group Limited (from September 2009 to December 2011).~~

~~Member of the Sustainability Committee.~~

Director of BHP Limited since June 2000 and a Director of BHP Billiton Limited and BHP Billiton Plc since June 2001.

Dr Schubert has considerable experience in the international oil industry, including at Chief Executive Officer level. ~~Dr Schubert~~He has had executive mining and financial responsibilities and was Chief Executive Officer of Pioneer International Limited for six years, where he operated in the building materials industry in 16 countries. Dr Schubert has experience in mergers, acquisitions and divestments, project analysis and management. ~~Dr Schubert~~He was previously Chairman and Managing Director of Esso Australia Limited and President of the Business Council of Australia.

~~Director~~Chairman of ~~Qantas Airways Limited~~Garvan Institute of Medical Research (since ~~October 2000)~~May 2013).

Former Chairman of G2 Therapies Pty Limited ~~(since~~(from November ~~2000)~~2000 to April 2013).

Former Director of Qantas Airways Limited (from October 2000 to November 2012).

Former Chairman (from November 2004 to February 2010) and Director (from October 1991 to February 2010) of Commonwealth Bank of Australia.

Former Chairman and Director of Worley Parsons Limited (from November 2002 ~~until~~to February 2005).

Chairman of the Sustainability Committee.

~~Member of the Remuneration Committee.~~

Member of the Nomination and Governance Committee.

Baroness Vadera brings wide-ranging experience in finance, economics and public policy as well as extensive experience of emerging markets and international institutions. ~~In recent years, Ms Vadera~~She is Chairman of Santander UK and has ~~undertaken~~been a ~~number~~Director of international assignments, including advising the G20 chair under the Republic of Korea, Temasek Holdings, Singapore on strategy and the Government of Dubai on the restructuring of Dubai World. Ms VaderaAstraZeneca since 2011. She was ~~a Minister in the British Government~~an investment banker with S G Warburg / UBS from ~~2007~~1984 to ~~2009 in the Department for International Development, the Business Department and the Cabinet Office, where she was responsible for the response to the global financial crisis. Ms Vadera was~~1999, on the Council of Economic Advisers, ~~H M~~HM Treasury ~~from~~ 1999 to 2007, ~~focusing on business and international economic issues. Prior to her time~~Minister in the ~~British Government, Ms Vadera spent 14 years~~UK Department of International Development in ~~investment~~2007, Minister in the Cabinet Office and Business Department 2008 to 2009 with responsibility for dealing with the financial crisis, G20 Adviser 2009 to 2010, and advised governments, banks and investors on the Eurozone crisis, banking ~~at UBS Warburg where she specialised in advisory work in emerging markets.~~sector, debt restructuring and markets from 2010 to 2014.

Chairman of Santander UK Plc (since March 2015).

Director of AstraZeneca Plc (since January 2011).

Former Trustee of Oxfam (from 2000 tountil 2005).

Member of the Nomination and Governance Committee

Member of the Remuneration Committee.

Member of the Risk and Audit Committee.

~~Term of office:~~ ~~Jane McAloon joined the BHP Billiton Group in September 2006 as Company Secretary for BHP Billiton Limited and~~Ms Taylor was appointed Group Company Secretary ~~in July 2007.~~

~~Skills and experience:~~ ~~Prior to joining~~of BHP Billiton ~~Ms McAloon~~effective June 2015. Previously she was Group Company Secretary of Commonwealth Bank of Australia, and before joining the Bank, held the position of Group General Counsel and Company Secretary of Boral Limited. Prior to that, Ms Taylor was Regional Counsel Australia/Asia with BHP Billiton, and ~~Group Manager External~~earlier, a partner with law firm Minter Ellison, specialising in corporate and Regulatory Services in the Australian Gas Light Company. Ms McAloon previously held various Australian State and Commonwealth government positions, including Director General of the NSW Ministry of Energy and Utilities and Deputy Director General for the NSW Cabinet Office, as well as working in private legal practice. Ms McAloonsecurities laws. She is a Fellow of the Governance Institute of ~~Chartered Secretaries and a Member of the Corporations and Markets Advisory Committee.~~

Marius Kloppers has been active in the mining and resources industry since 1993 and was appointed Chief Executive Officer in October 2007. Mr Kloppers was previously Chief Commercial Officer, Chief Marketing Officer, Group Executive of Billiton Plc, Chief Executive of Samancor Manganese and held various positions at Billiton Aluminium, among them Chief Operating Officer and General Manager of Hillside Aluminium.

~~Group Executive and Chief Executive Aluminium, Nickel & Corporate Development~~

Alberto Calderon joined BHP Billiton as President Diamonds and Specialty Products in February 2006 and was appointed Group Executive and Chief Commercial Officer in July 2007. In December 2011, he was appointed to his current position, Group Executive and Chief Executive Aluminium, Nickel & Corporate Development. Prior to joining BHP Billiton, Mr Calderon was Chief Executive Officer of Cerrejón Coal Company and Chief Executive Officer of Colombian oil company, Ecopetrol. He has held senior roles in investment banking, the Colombian Government and the International Monetary Fund.

Mike Henry joined the Group in 2003 and was appointed Chief Marketing Officer in November 2011. Prior to this, he was President Marketing. Mr Henry’s earlier career with BHP Billiton included various business development and marketing roles, including Marketing Director for Petroleum, Marketing Director for Energy Coal & Freight and Vice President Business Development for the Energy Coal Customer Sector Group. Prior to joining BHP Billiton, Mr Henry worked for Mitsubishi Corporation, where he held a number of commercial roles.

~~Member of the Group Management Committee and Chairman of the Investment Committee and Financial Risk Management Committee~~

Graham Kerr joined the Group in 1994 and was appointed Chief Financial Officer in November 2011. Prior to this, he was President of Diamonds and Specialty Products. Mr Kerr has worked in a wide range of finance, treasury and operational roles across the Group, and has held the positions of Chief Financial Officer of Stainless Steel Materials, Vice President Finance – BHP Billiton Diamonds and Finance Director for EKATI. In 2004, Mr Kerr left BHP Billiton for a two-year period when he was General Manager Commercial for Iluka Resources Ltd.

~~Group Executive and~~ Chief Executive ~~– Non-Ferrous~~Officer and Executive Director

~~Andrew~~Mr Mackenzie has over 30 years’ experience in oil and gas, petrochemicals and minerals. He joined BHP Billiton in November 2008 ~~in his current position~~ as Chief Executive ~~– Non-Ferrous.~~Non-Ferrous and commenced as Chief Executive Officer in May 2013. Prior to BHP Billiton, Mr ~~Mackenzie’s prior career included time with~~Mackenzie worked at Rio Tinto, where he was Chief Executive of Diamonds and Minerals, and ~~with~~ BP, where he held a number of senior roles, including Group Vice President for Technology and Engineering, and Group Vice President for Chemicals. ~~Mr Mackenzie is a Non-executive Director of Centrica plc.~~

~~Group Executive and~~ Chief ~~Executive – Ferrous & Coal~~Financial Officer

Mr Beaven was appointed Chief Financial Officer in October 2014. Previously he was the President of Copper and prior to that appointment in May 2013, President of Base Metals. Mr Beaven was previously the President of BHP Billiton’s Manganese Business, and Vice President and Chief ~~Organisation~~ Development Officer for Carbon Steel Materials. He has wide experience across a range of regions and businesses in BHP Billiton, UBS Warburg, Kleinwort Benson and PricewaterhouseCoopers.

Mr Cudmore joined BHP Billiton as President, Corporate Affairs in March 2014. Mr Cudmore’s title changed to Chief Public Affairs Officer effective 1 July 2015. Prior to BHP Billiton, Mr Cudmore worked with ExxonMobil for 13 years and held a wide range of senior and global Corporate Affairs roles in Australia and the United States. Before joining ExxonMobil, Mr Cudmore was a Media Relations and Policy Adviser before becoming Principal Adviser to then Premier of Victoria, The Hon Jeff Kennett MP, followed by his role as Assistant Director of the Australian Institute of Petroleum.

Mr Cutt was appointed President, Petroleum in July 2013. He joined BHP Billiton in 2007 as the President of the Production Division in the Petroleum business. Mr Cutt was appointed to the position of President, Diamonds and Specialty Products in 2011 – a role that included responsibility for Potash. He has over 30 years’ experience in the resources industry. Before joining BHP Billiton, Mr Cutt held positions in engineering, operations and senior management with Mobil Oil Corporation and then ExxonMobil, where he was President Hibernia Management and Development Company in Canada and President of ExxonMobil de Venezuela.

Mr Dalla Valle was appointed President, HSE, Marketing & Technology in January 2015. Mr Dalla Valle’s title changed to Chief ~~Strategic~~Commercial Officer ~~Minerals for~~effective 1 July 2015. He has 38 years’ experience in BHP Billiton. Mr ~~Randolph’s~~Dalla Valle was previously the President of the Coal Business, President of the Uranium business and prior to that held the positions of Asset President, Olympic Dam, Asset President of the Cannington silver mine and Vice President Ports for Iron Ore. He was also the General Manager of the Appin, Tower and Westcliff Collieries for Illawarra Coal.

Mr Healy joined BHP Billiton as Chief Legal Counsel in June 2013. Prior to BHP Billiton, Mr Healy was a partner at Herbert Smith Freehills for 16 years, and a member of its Global Partnership Council, and worked widely across its network of Australian and international offices.

Mr Henry joined BHP Billiton in 2003 and has served as President, Coal since January 2015. Prior to this, he was President, HSE, Marketing & Technology. His earlier career ~~includes~~with BHP Billiton included various business development and marketing roles, including Chief ~~Executive~~Marketing Officer, ~~First Dynasty Mines, Mining~~Marketing Director for Petroleum, Marketing Director for Energy Coal and Freight and Vice President, Business Development for the Energy Coal Business. Prior to joining BHP Billiton, Mr Henry worked for Mitsubishi Corporation, where he held a number of commercial roles.

Mr Malchuk was appointed President, Copper in March 2015. Previously, he was the President of Aluminium, Manganese and Nickel and prior to that appointment in May 2013, President of Minerals ~~Executive, Rio Tinto Plc, Director of Acquisitions~~Exploration, a position he held from July 2012. He worked for the Company between 1996 and ~~Strategy, Kennecott Inc, and various mine operating positions~~1998 in BHP Copper, in the United States, and ~~Peru with Asarco Inc. Mr Randolph~~ has ~~been~~held a number of roles in ~~his current position as Chief Executive – Ferrous & Coal~~the Base Metals business since ~~July 2007.~~he rejoined BHP Billiton in 2002. In 2006, he took the role of Asset Leader Joint Ventures and a year later was appointed Vice President Strategy and Development in Base Metals.

~~Karen Wood~~Ms Williams joined BHP Billiton in ~~2001.~~2007 and was appointed to the Group Management Committee as President, Human Resources in January 2015. Ms ~~Wood’s previous positions were Chief Governance Officer, Special Adviser and Head of Group Secretariat and Group Company Secretary. Ms Wood was appointed~~Williams’ title changed to Chief People Officer ~~in 2007~~effective 1 July 2015. She has previously held senior Human Resources positions including Vice President Human Resources Marketing, Vice President Human Resources for the Uranium business and ~~in 2010 assumed responsibility for Public Affairs. Before joining~~Group HR Manager, Executive Resourcing & Development. Prior to BHP Billiton, ~~she~~Ms Williams was ~~General Counsel~~an organisation strategy and ~~Company Secretary for Bonlac Foods Limited. Ms Wood is a Fellow of the Institute of Chartered Secretaries.~~workforce transformation advisor with Accenture (formerly Andersen Consulting) and National Australia Bank.

~~J Michael Yeager~~Jimmy Wilson BSc ~~MSc, 59~~(Mechanical Engineering), 53

~~Mike Yeager joined~~Mr Wilson was appointed President, Iron Ore in March 2012. He has had an extensive career in the ~~Group in April 2006 as Chief Executive Petroleum after 25 years with Mobil and later ExxonMobil. Mr Yeager was previously Vice President, ExxonMobil Development Company,~~mining industry, and held ~~the~~key managerial and operational roles ~~of Senior Vice~~throughout BHP Billiton including President, ~~Imperial Oil Ltd~~Energy Coal (2009 – 2012) and President, Stainless Steel Materials (2007 – 2009). Prior to these roles, Mr Wilson was President and Chief ~~Executive~~Operating Officer ~~Imperial Oil Resources, Vice~~Nickel West, President ~~Africa, ExxonMobil Production Company, Vice President Europe, ExxonMobil Production Company~~ and ~~President, Mobil Exploration~~Chief Operating Officer Samancor Chrome and ~~Production in the United States.~~

Welcome to BHP Billiton’s Corporate Governance Statement. At BHP Billiton, our purpose is to create long-term shareholder value through the discovery, acquisition, development and marketing of natural resources. Your Board oversees the consistent execution of BHP Billiton’s long-stated business strategy and commitment to transparent and high-quality governance.

We believe that long-term value creation is supported by high-quality governance. Our governance framework reflects the regulatory requirements of Australia, the United Kingdom and the United States, given our listings in those three countries. Beyond regulatory requirements, we adopt what we consider to be the highest of governance standards in those jurisdictions. Underpinning this is our overall approach to governance:

~~We believe governance is not just a matter for the Board. Good governance must be fostered throughout the organisation.~~

~~We strive to foster a culture that values and rewards exemplary ethical standards, personal and corporate integrity and respect for others.~~

~~Our statement of full compliance with the governance codes that apply to us is set out in section 5.22, and an outline of our governance structure is set out below.~~

We are continuously focused on enhancing the diversity of perspective on the Board. We do this in a structured manner, looking out over a five-year period at the skills, backgrounds, knowledge, experience and diversity on the Board. The right blend of skills, experience and perspective is critical to ensuring the Board oversees BHP Billiton effectively for shareholders.

Our immediate business imperative in FY2012 was to appoint an additional Director with skills and experience in the oil and gas sector. Pat Davies, former Chief Executive of Sasol Limited, commenced as a Director in June 2012 and he brings this specific experience as well as a broad range of international commercial and business skills.

The Board has set an aspirational goal of increasing the number of women on the Board to at least three over the next two years. If achieved, this would see the proportion of women on the Board increase from 15 per cent currently to 23 per cent, based on a Board size of 13.

The Board has a commitment to ongoing improvement in the way it carries out its work. The continued evolution of the Board and its committees resulted in the formation of the Finance Committee during FY2012. The Board is of the view that our governance structure is enhanced by a committee that focuses on capital structure, funding, capital management planning and due diligence. As part of our commitment to continuous improvement, the role and function of the Finance Committee will be evaluated not later than 12 months after its establishment.

This year, with the assistance of independent advisers, we completed an assessment of each Director individually and implemented recommendations from Committee reviews. As a consequence, we initiated a number of changes to our Committee and Board processes. Further information is set out in section 5.10. We believe the evaluation process is an important part of continuous improvement. You will also see some changes to our Corporate Governance Statement this year, as we strive to continually improve our transparency and our dialogue with shareholders. I hope you find this report useful and look forward to feedback fellow shareholders may have.’

Part of the Board’s commitment to high-quality governance is expressed through the approach ~~we take~~BHP Billiton takes to engaging and communicating with shareholders. We encourage shareholders to make their views known to us.

Our shareholders are based across the globe. Outside of the ~~Annual General Meeting (AGM),~~two AGMs, which are an important step in the governance and investor engagement process, the Board uses a range of formal and informal communication channels to understand shareholder views to ensure it can represent shareholders in governing ~~the business.~~BHP Billiton. Regular proactive engagement with institutional shareholders and investor representative organisations takes place in Australia, South Africa, the United Kingdom and the United States. ~~This~~The purpose of these meetings is to discuss the full range of governance issues, as well as the broad strategy of the Group. The meetings are an important opportunity to build relationships and to engage directly with governance managers, fund managers and governance advisers. The meetings are led by:

~~The~~the Chairman, supported by the Group Governance and Company Secretariat team – strategy, governance and ~~remuneration.~~

remuneration;

~~The~~the Remuneration Committee Chairman ~~and~~or Senior Independent Director – governance and ~~remuneration.~~remuneration;

the Head of Health, Safety and Environment (HSE) – HSE and Community strategy (together, HSEC). Each year, we conduct group and one-on-one meetings and briefings with investors focused on key HSEC issues. During FY2015, these took place in Australia, France, South Africa and the UK, with additional meetings in mainland Europe held by conference call;

Group Governance and Company Secretariat – governance strategy and briefings. The Governance and Company Secretariat team provides a conduit to enable the Board and its committees to remain abreast of evolving investor expectations and to continuously enhance the governance processes of the Group.

The ~~Chief Executive Officer (CEO), Chief Financial Officer (CFO), management~~Chairman’s meetings are scheduled throughout the year to ensure continual feedback. This is designed to ensure that governance issues can be discussed separately to the AGM and, where appropriate, allows time to respond to feedback and shape new policies for the forthcoming financial year. During FY2015, the Chairman’s meetings included investors in Australia and the United Kingdom. Alongside these meetings, members of the Group Governance and Investor Relations ~~team – strategy, financial~~teams met with shareholders in South Africa, the United States, Netherlands, France and ~~operating performance. Important briefings are webcast live~~Sweden.

As a Group, we take a coordinated approach to engagement on corporate governance, and during the year responded to a wide range of shareholders, their representatives and non-governmental organisations. Issues covered included climate change and strategic risk assessment; safety; biodiversity; water management; hydraulic fracturing; long-termism, tax; remuneration; and collective bargaining.

The Company provides shareholders with the option to receive communications from, and send communications to, the Company and our ~~website.~~

~~In addition, shareholders~~registrar electronically. Shareholders can contact us at any time through our Investor Relations team, with contact details available on our ~~website.~~

website:www.bhpbilliton.com. Feedback from shareholders is regularly reported to the Board. Shareholder and analyst feedback is shared with the Board through the Chairman, the Chairman of the Remuneration Committee, ~~(also the Senior Independent Director),~~ other Directors, the CEO, the CFO and the ~~CFO.~~Group Company Secretary. In addition, the Head of Investor Relations ~~team provides~~and Vice President Governance provide regular reports to the Board on shareholder and governance manager feedback and analysis. This approach provides a robust mechanism to ensure Directors are aware of issues raised and have a good understanding of current shareholder views.

As described above, a key part of our approach to governance involves shareholders’ views being heard and understood. The ~~AGM is~~AGMs provide an ~~opportunity for shareholders~~important forum to ~~ask questions of the Board.~~facilitate this.

Our Dual Listed Company (DLC) structure means that we hold two AGMs each year. The AGMs are important dates in the BHP Billiton calendar. ~~In October each year, the BHP Billiton Plc meeting is held in the United Kingdom, and in November, the BHP Billiton Limited meeting is held in Australia.~~ These meetings provide an update for shareholders on the Group’s performance and offer an opportunity for shareholders to ask questions and vote. Shareholders vote on important matters affecting the business, including the election of Directors, any changes to our constitutional documents, the receipt of annual financial statements and incentive arrangements for the Executive Director. Shareholders may appoint proxies electronically through our website, and the Notice of Meeting describes how this can be done. As described above, a key part of our approach to governance is that shareholders’ views are heard and understood. The AGM provides an important forum to enable this.

Questions can be registered prior to the meeting by completing the relevant form accompanying the Notice of Meeting. Shareholders can also email the Group atinvestor.relations@bhpbilliton.com. Questions can be lodged ahead of the ~~meeting and the answers to the most frequently asked questions are posted to our website.~~meeting.

Key members of management, including the CEO and CFO, are present and available to answer questions. The External Auditor attends the AGMs and is also available to answer questions.

Proceedings at shareholder meetings are webcast live from our website. Copies of the speeches delivered by the Chairman and CEO to the AGMs are released to the stock exchanges and posted to our website. A summary of proceedings and the outcome of voting on the items of business are released to the relevant stock exchanges and posted to our website as soon as they are available following ~~the~~ completion of the BHP Billiton Limited meeting.

The Board’s role is to represent the shareholders. It is accountable to them for creating and delivering value through the effective governance of the ~~business.~~Group. This role requires a high-performing Board, with all Directors contributing to the Board’s collective decision-making processes.

TheBoard Governance Document is a statement of the practices and processes the Board has adopted to discharge its responsibilities. It includes the processes the Board has implemented to undertake its own tasks and

activities; the matters it has reserved for its own consideration and decision-making; the authority it has delegated to the CEO, including the limits on the way in which the CEO can execute that authority; and ~~provides~~ guidance on the relationship between the Board and the CEO.

TheBoard Governance Document ~~also~~ specifies the role of the Chairman, the membership of the Board and the role and conduct of Non-executive Directors. It also provides that the Group Company Secretary is accountable to the Board and advises the Chairman, and through the Chairman, the Board and individual Directors, on all matters of governance process. Further information is atset out in sections ~~5.4~~3.5 to ~~5.7.~~3.8.

appointments to the ~~appointment~~position of ~~the~~ CEO and approval of the ~~appointments~~appointment of ~~direct reports~~executives reporting directly to the CEO;

approval of ~~the overall~~ strategy and annual budgets of the ~~business;~~

Group;

determination of ~~matters~~capital and non-capital items in accordance with the approved delegations of authority;

~~formal determinations~~determination and adoption of documents (including the publication of reports and statements to shareholders) that are required by the Group’s constitutional documents, by statute or by other external ~~regulation or governance codes.~~

regulation.

The Board is free to alter the matters reserved for its decision, subject to the limitations imposed by the constitutional documents and the law.

~~Beyond those matters, the Board has~~The CEO is delegated ~~all~~ authority to ~~achieve the corporate purpose to the CEO, who takes~~take all decisions and actions ~~which, in~~that further the ~~CEO’s judgement, are reasonable having regard~~corporate purpose of creating long-term shareholder value through the discovery, acquisition, development and marketing of natural resources. This is subject to the limits imposed by the ~~Board.~~Board on the CEO’s decision-making authority and set out in theBoard Governance Document, and the matters the Board has specifically reserved for its decision, including in the Group’s authorities framework. The CEO remains accountable to the Board for the authority that is delegated and for the performance of the ~~business.~~Group, with the expectation that the CEO works in a constructive partnership with the Board. The Board monitors the decisions and actions of the CEO and the performance of the ~~business~~Group to gain assurance that progress is being made towards the corporate purpose within the limits imposed through the Group’s governance assurance framework. The Board also monitors the performance of the Group and assesses its risk profile through its committees. Reports from ~~each of~~ the committees are set out in section ~~5.13.~~3.14.

The CEO is required to report regularly to the Board in a spirit of openness and trust on the progress being made by the ~~business.~~Group. The Board and its committees determine the information required from the CEO and any employee or external party, including the External Auditor. Open dialogue between individual members of the Board and the CEO and other ~~employees~~members of the management team is encouraged to enable Directors to gain a better understanding of ~~our business.~~the Group.

The Board and its committees may seek advice from independent experts whenever it is considered appropriate. Individual Directors, with the consent of the Chairman, may seek independent professional advice at the Group’s expense on any matter connected with the discharge of their ~~responsibilities, at the Group’s expense.~~responsibilities.

Within this framework, at the start of the calendar year, the Board agrees its strategic focus and priorities for the year ahead. This ensures that the work of the Board is aligned with the corporate purpose and takes into account ~~the relevant~~ external ~~environment,~~factors, such as ~~the markets in which we operate,~~commodity market developments and changes to the ~~external~~operating and regulatory environment.

matters considered by the Board (including time spent on those matters);

legal and governance requirements of the Board and its committees;

feedback from shareholders and other stakeholders;

the outcomes of its evaluation process.

The Board is satisfied that it has discharged its obligations as set out in theBoard Governance Document.

A key activity during the year for the Board has been governing the Group through the current more challenging economic environment, in order to continue to focus on our strategy to own and operate large, long-life, low-cost, expandable, upstream assets diversified by commodity, geography and market. Disciplined investment throughout the economic cycle has established momentum in our major businesses; however, weakness in commodity markets and industry-wide cost pressure also had an effect over the year.

The Group’s long-stated priorities for capital management remain unchanged: firstly, to invest in high-return growth opportunities throughout the economic cycle; secondly, to maintain a solid ‘A’ credit rating and to grow our progressive dividend; and finally, to return excess capital to shareholders. Within this context, the Board approved a range of business decisions ~~including:~~

~~the acquisition of Petrohawk Energy Corporation for US$38.75 per share by means of an all cash tender offer;~~

the investment of US$1.2 billion in pre-commitment capital for the first phase of the Olympic Dam Project to develop an open-pit mine in South Australia. On 22 August 2012, we announced that we will investigate an alternative, less capital-intensive design of the Olympic Dam open-pit expansion, involving new technologies, to substantially improve the economics of the project. As a result of this change, we recognised an impairment and other charges of US$346 million before tax (US$242 million after tax) in respect of the Olympic Dam project;

the investment of US$2.1 billion for the development of the Caval Ridge project and the expansion of the Peak Downs mine in the Northern Bowen Basin in Central Queensland, Australia. On 22 August 2012, we announced we will delay indefinitely the expansion of Peak Downs;

~~the investment of US$1.2 billion in projects to underpin higher production at Escondida over the next decade;~~

~~the investment of US$708 million in pre-commitment funding for Mad Dog Phase 2 project in the deepwater Gulf of Mexico;~~

the investment of US$779 million in pre-commitment funding for the construction of an Outer Harbour facility associated with the Western Australia Iron Ore operations. On 24 August 2012, we announced that Western Australia Iron Ore has been granted the right, subject to the state approvals process to develop two additional berths in the Inner Harbour. We also announced that work on the Outer Harbour has been slowed while focus shifts to maximising the potential capacity from the Inner Harbour;

~~the investment of US$845 million to sustain operations at Illawarra Coal in Southern New South Wales;~~

~~the impairments against carrying value of the Fayetteville shale gas assets and Nickel West assets.~~

~~Another significant activity~~ during the year, ~~was Board and Committee succession planning and renewal. The Board believes that orderly succession and renewal is~~as outlined in ~~the best interests of the Group. During FY2012, Pat Davies was appointed to the Board (from 1 June 2012). As disclosed last year, following a detailed succession~~

process for the Risk and Audit Committee (RAC) Chairman, Lindsay Maxsted was appointed to that position in September 2011. The former RAC Chairman, David Crawford, is no longer a member of that committee but, at the request of the Board and reflecting his experience, expertise and valuable corporate memory, he remains on the Board and is Chairman of the Finance Committee. He continues to make a significant contribution to the Board’s work.

In addition, Board Committee assessments were finalised (see section 5.10 for further information) and the Finance Committee was established. The Board is of the view that our governance structure is enhanced by a committee that focuses on capital structure and funding, capital management planning and initiatives and due diligence.

The Board currently has 1312 members, each of whom must seek re-election by shareholders annually. Following the retirement of Carlos Cordeiro after the forthcoming AGMs, the Board will have 11 members. ~~Of these, 12, including the Chairman, are independent Non-executive Directors.~~ The Non-executive Directors (including Anita Frew) are considered by the Board to be independent of management and free from any business relationship or other circumstance that could materially interfere with the exercise of objective, unfettered or independent judgement. ~~Further~~For further information on the process for assessing independence, ~~is in~~refer to section ~~5.9.~~3.10.

~~There were changes to~~In terms of Non-executive Directors, the ~~composition of the Board during the year. The~~ Nomination and Governance Committee retains the services of external recruitment specialists to continue to assist in the identification of potential candidates for the Board. ~~The Board’s assessment of the overall skills, experience and diversity profile resulted in the appointment of Mr Davies with effect from 1 June 2012.~~

The Board considers that there is an appropriate balance between Executive and Non-executive Directors to promote shareholder interests and govern the ~~business~~Company effectively. While the Board includes a smaller number of Executive Directors than is common for UK-listed companies, its composition is appropriate for the DLC structure and is in line with Australian-listed company practice. In addition, the Board has extensive access to members of senior ~~management. Members of the Group Management Committee (GMC) (the most senior executives in the Group)~~management, who frequently attend ~~all the regularly scheduled~~ Board meetings, ~~by invitation,~~ where they make presentations and engage in discussions with Directors, answer questions, and provide input and perspective on their areas of responsibility. The Board, led by the Chairman, also ~~deliberates~~holds discussions in the absence of management at the beginning and end of each ~~meeting, which is chaired by the Group Chairman.~~meeting.

~~The~~along with their biographical details, ~~of the Directors~~ are ~~set out~~listed in section ~~4.1 of this Annual Report.~~3.2.1.

The Chairman of the Group is responsible for leading the Board and ensuring that it is operating to the highest governance standards. The Chairman is charged with building an effective, high-performing and collegial team of Directors and ensuring that they operate effectively as a Board.

The Chairman, Jac Nasser, is considered by the Board to be independent. He was appointed Chairman of the Group from 31 March 2010 and has been a Non-executive Director of the Group since 6 June 2006. Mr Nasser was last re-elected at the ~~2011~~2014 AGMs and, in accordance with the Group’s policy that each Director stand for election annually, will stand for re-election in ~~2012.~~2015. Further information in relation to his tenure on the Board is set out in section 3.10.

leading the Board and ensuring that it is operating to the ~~principles~~highest governance standards;

encouraging a culture of openness and ~~processes~~debate to foster a high-performing and collegial team of Directors that operates effectively;

ensuring strategic issues, shareholder and relevant stakeholder views are regularly reviewed, clearly understood and underpin the work of the Board;

facilitating the relationship between the Board ~~are maintained, including~~and the CEO;

ensuring the provision of accurate, timely and clear information;

~~encouraging debate and constructive criticism;~~

~~ensuring strategic focus is regularly reviewed, clearly understood and underpins the work of the Board;~~

setting agendas for meetings of the Board, in ~~conjunction~~consultation with the CEO and Group Company Secretary, that focus on the strategic direction and performance of ~~our~~the Group’s business;

ensuring that adequate time is available for discussion on all agenda ~~items, including strategic issues;~~

items;

leading the Board and individual Director performance assessments;

speaking and acting for the Board and representing the Board to ~~shareholders;~~

~~presenting shareholders’ views to the Board;~~

~~facilitating the relationship between the Board and the CEO.~~

shareholders.

The Board considers that none of Mr Nasser’s other commitments (set out in section ~~4.1 of this Annual Report) interfere~~3.2.1) interferes with the discharge of his responsibilities to the Group. The Board is satisfied that he makes sufficient time available to serve the Group effectively.

The Group does not have a Deputy Chairman, but has identified John Schubert to act as Chairman should the need arise at short notice.

~~The Board has appointed~~During the year under review, and from February 2003, Sir John Buchanan held the role of Senior Independent Director of BHP Billiton Plc. He acted independently in the best interests of the Group. His expertise and broad international experience materially enhanced the skills and experience profile of the Board and he continued to make a substantial contribution as Senior Independent Director and in his other Board roles until his death in July 2015.

On 14 August 2015, the Board announced that it had appointed Shriti Vadera as the Senior Independent Director of BHP Billiton Plc in accordance with the UK Corporate Governance Code. ~~Sir John~~She is available to shareholders who have concerns that cannot be

addressed through the Chairman, CEO or CFO. As Senior Independent Director, heshe also provides a sounding board for the Chairman and serves as an intermediary for other Directors if necessary.

The Board considers that a diversity of skills, backgrounds, knowledge, experience, geographic location, nationalities and gender is required in order to effectively govern the business. The Board and its ~~committees~~Nomination and Governance Committee work to ensure that the Board continues to have the right balance of skills, experience, independence and Group knowledge necessary to discharge its responsibilities in accordance with the highest standards of governance.

In order to govern the Group effectively, Non-executive Directors must have a clear understanding of the Group’s overall strategy, together with knowledge about the Group and the industries in which it operates. Non-executive Directors must be sufficiently familiar with the Group’s core business to be effective contributors to the development of strategy and to monitor performance. Part of the required understanding of strategy and the

core business is the requirement to understand the risks that the Group faces and the processes in place to mitigate and manage those risks. We operate in an uncertain external environment, and the Group is exposed to many material risks across its operations, including some that are systemic, such as financial risks and climate change. All those risks are factored into the Board’s approach to strategy and its assessment of an optimised portfolio. The risk management governance structure is described in section 3.15.

TheBoard Governance Document requires that Directors ~~demonstrate unquestioned honesty and integrity, preparedness to question, challenge and critique, and a willingness to understand and commit to the highest standards of governance. Directors must~~ commit to the collective decision-making processes of the Board. Individual Directors are required to debate issues openly and constructively, and are free to question or challenge the opinions of others. ~~Directors must also commit to active involvement in Board decisions and the application of strategic thought to matters in issue.~~ Directors must be clear communicators and good listeners who actively contribute to the Board in a collegial manner. Each Director must ensure that no decision or action is taken that places his or her interests in front of the interests of the ~~business.~~Company.

~~Directors must be prepared to commit sufficient time and resources to perform the role effectively.~~ Current Board profile

The ~~Nomination Committee takes account~~Board considers that each of the ~~other positions held by each potential Director candidate. It assesses whether they will have adequate~~ Non-executive Directors has the following attributes:

time to ~~devote~~undertake the responsibilities of the role;

unquestioned honesty and integrity;

a willingness to understand and commit to the highest standards of governance;

an ability to apply strategic thought to relevant matters;

an ability to consider materiality and risk tolerance as key considerations in decision-making;

a preparedness to question, challenge and critique;

experience of managing in the context of uncertainty, and an understanding of the risk environment of the Group, including the potential for risk to impact our health and safety, environment, community, reputation, regulatory, market and financial performance;

knowledge of world capital markets;

a proven track record of creating value for shareholders.

The Executive Director brings additional perspectives to the Board ~~prior to making~~through a ~~recommendation to~~deeper understanding of the Board on whether to appoint them as a Director. In addition, Directors are required to consult with the Chairman before accepting any additional commitments that could conflict with or impact on the time Directors can devote to their role.

~~The Nomination Committee is required to assist the Board in ensuring that the Board is comprised of high-calibre individuals whose background, skills, experience~~Group’s business and ~~personal characteristics will augment the present Board and meet its future needs and diversity aspirations.~~

The following table sets out the ~~key~~mix of skills and experience ofthat the Board considers necessary or desirable in its Directors and the extent to which they are represented on the Board and its committees. ~~In summary, the Non-executive Directors contribute:~~

~~international and operational experience;~~

~~understanding of the sectors in which we operate;~~

~~knowledge of world capital markets;~~

~~an understanding of the health, safety, environmental and community challenges that we face.~~

The ~~Executive Director brings additional perspectives to the Board’s work through a deep understanding of the Group’s business.~~

~~In addition to the skills and experience set out in the~~ table includes Anita Frew, who joined the Board ~~considers that each Director has the following attributes:~~on 15 September 2015.

~~unquestioned honesty and integrity;~~

~~a proven track record of creating value for shareholders;~~

~~time available to undertake the responsibilities;~~

~~an ability to apply strategic thought to matters in issue;~~

~~a preparedness to question, challenge and critique;~~

~~a willingness to understand and commit to the highest standards of governance.~~

Skills and experience

Board

Risk and
Audit

Nomination
and
Governance

Remuneration

Sustainability

~~Finance~~

~~Financial acumen~~Governance

Commitment to the highest standards of governance, including experience with a major organisation that is subject to rigorous governance standards, and an ability to assess the effectiveness of senior management.

12 Directors

4 Directors

3 Directors

4 Directors

Strategy/Risk

Track record of developing and implementing a successful strategy, including appropriately probing and challenging management on the delivery of agreed strategic planning objectives. Track record in developing an asset or business portfolio over the long term that remains resilient to systemic risk.

12 Directors

4 Directors

3 Directors

4 Directors

Financial acumen

Senior executive or equivalent experience in financial accounting and reporting, corporate finance and internal financial controls, including an ability to probe the adequacies of financial and risk controls.

1312 Directors

4 Directors

3 Directors

4 Directors

~~3 Directors~~

4 Directors

Capital projects

Experience working in an industry with projects involving large-scale capital outlays and long-term investment horizons.

1110 Directors

4 Directors

3 Directors

32 Directors

4 Directors

Health, safety and environment

Experience related to workplace health and safety, environmental and social responsibility, and community.

11 Directors

4 Directors

3 Directors

4 Directors

~~Health, safety and environment~~Remuneration

~~Experience related to workplace health and safety, environmental and social responsibility, and community.~~

~~12 Directors~~

~~4 Directors~~

~~3 Directors~~

~~4 Directors~~

~~Remuneration~~

Board ~~remuneration committee~~Remuneration Committee membership or management experience in relation to remuneration, including incentive programs and pensions/superannuation and the legislation and contractual framework governing remuneration.

1312 Directors

4 Directors

3 Directors

4 Directors

~~3 Directors~~

4 Directors

Mining

Senior executive experience in a large mining organisation combined with an understanding of the Group’s corporate purpose to create long-term shareholder value through the discovery, acquisition, development and marketing of natural resources.

54 Directors

~~1 Director~~2 Directors

0 Directors

1 Director

~~2 Directors~~

2 Directors

Skills and experience

Board

Risk and
Audit

Nomination
and
Governance

Remuneration

Sustainability

~~Finance~~

Oil and gas

Senior executive experience in the oil and gas industry, including ~~in depth~~in-depth knowledge of the Group’s strategy, markets, competitors, operational issues, technology and regulatory concerns.

5 Directors

1 Director

~~2 Directors~~

~~3 Directors~~1 Director

1 Director

~~1 Director~~3 Directors

Marketing

Senior executive experience in marketing and a detailed understanding of the Group’s corporate purpose to create long-term shareholder value through the discovery, acquisition, development and marketing of natural resources.

1110 Directors

3 Directors

2 Directors

~~3 Directors~~

~~4 Directors~~

32 Directors

4 Directors

Public policy

Experience in public and regulatory policy, including how it affects corporations.

1312 Directors

4 Directors

3 Directors

4 Directors

~~3 Directors~~

4 Directors

The Board plans for its own succession, with the assistance of the Nomination and Governance Committee. In doing this, the Board:

considers the skills, backgrounds, knowledge, experience and diversity of geographic location, nationality and gender necessary to allow it to meet the corporate purpose;

assesses the skills, backgrounds, knowledge, experience and diversity currently represented;

identifies any inadequate representation of those attributes and agrees the process necessary to ensure a candidate is selected who brings them to the Board;

reviews how Board performance might be enhanced, both at an individual Director level and for the Board as a whole.

The Board believes that orderly succession and renewal isare achieved as a result of careful planning, ~~where~~with the appropriate composition of the Board is continually under review. This planning involves looking out over a five-year period, which provides a robust framework within which to consider Board succession and renewal.

When considering new appointments to the Board, the Nomination and Governance Committee oversees the preparation of a position specification that is provided to an independent recruitment organisation retained to conduct a global search. Independent search firms are instructed to consider a wide range of candidates, including taking into account geographic location, nationality and gender. In addition to the specific skills, knowledge and experience deemed necessary, the specification contains the criteria required by theBoard Governance Document.

~~Newly~~Once a candidate is identified, the Board, with the assistance of external consultants where necessary, conducts appropriate background and reference checks before the candidate is appointed ~~Directors must submit themselves~~to the Board or put forward to shareholders for ~~election at the first AGM following their appointment.~~election.

The Board has adopted a letter of appointment that contains the terms on which Non-executive Directors will be appointed, including the basis upon which they will be indemnified. The letter of appointment clearly defines the role of Directors, including the expectations in terms of independence, participation, time commitment and continuous improvement. In summary, Directors are expected to constructively challenge; set the values and standards of the Group; monitor the performance of ~~management;~~management and of the Group; satisfy themselves as to the adequacy and integrity of ~~financial statements;~~the Financial Statements; and satisfy themselves that the systems for the identification and management of risks are robust and appropriate. Directors are also expected to commit sufficient time to carry out their role and to participate in continuous improvement programs and internal ~~review~~reviews to support ongoing development. The letter of appointment also makes it clear that Directors are required to disclose circumstances that may affect, or be perceived to affect, their ability to exercise independent judgement so that the Board can assess independence on a regular basis.

Our Charter and Human Resources Group Level Documents guide management on all aspects of human resource management, including inclusion and diversity. Underpinning the Group Level Documents and supporting the achievement of diversity across the Group are principles and measurable objectives that define our approach to diversity and our focus on creating an inclusive work environment.

The Board ~~has set an aspirational goal~~and the Nomination and Governance Committee believe that many facets of ~~increasing~~diversity are required in order to meet the ~~number~~corporate purpose. This diversity is not restricted to gender but also includes geographic location, nationality, skills, background, knowledge and experience.

The Board is committed to ensuring gender diversity is actively pursued and implemented in terms of ~~women on~~Board composition. Diversity is a core consideration in ensuring that the Board and its committees have the right balance of skills, experience, independence and Group knowledge necessary to ~~at least three over~~discharge their responsibilities. The right blend of perspectives is critical to ensuring the ~~next two years. While this remains our medium-term target, the immediate business imperative in FY2012 was~~Board oversees BHP Billiton effectively for shareholders.

Further information relating to add additional expertise in the oil and gas sector. The appointment of Mr Davies brings this experience, as well as relevant broader skills and experience. We continue to work to identify future candidates for the Board. The ongoing aim is to enhance the diversity of Directors consistent with our five-year outlook of the attributes currently present, and of those required, on the Board. There are currently two female Directors and the Board’s broader diversity mix is set out in section 3.14.3.

Alongside Board composition, part of the ~~pie chart below.~~Board’s role is to consider and approve the Group’s measurable objectives for workforce diversity each financial year, and to oversee the Group’s progress in achieving those objectives. This progress will continue to be disclosed in the Annual Report, along with the proportion of women in our workforce, in senior management positions and on the Board. Further information on inclusion and diversity at BHP Billiton, including our progress against FY2015 measurable objectives, and our employee profile more generally, is set out in ~~relation to how diversity is being addressed within the broader Group is contained in section 5.17.~~sections 1.13.1 and 1.13.3.

The Board considers that the development of industry and Group knowledge is a continuous and ongoing process.

Upon appointment, each new Non-executive Director undertakes an induction program specifically tailored to their needs.

BHP Billiton’s long-stated strategy is to own and operate large, long-life, low-cost, expandable, upstream assets diversified by commodity, geography and market. The Board’s development activity reflects this diversification through the provision of regular updates to Directors on each of the Group’s commodities, geographies and markets.

Non-executive Directors also participate in continuous improvement programs, in accordance with their terms of appointment. Programs are designed to maximise the effectiveness of the Directors throughout their tenure and link in with their individual Director performance evaluations. The ~~training~~Training and ~~development program~~Development Program covers ~~not only~~a range of matters of a business nature, ~~but also matters falling into the~~including environmental, social and governance ~~area.~~matters.

Structured opportunities are provided to build knowledge through initiatives such as visits to BHP Billiton sites and ~~business~~ briefings provided at Board meetings. Non-executive Directors also build their Group and industry knowledge through the involvement of the GMC and other senior Group employees in Board meetings.

Briefings, site visits and development sessions underpin and support the Board’s work in monitoring and overseeing progress towards the corporate ~~purpose of creating long-term shareholder value through the discovery, acquisition, development and marketing of natural resources.~~purpose. We therefore continuously build Directors’ knowledge to ensure ~~that~~ the Board remains ~~up to date~~up-to-date with developments within our ~~Customer Sector Groups (CSGs),~~Businesses, as well as developments in the markets in which we operate.

During the year, Non-executive Directors participated in the following activities:

~~business~~ briefings intended to provide each Director with a deeper understanding of the activities, environment and key issues and direction of ~~CSGs.~~the Businesses. These briefings are provided to the Board by senior executives, including ~~CSG Presidents~~GMC members and ~~GMC members.~~other team members with operational and non-operational responsibilities. They are comprehensive briefings on the commodities, assets and markets in which we ~~operate.~~operate, including HSEC, and public policy considerations. The briefings provided during ~~FY2012~~FY2015 covered ~~iron ore, stainless steel materials, uranium, petroleum~~Potash, the Group Technology strategy, Iron Ore, and ~~manganese.~~Group scenario planning (including sign posts). When ~~business~~these briefings were combined with a site visit, they took place on-site, otherwise they took place at Board meetings where the relevant executives joined Directors;

development sessions on specific topics of relevance, such as climate change, commodity markets, world economy, changes in corporate governance standards, diversity and inclusion, Directors’ duties and shareholder ~~feedback;~~

feedback. In relation to climate change, the Board and its committees once again spent time considering systemic climate change as it relates to the resilience of, and opportunities for, the Group’s portfolio, and considering actions to manage the implications of climate change;

visits to ~~key BHP Billiton sites,~~Houston, Petroleum, United States; Olympic Dam, Copper, Australia; Western Australia Iron Ore; Eagle Ford, Petroleum, United States; Peak Downs, Coal, Australia, and Mount Arthur, Coal, Australia, including briefings on the assets, operations and other relevant issues, and meetings with key personnel;

addresses by expert external ~~speakers, who are generally experts~~speakers.

These sessions and site visits provide not only an update on the main Businesses and assets, but also allow an opportunity to discuss, in ~~their field.~~

detail, the changing risk environment and the potential for impacts on the achievement of our corporate purpose and business plans. More detail on the management of principal risks is set out in sections 1.7.3 and 3.15. Director involvement and continuous development through site visits, Business ~~Group~~ Risk and Audit Committee (Business ~~Group~~ RAC) meetings and on-site ~~business~~ briefings isare summarised in the ~~site visit and business briefing map, below.~~following map.

Business ~~Group~~ RAC meetings take place twice yearly as part of our financial governance framework. Directors who are members of the Board’s ~~RAC~~Risk and Audit Committee chair the Business ~~Group~~ RAC meetings. Half-year Business Group RAC meetings take place via video conference and full year meetings take place face-to-face to ensure maximum interaction between the Business Group RAC and other meeting participants. FurtherFor further information on Business ~~Group~~ RACs, ~~is at~~refer to section ~~5.13.1~~3.14.1.

Director site visits, on-site ~~business~~ briefings and Business ~~Group~~ RAC meetings ~~2010-2012~~2013-2015

The Nomination and Governance Committee oversees the Directors’ Training and Development ~~Program.~~Program, and, as part of the yearly review process, the Chairman discusses development areas with each Director. Board committees in turn review and agree their training needs. The benefit of this approach is that induction and learning opportunities can be tailored to Directors’ committee memberships, as well as the Board’s specific areas of focus. ~~In addition, this~~This approach also ensures a coordinated process in relation to succession planning, Board renewal, training and development and committee composition, which are all relevant to the Nomination and Governance Committee’s role in securing the supply of talent to the Board.

In addition, each Board ~~Committee~~committee provides a standing invitation for any Non-executive Director to attend committee meetings (rather than just limiting attendance to committee members). Committee agendas are provided to all Directors to ensure that Directors are aware of matters to be considered by the ~~Committees~~committees, and can elect to attend meetings where appropriate.

The Board is committed to ensuring a majority of Directors ~~are~~is independent. The Board considers that all the current Non-executive Directors, including the Chairman, are independent.

The Board has a policy that it uses to determine the independence of its Directors. This determination is carried out upon appointment, annually and at any other time where the circumstances of a Director change such as to warrant reconsideration.

Under the policy, an ‘independent’ Director is one who is: ‘independent of management and any business or other relationship that could materially interfere with the exercise of objective, unfettered or independent judgement by the Director or the Director’s ability to act in the best interests of the BHP Billiton Group’.

Where a Director is considered by the Board to be independent, but is affected by circumstances that appear relevant to the Board’s assessment of independence, the Board has undertaken to explain the reasons why it reached its conclusion. In applying the independence test, the Board considers relationships with management, major shareholders, subsidiary and associated companies and other parties with whom the Group transacts business against ~~predetermined~~pre-determined materiality thresholds, all of which are set out in the policy. A summary of the factors that may be perceived to impact the independence of certain Directors is set out below.

~~Three~~As at the end of the year under review, four Directors, ~~David Crawford,~~Jac Nasser, John Schubert, ~~and~~Sir John Buchanan ~~have~~and Carlos Cordeiro, had each served on the Board for more than nine years. ~~Mr Crawford, Dr~~Two of those Directors – Jac Nasser and John Schubert ~~and Sir John~~– are standing for re-election at the ~~2012~~2015 AGMs, having each undergone a formal performance assessment. ~~Although~~

Mr ~~Crawford~~Nasser was first appointed to the ~~BHP Limited~~ Board in ~~1994,~~June 2006 as an independent Non-executive Director. The Board believes that his expertise and broad international experience materially enhance the ~~Board considers that he makes a significant contribution to the work~~skills and experience profile of the ~~Board and that his deep knowledge~~Board. In accordance with the UK Corporate Governance Code, Mr Nasser’s term of appointment has been subject to a particularly rigorous review, which took into account the need for progressive refreshing of the Group is particularly important when a significant proportion of the Non-executive Directors have between zero to three years tenure. Following an extensive succession planning process, in 2011 Mr Crawford stepped down from the role of Risk and Audit Committee Chairman. However, he continues to make a valuable contribution to the work of the Board, in particular in his role as Finance Committee Chairman.Board.

Dr Schubert was first elected to the Board of BHP Limited in 2000. The Board is of the view that Dr Schubert continues to make a valuable contribution through his role as Chairman of the Sustainability Committee and his ~~roles~~role on the ~~Remuneration~~Nomination and ~~Nomination Committees,~~Governance Committee, as well as to the work of the Board more broadly. Dr Schubert’s extensive experience as an executive, ~~(particularly~~particularly in the international oil ~~industry)~~industry, and subsequently as a public company director across multiple industries, adds significantly to the skills and expertise of the Board.

Sir John was first appointed to the Board (and as Senior Independent Director) in February 2003. The Board believes that he continues to act independently in the best interests of the Group. His expertise and broad international experience materially enhance the skills and experience profile of the Board and he continues to make a substantial contribution in his roles, as a member of the Board, Chairman of the Remuneration Committee, a member of the Nomination Committee and as Senior Independent Director.

The Board does not believe that Mr ~~Crawford’s,~~Nasser’s or Dr Schubert’s ~~or Sir John’s~~ tenure materially interferes with their ability to act in the best interests of the Group. The Board ~~also~~ believes that each of them has retained independence of character and judgement and has not formed associations with management (or others) that might compromise their ability to exercise independent judgement or act in the best interests of the Group.

As a former ~~Directors~~Director of BHP Limited ~~Mr Crawford and~~(prior to the establishment of the Dual Listed Company structure with Billiton Plc in 2001), Dr Schubert participated in a retirement plan approved by shareholders in 1989. The plan was closed on 24 October 2003. Benefits accrued to that date, together with interest earned on the benefits, have been preserved and will be paid on retirement. The Board does not believe that the independence of ~~any participating Director~~Dr Schubert is compromised as a result of this plan.

Lindsay Maxsted was the CEO of KPMG in Australia from 2001 until 2007. The Board considers that this prior relationship with KPMG does not materially interfere with Mr Maxsted’s exercise of objective, unfettered or independent judgement, or his ability to act in the best interests of the BHP Billiton Group. The Board has determined, consistent with its policy on the independence of Directors, that Mr Maxsted is independent. The Board notes in particular that:

at the time of his appointment to the Board, more than three years had elapsed since Mr Maxsted’s retirement from KPMG. The Director independence rules and guidelines that apply to the Group – which are

a combination of Australian, UK and US rules and guidelines – all use three years as the benchmark ‘cooling off’ period for former audit firm partners;

Mr Maxsted has no financial (e.g. pension, retainer or advisory fee) or consulting arrangements with KPMG;

Mr Maxsted was not part of the KPMG audit practice after 1980 and, while at KPMG, was not in any way involved in, or able to influence, any audit activity associated with BHP Billiton.

The Board considers Mr Maxsted’s financial acumen and extensive experience in the corporate restructuring field to be important in the discharge of the Board’s responsibilities. His membership of the Board and Chairmanship of the ~~RAC~~Risk and Audit Committee are considered by the Board to be appropriate and desirable.

Mr Crawford was a partner of KPMG in Australia until his retirement in June 2001. He has had no relationship with KPMG since that time and the Board does not consider Mr Crawford’s independence to be compromised as a result of this association that ended more than 11 years ago.

Carolyn Hewson was, until 30 June 2012, a Non-executive Director of Westpac Banking Corporation and Lindsay Maxsted is a Non-executive Director and the Chairman of Westpac Banking Corporation. Until 30 June 2012, Mr Maxsted and Ms Hewson each served on Westpac’s Nominations and Risk Management Committees. The Board has assessed this cross directorship and concluded that it does not interfere with the Directors’ exercise of objective, unfettered or independent judgement or the Directors’ ability to act in the Group’s best interests. In any event, Ms Hewson retired as a Non-executive Director of Westpac from 30 June 2012.

Some of the Directors hold or have previously held positions in companies with which ~~we have~~BHP Billiton has commercial relationships. Those positions and companies are set out in the Director profiles in section ~~4.1 of this Annual Report.~~3.2.1. The Board has assessed all of the relationships between the Group and companies in which Directors hold or held positions and has concluded that in all cases the relationships do not interfere with the Directors’ exercise of objective, unfettered or independent judgement or their ability to act in the best interests of ~~our business.~~ the Group.

A specific instance is Malcolm ~~Broomhead, who~~Brinded. Mr Brinded is a ~~Non-executive~~former executive Director of ~~Coates Group Holdings Pty Limited,~~Royal Dutch Shell Plc, a ~~company with which~~material customer of the BHP Billiton ~~has commercial dealings. Coates Group provides equipment hire to~~Group. Mr Brinded stepped down from the ~~mining~~Board of Shell on 1 April 2012 and ~~resources industry (among others).~~left Shell group employment on 30 April 2012. Prior to and since the appointment of Mr ~~Broomhead~~Brinded as a Director of BHP Billiton, the Board has assessed the relationship between BHP Billiton and ~~Coates Group~~Shell group and remains satisfied that Mr ~~Broomhead~~Brinded is able to apply objective, unfettered and independent judgement and act in the best interests of BHP Billiton. In addition, no commercial dealings with Coates Group were discussed at Board or Board Committee level, and to the extent they are in the future, Mr Broomhead will absent himself fully from those deliberations.

Transactions during the year that amounted to ~~related-party~~related party transactions with Directors or Director-related entities under International Financial Reporting Standards (IFRS) are outlined in note ~~30 ‘Key Management Personnel’~~33 ‘Related party transactions’ to the ~~financial statements.~~Financial Statements.

The Executive Director, ~~Marius Kloppers,~~Andrew Mackenzie, is not considered independent because of his executive responsibilities. Mr ~~Kloppers~~Mackenzie does not hold directorships in any other company included in the ASX 100 or FTSE 100.

The UK Companies Act 2006 requires that BHP Billiton Directors avoid a situation where they have, or can have, an unauthorised direct or indirect interest that conflicts, or possibly may conflict, with the Company’s interests,

unless approved by non-interested Directors. In accordance with the UK Companies Act 2006, BHP Billiton Plc’s Articles of Association allow the Directors to authorise conflicts and potential conflicts where appropriate. A procedure operates to ensure the disclosure of conflicts and for the consideration and, if appropriate, the authorisation of them by non-conflicted Directors. The Nomination and Governance Committee supports the Board in this process, both by reviewing requests from Directors for authorisation of situations of actual or potential conflict and making recommendations to the Board, and by regularly reviewing any situations of actual or potential conflict that have previously been authorised by the Board, and making recommendations regarding whether the authorisation remains appropriate. In addition, in accordance with Australian law, if a situation arises for consideration in which a Director has a material personal interest, the affected Director takes no part in decision-making. Provisions for Directors’ interests are set out in the Constitution of BHP Billiton Limited.

The Board is committed to transparency in determining Board membership and in assessing the performance of Directors. The Board evaluates its performance through a combination of both internal peer and externally facilitated assessments. Contemporary performance measures are considered an important part of this process. Directors’ performance is also measured against their individual development plans.

The Board conducts regular evaluations of its performance, the performance of its committees, the Chairman, individual Directors and the governance processes that support the Board’s work. The Board evaluation process comprises both assessment and review, as summarised in the diagram below. This includes analysis of how the Board and its Directors are functioning, the time spent by the Board considering matters and whether the terms of reference of the Board committees have been met, as well as compliance with theBoard Governance Document.

The ~~assessment~~evaluation considers the balance of skills, experience, independence and knowledge of the ~~Board’s performance is conducted by focusing on individual Directors and Board committees in one year~~Company and the Board, its overall diversity, including gender, and how the Board works together as a ~~whole in the following year.~~unit. In addition, each year the Board, with the assistance of the Nomination and Governance Committee, conducts a review of the performance of each Director seeking re-election and uses the results of that review when considering whether to recommend the re-election of each Director. As the Board has adopted a policy of annual election, this effectively means that all Directors are subject to a performance review annually should they wish to remain on the Board.

Directors provide anonymous feedback on their peers’ performance and individual contributions to the Board, which is passed on to the relevant Director via the Chairman. In respect of the Chairman’s performance, Directors provide feedback directly to ~~John~~either Dr Schubert ~~to be passed on anonymously to~~or the ~~Chairman.~~Senior Independent Director. External independent advisers are engaged to assist with these processes, as ~~necessary and an externally facilitated assessment of the Board, Directors or Committees takes place at least every two years.~~necessary. The involvement of an independent third party has assisted in ~~ensuring that~~ the evaluation processes ~~are both~~being rigorous, fair and ~~fair.~~

The evaluation of individual Directors focuses on the contribution of the Director to the work of the Board and the expectations of Directors as specified in the Group’s governance framework. The performance of individual Directors is assessed against a range of criteria, including the ability of the Director to:

consistently take the perspective of creating shareholder value;

contribute to the development of strategy;

understand the major risks affecting the ~~business;~~

Group;

provide clear direction to management;

contribute to Board cohesion;

commit the time required to fulfil the role and perform their responsibilities effectively;

listen to and respect the ideas of fellow Directors and members of management.

The effectiveness of the Board as a whole and of its committees is assessed against the accountabilities set down in theBoard Governance Document and each ~~of the committees’~~committee’s terms of reference. Matters considered in evaluations include:

the effectiveness of discussion and debate at Board and committee meetings;

the effectiveness of the Board’s and committees’ processes and relationship with management;

the quality and timeliness of meeting agendas, Board and committee papers and secretariat support;

the composition of the Board and each committee, focusing on the blend of skills, experience, independence and knowledge of the Group and its diversity, including geographic location, nationality and gender.

The process is managed by the Chairman, ~~but~~with feedback on the Chairman’s performance isbeing provided to him by Dr Schubert.

Information about the performance review process for executives is set out in section ~~5.15.~~3.16.

During the year with the assistance of an external adviser, recommendations were implemented from the assessment of each Board committee that was finalised in FY2012. An assessment of each Director was also completed. Enhancements identified from previous years’ evaluations have continued to be implemented.

At the end of FY2011, each committee retained the services of an external adviser (JCA Group, a UK-based provider of board evaluation services, that has no other connections with the BHP Billiton Group) to assist with an assessment of the committee’s effectiveness, and this assessment continued into FY2012. The assessments indicated that the Board’s committees continue to function effectively and in accordance with their terms of reference.

During FY2011, an external adviser (Heidrick and Struggles Leadership Consulting Practice) was retained in relation to the assessment of each Director, and this assessment continued into FY2012. Although Heidrick and

~~Struggles’ Executive Search Practice also provides services in respect of Board renewal, the Leadership Consulting Practice and the Executive Search Practice operate independently.~~

The process involves each Director, including the Chairman and CEO, being interviewed by the external facilitator. The interview considers each Director’s contribution and the value they bring to the work of the Board. It also provides the opportunity for each Director to provide comments and feedback on fellow Directors, as well as their views on the focus of the Board.

~~The overall findings are presented to~~under review, the Board ~~and discussed. Each Director is provided with feedback on their individual and collective contribution to the Board and its committees.~~

~~As the assessment completed in FY2012 focused on individual Directors and Board committees, a short form~~conducted an internal review of ~~the Board as a whole was conducted to assess~~ compliance with theBoard Governance Document~~, time spent by~~; an externally facilitated evaluation of the Board ~~in considering matters~~committees; and an externally facilitated evaluation of individual Directors.

The internal review focused on compliance with ~~corporate governance requirements.~~

theBoard Governance Document. The review of the Board ~~as a whole~~included analysis of matters considered by the Board, matters referred by management, monitoring and assurance, and site visits. The review indicated that the Board is continuing to function effectively and in accordance with the terms of theBoard Governance Document.

In respect of FY2015, an externally facilitated evaluation of each Director was conducted using the electronic Lintstock service. Lintstock is a UK-based provider of corporate advice, which has no other connection to the BHP Billiton Group. Completed evaluations for individual Directors were submitted to the Chairman, and the Chairman’s evaluation was submitted to Dr Schubert. The evaluation found that the Board was described as cohesive and collegiate in nature with effective engagement, particularly when addressing difficult issues. The review also noted that as the Board continues to progress through this period of transition, the willingness to speak up, and effective working relationships, will continue to be an area of focus.

In respect of FY2015, an externally facilitated evaluation of each Board committee was conducted using the electronic Lintstock service. The evaluation was designed to draw out views on work, process and overall effectiveness of the committees. Some of the outcomes from each of the Board committee evaluations are set out in section 3.14. The assessments determined that each of the committees continues to function effectively. Potential enhancements related to continuing to ensure that the Board, the Group and its systems and processes are right-sized for a simplified BHP Billiton following the demerger of South32.

Board and committee evaluations conducted in recent years have led to a number of ~~enhancements have been made~~improvements to Board meeting processes to enhance the ~~internal~~Board’s work and effectiveness. Following the external assessment of the Board in FY2014, changes included streamlining of the Board meeting processes ~~surrounding~~and procedures, the introduction of regular Asset President meetings to allow Board ~~meetings~~members to engage with operating executives on a broad range of issues, and formalisation of the focused Board strategy forum. In addition, as a result of ~~evaluations.~~

~~Chairman’s matters: In~~ the ~~past,~~assessment, the Board held a closed session at the end of Board meetings. An additional closed session has been incorporated so that all Board meetings start with a closed session of all Directors (there are no members of the GMC present other than the Executive Director). This allows the Chairman to outline matters to be considered byFinance Committee was dissolved and its responsibilities allocated between the Board and the Risk and Audit Committee. Further information is set ~~the context for the meeting. It is also an opportunity for Directors to raise the items of business they believe should be particularly considered or any other relevant issues.~~out in section 3.14.5.

Assurance items: The Board agenda provides more time for reports from the committee chairmen to the Board. This ensures that the Board is properly and formally informed of the work of its committees and relevant committee papers are also provided to the Board. Where it is considered appropriate, presentations made to committees are also presented to the Board during its meeting.

~~Training and development: sessions are scheduled during the Board meeting program.~~

~~Closed session: Directors continue to have the opportunity to raise matters during the closed session at the end of each Board meeting, which is attended only by the Non-executive Directors.~~

The Board meets as often as necessary to fulfil its role. Directors are required to allocate sufficient time to the Group to perform their responsibilities effectively, including adequate time to prepare for Board meetings. During the reporting year, the Board met 10 times, with ~~five~~six of those meetings being held in Australia ~~three~~and four in the United ~~Kingdom and two in the United States. Generally,~~Kingdom. Regularly scheduled Board meetings run over three days (including committee ~~meetings)~~meetings and Director training and development sessions).

Members of the GMC and other members of senior management attended meetings of the Board by invitation. Senior managers delivered presentations on the status and performance of our ~~businesses~~Businesses and matters reserved for the Board, including the approval of budgets, annual ~~financial statements~~Financial Statements and ~~business~~ strategy.

Attendance at Board and standing Board ~~Committee Meetings~~committee meetings during ~~the year ended 30 June 2012~~FY2015 is set out in the table below.

~~Attendance at Board and Board Committee meetings during the year ended 30 June 2012~~

Column ~~A –~~A: indicates the number of scheduled and ad-hoc meetings held during the period the Director was a member of the Board and/or committee.

Column ~~B –~~B: indicates the number of scheduled and ad-hoc meetings attended by the Director during the period the Director was a member of the Board and/or committee.

The Board has adopted a policy, consistent with the UK Corporate Governance Code, under which all Directors must seek re-election by shareholders annually, if they wish to remain on the Board. This policy took effect at the 2011 Annual General Meetings. It replaced the previous system, as set out in the Constitution of BHP Billiton Limited and the Articles of Association of BHP Billiton Plc, under which Directors are required to submit themselves to shareholders for re-election at least every three years. The adoption of annual re-election reflects the Board’s long-standing commitment that, where governance principles vary across jurisdictions, the Board will adopt what it considers to be the higher of the prevailing standards.AGMs. The Board believes that annual re-election promotes and supports accountability to shareholders. The combined voting outcome of the BHP Billiton Plc and BHP Billiton Limited 2014 AGMs meant that each Director received more than 98.3 per cent in support of their re-election.

Board support for reappointment is not automatic. Directors who are seeking re-election are subject to a performance appraisal overseen by the Nomination and Governance Committee of the Board. Annual re-election effectively means all Directors are subject to a performance appraisal annually. The Board, on the recommendation of the Nomination and Governance Committee, makes a determination as to whether it will endorse a retiring Director for re-election. The Board will not endorse a Director for re-election if his or her performance is not considered satisfactory. The ~~Board will advise shareholders in the~~ Notice of Meeting will provide information that is material to a shareholder’s decision whether or not to re-elect a Director, including whether or not re-election is ~~supported.~~supported by the Board.

BHP Billiton does not apply or implement a ‘no vacancy’ rule in relation to Board appointments. Accordingly, Director candidates can be elected to the Board by ordinary resolution and are not required to out-poll an incumbent Director in order to be elected.

The Board has established committees to assist it in exercising its authority, including monitoring the performance of the ~~business~~Group to gain assurance that progress is being made towards the corporate purpose within the limits imposed by the Board. During the year the Board approved the formation of a new standing committee: the Finance Committee, the mandate of which is outlined below. The Board is of the view that the Group’s governance structure is enhanced by a committee that focuses on capital and finance matters. The Finance Committee sits alongside the other permanent committees of the Board: the RAC, the Sustainability Committee, the Nomination Committee and the Remuneration Committee. Other committees are formed from time to time to deal with specific matters.

Each of the permanent committees has terms of reference under which authority is delegated by the Board.

~~The office of the~~ Company ~~Secretary~~Secretariat provides secretariat services for each of the committees. Committee meeting agendas, papers and minutes are made available to all members of the Board. Subject to appropriate controls and the overriding scrutiny of the Board, committee chairmen are free to use whatever resources they consider necessary to discharge their responsibilities.

The role of the ~~RAC~~Risk and Audit Committee (RAC) is to assist the Board in monitoring the decisions and actions of the CEO and the Group and to gain assurance that progress is being made towards the corporate purpose within the limits imposed by the Board, as set out in theBoard Governance Document.

the integrity of the ~~financial statements;~~

Group’s Financial Statements;

the appointment, remuneration, qualifications, independence and performance of the External Auditor and the integrity of the audit process as a whole;

the plans, performance, objectivity and leadership of the internal audit ~~function;~~

function and the integrity of the internal audit process as a whole;

the effectiveness of the systems of internal controls and risk management;

the Group’s systems for compliance with applicable legal and regulatory ~~requirements;~~

requirements within the RAC’s area of responsibility;

capital management (funding, liquidity, balance sheet management, dividends);

the CEO’s compliance ~~by management~~ with ~~constraints imposed by~~ the ~~Board.~~

relevant CEO limits.

~~The role of the Committee in the context of the Board’s broader governance framework is summarised in the diagram below. Further~~For further information about our approach to risk, ~~can be found in~~refer to sections ~~1.5~~1.7.1 and ~~5.14.~~

The RAC met 11eight times during the year. Information on meeting attendance by Committee members is included in the table in section ~~5.11~~3.12 and information on ~~their~~Committee members’ qualifications is ~~included~~set out in section ~~4.1.~~3.2.1.

In addition to the regular business of the year, the Committee discussed ~~reform proposals from Europe~~matters including the compliance organisation updates and anti-corruption plan, taxation, funding updates, commodity price protocols, and continued development of the Assurance function. Statements relating to tendering of the external audit contract, significant matters relating to the Financial Statements and the ~~United Kingdom relating to:~~

process for evaluating the external audit ~~regime;~~are set out below.

~~role of risk and audit committees;~~

~~annual reporting regime.~~

The RAC continues to monitor regulatory developments in relation to the ~~debate in these important areas~~audit regime and the role of risk and audit committees, and will continue to review and assess how these will impact the ~~Group’s response~~Group in the future. In addition, the RAC considered and discussed updates in relation to the ~~updated recommendations~~recently concluded US Securities and Exchange Commission (SEC) anti-corruption investigation, as ~~they progress.~~well as the US Department of Justice investigation, and the ongoing Australian Federal Police (AFP) investigation, which are outlined in section 3.17.

~~Business Group~~ Risk and Audit ~~committees~~Committee members during the year

To assist management in providing the information necessary to allow the RAC to discharge its responsibilities, Business Risk and Audit Committees have been established, ~~incorporating~~covering each ~~CSG,~~Business, and for key functional areas such as Marketing and Treasury. These committees, known as Business ~~Group~~ RACs, ~~have been established and~~ operate as committees of management, but are chaired by members of the RAC. The responsible member of the GMC participates in those meetings. Business ~~Group~~ RACs perform an important monitoring function in the overall governance of the Group.

Significant financial and risk matters raised at Business ~~Group~~ RAC meetings are reported to the RAC by the Head of Group Reporting and ~~Taxation and~~ the Head of Group Risk Assessment and Assurance.

Directors are required to confirm that they consider the Annual Report, taken as a whole, to be fair, balanced and understandable, and are required to provide the information necessary for shareholders to assess the Group’s performance, business model and strategy.

The Group has a substantial governance framework in place for the Annual Report. This includes management representation letters, CEO and CFO certifications, RAC oversight of the Financial Statements and a range of other financial governance procedures focused on the financial section of the Annual Report, together with detailed verification procedures for the narrative reporting section of the Report.

The RAC is required in its terms of reference to provide advice to the Board on whether the Annual Report meets the fair, balanced and understandable requirement. The RAC used the UK Corporate Governance Code provisions to guide its oversight of the project plans that support the preparation of the Annual Report suite, in order to provide the Board with appropriate assurance.

As part of the enhancements to the governance process, which were put in place in FY2014, the following is required:

ensuring all individuals involved in the preparation of any part of the Annual Report are briefed on the fair, balanced and understandable requirement, through training sessions for each content manager that detail the key attributes of ‘fair, balanced and understandable’;

employees who have been closely involved in the preparation of the Financial Statements review the entire narrative for the fair, balanced and understandable requirement, and sign off an appropriate sub-certification;

key members of the team preparing the Annual Report confirm they have taken the fair, balanced and understandable requirement into account and that they have raised, with the Annual Report project team, any concerns they have in relation to meeting this requirement;

the Annual Report suite sub-certification incorporates a fair, balanced and understandable declaration;

in relation to the requirement for the auditor to review parts of the narrative report for consistency with the audited Financial Statements, asking the External Auditor to raise any issues of inconsistency at an early stage.

As a result of the process above, the RAC, and then the Directors, were able to confirm their view that BHP Billiton’s 2015 Annual Report taken as a whole is fair, balanced and understandable. The Board’s statement on the Report is set out in section 5.

~~The~~In addition to the assurance process above, the RAC ~~assists~~continues to assist the Board in assuring the integrity of the ~~financial statements.~~Financial Statements. The RAC evaluates and makes recommendations to the Board about the appropriateness of accounting policies and practices, areas of judgement, compliance with Accounting Standards, stock exchange and legal requirements and the results of the external audit. It reviews the half-yearly and annual ~~financial statements~~Financial Statements and makes recommendations on specific actions or decisions (including formal adoption of the ~~financial statements~~Financial Statements and reports) the Board should consider in order to maintain the integrity of the ~~financial statements.~~Financial Statements. From time to time, the Board may delegate authority to the RAC to approve the release of the statements to the stock exchanges, shareholders and the financial community.

~~The~~For the FY2015 full year and the half year, the CEO and CFO have certified that the ~~2012~~Group’s financial ~~statements~~records have been properly managed and that the 2015 Financial Statements present a true and fair view, in all material respects, of our financial condition and operating results and are in accordance with applicable regulatory requirements.

In addition to the Group’s critical accounting policies and estimates set out in note 44 ‘Application of accounting estimates, assumptions and judgements’ to the 2015 Financial Statements, the Committee also considered the following significant issues:

The Committee reviewed the carrying value of the US Onshore petroleum assets, including goodwill, and concluded that an impairment charge was appropriate. In undertaking the review, specific consideration was given to the most recent short and long-term prices, geological complexity, expected production volumes and mix, amended development plans, operating and capital costs and discount rates.

conventional onshore assets in north Louisiana, United States;

unconventional gas assets in the Pecos field of the Permian basin;

conventional oil and gas Neptune field in the Gulf of Mexico,

and concluded that impairment charges on these assets were appropriate given specific consideration of most recent prices for both oil and gas.

The Committee reviewed the carrying value of the Nickel West business when the proposed sale of the business was not achieved. Specific consideration was given to most recent prices and foreign exchange rates as well as anticipated cost savings and potential development options.

The Committee reviewed the carrying value of Cerro Colorado and concluded that an impairment charge was appropriate. Specific consideration was given to the recent foreign exchange and copper price curves together with the likelihood of the extension of environmental permits, which directly impacted the life of the asset.

For further information refer to note 12 ‘Intangible assets’ to the Financial Statements.

The Committee reviewed the measurement and disclosure of tax and royalty provisions and contingent liabilities including the following:

transfer pricing estimates impacting taxes and royalties payable in various jurisdictions;

changes in the Chilean Tax law and the repeal of the Minerals Resource Rent Tax in Australia;

other matters where uncertainty exists in the application of the law.

The Committee reviewed the measurement and disclosure of the demerger of South32. Specific consideration was given to Discontinued operations disclosures and the fair value of the shares issued to effect the demerger. The Committee also considered measurement issues related to the South32 assets prior to demerger, including the recognised gain on loss of control of the Manganese business and subsequent impairments resulting from the demerged assets being held for distribution.

The Committee reviewed the various changes in estimates for closure and rehabilitation provisions recognised during the year. Consideration was given to the results of the most recently completed surveying data, current cost estimates and appropriate inclusion of contingency in cost estimates to allow for both known and residual risks.

The RAC manages the relationship with the External Auditor on behalf of the Board. It considers the reappointment of the External Auditor each year, as well as remuneration and other terms of engagement, and makes a recommendation to the Board. ~~The last competitive audit review was in 2003, when KPMG was appointed by the Board on the recommendation of the RAC.~~ There are no contractual obligations that restrict the RAC’s capacity to recommend a particular firm for appointment as auditor. ~~Shareholders are asked to approve~~

The last audit tender was in 2002, at which time the ~~reappointment~~Group had three external auditors following the completion of the ~~auditor each year~~DLC structure. The tender resulted in KPMG and PricewaterhouseCoopers being appointed as joint auditors for FY2003 and, therefore, a reduction in audit providers. A competitive audit review was undertaken in 2003, which resulted in KPMG being appointed as the External Auditor by the Board on the recommendation of the RAC.

The lead audit engagement partners in both Australia and the United Kingdom have been rotated every five years. The current Australian audit engagement partner was appointed at the start of FY2015. A new UK audit engagement partner was appointed for the FY2013 year-end, and therefore FY2017 is scheduled to be his last year.

The Committee is satisfied with the External Auditor’s performance and independence and therefore does not believe a tender in the ~~United Kingdom.~~near term is appropriate. Consistent with the UK and EU requirements in regard to audit firm tender and rotation, which were finalised during FY2015, the Committee’s current intention is to conduct an audit firm tender for FY2019.

The RAC evaluates the performance of the External Auditor during its term of appointment against specified criteria, including delivering value to shareholders and the ~~Group.~~Group, and also assesses the effectiveness of the external audit process. It does so through a range of means, including:

the Committee considers the External Audit Plan, in particular to gain assurance that it is tailored to reflect changes in circumstances from the prior year;

throughout the year, the Committee meets with the audit partners, particularly the lead Australian and UK audit engagement partners, without management present;

following the completion of the audit, the Committee considers the quality of the External Auditor’s performance drawing on survey results. The survey is based on a two-way feedback model where the BHP Billiton and KPMG teams assess each other against a range of criteria. The criteria against which the BHP Billiton team evaluates KPMG’s performance include ethics and integrity, insight, service quality, communication and reporting, and responsiveness;

reviewing the terms of engagement of the External Auditor;

discussing with the audit engagement partners the skills and experience of the broader audit team;

reviewing audit quality inspection reports on KPMG published by the UK Financial Reporting Council;

overseeing (and approving where relevant) non-audit services as described below.

The RAC also reviews the integrity, independence and objectivity of the External ~~Auditor.~~Auditor, and assesses whether there is any element of the relationship that impairs, or appears to impair, the External Auditor’s judgement of independence. This review includes:

confirming that the External Auditor is, in its judgement, independent of the Group;

obtaining from the External Auditor an account of all relationships between the External Auditor and the Group;

monitoring the number of former employees of the External Auditor currently employed in senior positions within the ~~Group and assessing whether those appointments impair, or appear to impair, the External Auditor’s judgement or independence;~~Group;

considering ~~whether~~ the various relationships between the Group and the External ~~Auditor collectively impair, or appear to impair, the External Auditor’s judgement or independence;~~

Auditor;

determining whether the compensation of individuals employed by the External Auditor who conduct the audit is tied to the provision of non-audit ~~services and, if so, whether this impairs, or appears to impair, the External Auditor’s judgement or independence;~~

services;

reviewing the economic importance of ~~our business~~the Group to the External ~~Auditor and assessing whether that importance impairs, or appears to impair, the External Auditor’s judgement or independence.~~

Auditor.

~~The audit engagement partner rotates every five years.~~Non-audit services

Although the External Auditor does provide some non-audit services, the objectivity and independence of the External Auditor isare safeguarded through restrictions on the provision of these services. For example, certain types of non-audit ~~service~~services may only be undertaken by the External Auditor with the prior approval of the RAC (as described below), while other services may not be undertaken at all, including services where the External Auditor:

may be required to audit its own work;

participates in activities that would normally be undertaken by management;

is remunerated through a ‘success fee’ structure;

acts in an advocacy role for ~~our business.~~

the Group.

The RAC has adopted a policy entitled ‘Provision of Audit and Other Services by the External Auditor’, covering the RAC’s pre-approval policies and procedures to maintain the independence of the External Auditor.

In addition to audit services, the External Auditor will be permitted to provide other (non-audit) services that are not, and are not perceived to be, in conflict with the role of the External Auditor. In accordance with the requirements of the 1934 Securities Exchange Act and guidance contained in Public Company Accounting Oversight Board (PCAOB) Release 2004-001, certain specific activities are listed in our detailed policy ~~which~~that have been ‘pre-approved’ by the RAC.

Audit services – work that constitutes the agreed scope of the statutory audit and includes the statutory audits of the Group and its entities (including interim reviews). The RAC will monitor the ~~Audit~~audit services engagements and approve, if necessary, any changes in terms and conditions resulting from changes in audit scope, Group structure or other relevant events.

Audit-related/assurance services – work that is outside the required scope of the statutory audit, but is consistent with the role of the external statutory auditor. This category includes work that is reasonably related to the performance of an audit or review and is a logical extension of the audit or review scope, is of an assurance or compliance nature and is work that the External Auditor must or is best placed to undertake.

Tax services – work of a tax nature that does not compromise the independence of the External Auditor.

Other advisory services – work of an advisory nature that does not compromise the independence of the External Auditor.

Activities not listed specifically are therefore not ‘pre-approved’ and must be approved by the RAC prior to engagement, regardless of the dollar value involved. Additionally, any engagement for other services with a value over US$100,000, even if listed as a ‘pre-approved’ service, can only be approved by the RAC, and all engagements for other services, whether ‘pre-approved’ or not, and regardless of the dollar value involved, are reported quarterly to the RAC.

While not specifically prohibited by ~~our~~BHP Billiton’s policy, any proposed non-audit engagement of the External Auditor relating to internal control (such as a review of internal controls or assistance with implementing the regulatory requirements, including those of the 1934 Securities Exchange Act) must obtain specific prior approval byfrom the RAC. With the exception of the external audit of the Group ~~financial report,~~Financial Statements, any engagement identified that contains an internal control-related element is not considered to be pre-approved. In addition, ~~whilst~~while the categories shown above include a list of certain pre-approved services, the use of the External Auditor to perform such services shall always be subject to our overriding governance practices as articulated in the policy.

An exception can be made to the above policy where such an exception is in ~~our~~BHP Billiton’s interests and appropriate arrangements are put in place to ensure the integrity and independence of the External Auditor. Any such exception requires the specific prior approval of the RAC and must be reported to the Board. No exceptions were approved during the year ended 30 June ~~2012.~~2015.

In addition, the RAC approved no services during the year ended 30 June ~~2012~~2015 pursuant to paragraph (c)(7)(i)(C) of Rule 2-01 of ~~the~~ SEC Regulation S-X.

Fees paid to the Group’s External Auditor during the year for audit and other services were US$~~34.9~~30.4 million, of which 6151 per cent comprised audit fees, 2845 per cent related to legislative requirements (including ~~Sarbanes-Oxley)~~Sarbanes-Oxley and 11services in connection with the South32 demerger) and four per cent was for other services. Details of the fees paid are set out in note 3438 ‘Auditor’s remuneration’ to the ~~financial statements.~~Financial Statements.

Based on the review by the RAC, the Board is satisfied that the External Auditor is independent.

The Internal Audit function is carried out ~~internally~~ by Group Risk Assessment and Assurance (RAA). The role of RAA is to determine whether risk management, control and governance processes are adequate and functioning. The Internal Audit function is independent of the External Auditor. The RAC reviews the mission and charter of RAA, the staffing levels and its scope of work to ensure that it is appropriate in light of the key risks we face. It also reviews and approves the annual internal audit ~~plan.~~plan and monitors and reviews the overall effectiveness of the internal audit activities.

The RAC also approves the appointment and dismissal of the Head of ~~Group Risk Assessment and Assurance~~RAA and assesses his or her performance, independence and objectivity. The role of the Head of ~~Group Risk Assessment and Assurance~~RAA includes achievement of the internal audit objectives, risk management policies and insurance strategy. The position iswas held throughout the year by ~~Stefano Giorgini.~~Alistair Mytton. Mr ~~Giorgini~~Mytton reports directly to ~~senior management and has all necessary access to management and~~ the ~~RAC.~~RAC with functional oversight by the CFO.

In delegating authority to the CEO, the Board has established CEO limits set out in the Board Governance Document. Limits on the CEO’s authority require the CEO to ensure that there is a system of control in place for identifying and managing ~~risk.~~risk in the Group. The Directors, through the RAC, review the systems that have been established for this purpose and regularly review their effectiveness. These reviews include assessing whether processes continue to meet evolving external governance requirements.

The RAC is responsible for the oversight of risk management and reviews the internal controls and risk management systems. In undertaking this role, the RAC reviews the following:

procedures for identifying business and operational risks and controlling their financial impact on the Group and the operational effectiveness of the policies and procedures related to risk and control;

budgeting and forecasting systems, financial reporting systems and controls;

policies and practices put in place by the CEO for detecting, reporting and preventing fraud and serious breaches of business conduct and whistle-blowing procedures;

procedures for ensuring compliance with relevant regulatory and legal requirements;

arrangements for protecting intellectual property and other non-physical assets;

operational effectiveness of the Business ~~Group~~ RAC structures;

overseeing the adequacy of the internal controls and allocation of responsibilities for monitoring internal financial controls.

For further discussion on our approach to risk management, refer to sections ~~1.5~~1.7 and ~~5.14.~~3.15 of this Annual Report. Section 1.7 includes a description of the material risks that could affect BHP Billiton including, but not limited to, economic, environment and social sustainability risks to which the Group has a material exposure. Section 1.7.3 also provides an explanation of how those risks are managed.

During the year, the Board conducted reviews of the effectiveness of the Group’s ~~system~~systems of risk management and internal controls for the financial year and up to the date of this Annual Report in accordance with the UK Corporate Governance Code ~~(Turnbull~~(including the Turnbull Guidance) and the Principles and Recommendations published by the Australian Securities Exchange (ASX) Corporate Governance Council. These reviews covered financial, operational and compliance controls and risk assessment. During the year, management presented an assessment of the material business risks facing the Group and the level of effectiveness of risk management over the material business risks. The reviews were overseen by the RAC, with findings and recommendations reported to the Board. In addition to considering key risks facing the Group, the Board received an assessment of the effectiveness of internal controls over key risks identified through the work of the Board committees. The Board is satisfied that the effectiveness of the internal controls has been properly reviewed.

Management’s assessment of our internal control over financial reporting

Our management is responsible for establishing and maintaining adequate internal control over financial reporting (as defined in Rule 13a-15(f) and 15d-15(f) under the US1934 Securities Exchange ~~Act of 1934)~~Act). Under the supervision and with the participation of our management, including our CEO and CFO, ~~we have evaluated~~ the effectiveness of the Group’s internal control over financial reporting has been evaluated based on the framework and criteria established in Internal Controls – Integrated Framework, issued by the Committee of the Sponsoring ~~Organization~~Organizations of the Treadway Commission (COSO). Based on this evaluation, management has concluded that internal control over financial reporting was effective as at 30 June ~~2012.~~2015. There were no material weaknesses in the Group’s internal controls over financial reporting identified by management.

Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements and, even when determined to be effective, can only provide reasonable assurance with respect to financial statement preparation and presentation. Also, projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate.

BHP Billiton has engaged our independent registered public accounting firms, KPMG and KPMG ~~Audit Plc,~~LLP, to issue an audit report on our internal control over financial reporting for inclusion in the ~~financial statements~~Financial Statements section of ~~our~~this Annual Report on Form 20-F as filed with the SEC.

There have been no changes in our internal control over financial reporting during ~~FY2012~~FY2015 that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.

The CEO and CFO have certified to the Board that the ~~financial statements~~Financial Statements for the full year and half year are founded on a sound system of risk management and internal control and that the system is operating efficiently and ~~effectively in all material respects.~~effectively.

During the year, the RAC reviewed our compliance with the obligations imposed by the US Sarbanes-Oxley Act (SOX), including evaluating and documenting internal controls as required by section 404 of ~~the Act.~~SOX.

Our management, with the participation of our CEO and CFO, has performed an evaluation of the effectiveness of the design and operation of our disclosure controls and procedures as of 30 June ~~2012.~~2015. Disclosure controls and procedures are designed to provide reasonable assurance that the material financial and non-financial information required to be disclosed by BHP Billiton, including in the reports that it files or submits under the US1934 Securities Exchange Act, ~~of 1934,~~ is recorded, processed, summarised and reported on a timely basis and that such information is accumulated and communicated to BHP Billiton’s management, including our CEO and CFO, as appropriate, to allow timely decisions regarding required disclosure. Based on the foregoing, our management, including the CEO and CFO, has concluded that our disclosure controls and procedures are effective in providing that reasonable assurance.

There are inherent limitations to the effectiveness of any system of disclosure controls and procedures, including the possibility of human error and the circumvention or overriding of the controls and procedures. Accordingly, even effective disclosure controls and procedures can only provide reasonable assurance of achieving their control objectives.

Further, in the design and evaluation of our disclosure controls and procedures, our management was necessarily required to apply its judgement in evaluating the cost-benefit relationship of possible controls and procedures.

~~During FY2011,~~An externally facilitated evaluation of the Risk and Audit Committee was conducted for FY2015. The evaluation was designed to draw out views on work, process and overall effectiveness of the Committee. The evaluation indicated that the Committee ~~retained~~continues to operate effectively, with potential enhancements including additional consideration to ensure items such as capital management and internal audit are right-sized for the ~~services of an external adviser to assist with an assessment of the Committee’s effectiveness, and this continued into FY2012.~~ Group following demerger.

the remuneration policy and its specific application to the CEO and the CEO’s direct reports, and its general application to all employees;

the adoption of annual and longer-term incentive plans;

the determination of levels of reward for the CEO and approval of reward to the CEO’s direct reports;

the ~~provision~~annual evaluation of ~~guidance to the Chairman on~~ the performance of the ~~CEO;~~

CEO, by giving guidance to the Group Chairman;

~~effective communication to shareholders regarding remuneration policy and the Committee’s work on behalf of the Board, including~~ the preparation of the Remuneration Report for inclusion in the Annual Report;

compliance with applicable legal and regulatory requirements associated with remuneration matters;

the review, at least annually, of remuneration by ~~gender, the relative proportion of men and women in the Group’s workforce and the Group’s progress in achieving its diversity objectives.~~

gender.

The ~~role of~~Sustainability and Risk and Audit Committees assist the Remuneration Committee in ~~the context of BHP Billiton’s broader governance framework is summarised~~determining appropriate HSEC and financial and capital projects metrics, respectively, to be included in ~~the diagram below.~~

The Remuneration Committee met ~~eight~~seven times during the year. Information on meeting attendance by Committee members is included in the table in section ~~5.11.~~3.12.

Full details of the Committee’s work on behalf of the Board ~~including the review of our remuneration structures conducted by the Committee during FY2012,~~ are set out in the Remuneration Report in section 6.4 of this Annual Report.

~~During FY2011,~~An externally facilitated evaluation of the Remuneration Committee was conducted for FY2015. The evaluation was designed to draw out views on work, process and overall effectiveness of the Committee. The evaluation indicated that the Committee ~~retained the services of an external adviser~~continues to ~~assist~~perform strongly with ~~an assessment~~potential enhancements including deeper understanding of the ~~Committee’s effectiveness,~~views of investors and ~~this continued into FY2012. The Committee also reviewed its performance~~the allocation of more time for training in ~~accordance with its~~relation to market practice as it develops.

The role of the Nomination and Governance Committee is to assist in ensuring that the Board comprises individuals who are best able to discharge the responsibilities of a Director, having regard to the highest standards of governance, the strategic direction of the Group and the diversity aspirations of the Board. It does so by focusing on:

~~assessing~~the succession planning process for the Board and its committees, including the identification of the skills, ~~backgrounds,~~experience, independence and knowledge required on the Board, as well as the attributes required of potential Directors;

the identification of suitable candidates for appointment to the Board, taking into account the skills, experience and diversity ~~of geographic location, nationality and gender represented~~required on the Board, and ~~identifying any inadequate representation~~the attributes required of ~~those attributes;~~

~~reviewing the skills, backgrounds, knowledge, experience and gender represented on the Board committees and recommending committee composition to the Board;~~

Directors;

~~retaining~~ the ~~services of independent search firms and identifying suitable candidates (possessing the skills identified by the skills assessment referred to above)~~succession planning process for the ~~Board;~~

Chairman;

~~overseeing~~ the succession planning process for the CEO and periodic evaluation of the process;

Board and Director performance evaluation, including evaluation of ~~individual Directors and making recommendations to the Board on the endorsement of retiring~~ Directors seeking re-election ~~(see section 5.12);~~

prior to their endorsement by the Board as set out in sections 3.11 and 3.13;

~~the plan for succession of the Chairman and the CEO and its periodic evaluation;~~

the provision of appropriate training and development opportunities for Directors;

~~supporting~~ the ~~Board in its review and, where appropriate,~~independence of Non-executive Directors;

the time required from Non-executive Directors;

the authorisation of situations of actual and potential ~~conflicts (see~~conflict notified by Directors in accordance with the Articles of Association of BHP Billiton Plc as set out in section ~~5.9);~~

3.10; and

~~communicating to shareholders regarding~~ the ~~work~~Group’s corporate governance practices.

The process that the Board adopts for its own succession, with the assistance of the ~~Committee on behalf of the Board.~~

~~The Board has set an aspirational goal of increasing the number of women on the Board to at least three over the next two years~~Nomination and ~~the Nomination~~Governance Committee, ~~will continue to take diversity into account in its deliberations. Further information regarding the Group’s approach to diversity~~ is set out in section ~~5.17.~~

The Nomination ~~Committee also has oversight of training~~ and ~~development activity for all Directors. The Board considers this enhances the Committee’s ongoing consideration and review in relation to the appropriate skills mix for the Board.~~

~~The role of the Nomination Committee in the context of BHP Billiton’s broader governance framework is summarised in the diagram below.~~

~~The Nomination~~Governance Committee met ~~seven~~five times during the year. Information on meeting attendance by Committee members is included in the table in section ~~5.11.~~3.12.

The Board and the Nomination and Governance Committee believe that a range of diversity is required in order to effectively represent shareholders’ interests. This diversity is not restricted to gender but also includes geographic location, nationality, skills, background, knowledge and experience.

The Board is committed to ensuring gender diversity is actively pursued and implemented in terms of Board composition. Diversity is a core consideration in ensuring that the Board and its committees have the right balance of skills, experience, independence and Group knowledge necessary to discharge their responsibilities. The right blend of perspectives is critical to ensuring the Board oversees BHP Billiton effectively for shareholders.

For the past three years, two executive search firms, JCA Group and Heidrick & Struggles, have produced all-women short lists focused on the United Kingdom, Europe and the United States, which are continually refreshed. The two lists – combined with our skills and experience profile five-year matrix – ensure we maximise the number of female candidates we talk with and consider for appointment. Short-listed candidates are considered by the Nomination and Governance Committee. During FY2015, the Chairman met regularly with potential female candidates who have a range of backgrounds.

The Board believes that critical mass is important for diversity and, as set out in last year’s Annual Report, the Board had a goal of increasing the number of women on the Board to at least three by the end of CY2015. This has now been achieved with the appointment of Anita Frew to the Board. She brings extensive board, strategy, marketing, governance and risk management experience in the chemicals, engineering, water and finance industries, along with a strong understanding of shareholder expectations. While the Board has achieved its stated goal, diversity of all types remains a priority as the Board continues to be refreshed and renewed, as set out in section 3.8.

There were changes to the composition of the Board during the ~~year.~~year, with the retirement of David Crawford with effect from the 2014 AGMs and Keith Rumble with effect from 22 May 2015. The ~~Committee~~appointment of Anita Frew

followed a process involving the retained ~~the~~ services of ~~independent~~external recruitment specialists ~~to assist~~Heidrick & Struggles and JCA Group, who have assisted in the identification of potential candidates for the Board, as set out in section 3.8.

Aside from conducting external searches, in previous years Heidrick & Struggles Leadership Assessment has provided services in respect of Director performance assessment. JCA Group has also provided non-executive search services and facilitated the external Board assessment. In both cases, the search and assessment services operate independently, and neither firm has any other connection with the ~~result~~Group.

As set out in section 3.7, in August 2015 the Board announced that ~~Pat Davies was~~Shriti Vadera had been appointed as Senior Independent Director of BHP Billiton Plc. The Board believes that Shriti Vadera’s skills and attributes, together with ~~effect from 1 June 2012. This followed a detailed search which included consideration of skills,~~her experience ~~and diversity of geographic location, nationality and gender.~~

~~The Committee also oversaw~~with BHP Billiton over the ~~Director training and development program for 2012~~past four years will enable her to support the Chairman and the ~~induction program for the new Director.~~

~~During FY2011,~~An externally facilitated evaluation of the Nomination and Governance Committee was conducted for FY2015. The evaluation was designed to draw out views on work, process and overall effectiveness of the Committee. The evaluation indicated that the Committee ~~retained~~continues to function strongly. A requirement for additional focus during succession planning on ensuring the ~~services~~Board is the appropriate size, and has the right mix of ~~an external adviser to assist with an assessment of the Committee’s effectiveness~~skills and ~~this continued into FY2012. The Committee also reviewed its performance in accordance with its terms of reference. As~~experience, for a simplified BHP Billiton was noted as a result of ~~this evaluation,~~ the ~~Committee is satisfied it has met its~~evaluation.

The role of the Sustainability Committee is to assist the Board to take reasonable steps in ~~its oversight of:~~overseeing the:

~~the effectiveness~~adequacy of the Group’s ~~strategies, policies and systems associated with Health, Safety, Environment and Community (HSEC) matters;~~

HSEC framework, which consists of:

adequacy of the Group’s HSEC Management System, which is designed and implemented by management. It incorporates the systems and processes, resources, structures and performance standards for the day-to-day identification, management and reporting of HSEC risks and obligations, which are articulated in Group Level Documents;

Group’s compliance with applicable legal and regulatory requirements associated with HSEC matters;

annual Sustainability Report;

performance, resourcing and leadership of the HSE and Community functions;

Group’s performance in relation to HSEC ~~matters;~~

matters, including the ~~performance and leadership~~HSEC component of the ~~HSEC function;~~

GMC scorecard.

~~HSEC risks and the performance requirements described in our Group Level Documents (GLDs) to control HSEC risks;~~

~~our annual Sustainability Report;~~

~~communication to shareholders regarding the work of the Committee on behalf of the Board.~~

Our approach to sustainability is reflected inOur ~~BHP Billiton~~ Charter, which defines our values, purpose and how we measure success, and in our ~~sustainable development policy,~~sustainability performance targets, which ~~defines~~define our public commitments to safety, health, environment and ~~environmental and social responsibility.~~community. Further information is set out in the Group’s Sustainability ~~Report.~~ Report 2015.

The Committee provides oversight of the preparation and presentation of the Sustainability Report by ~~management, including oversight of internal control systems relevant to the preparation of the Sustainability Report.~~management.

~~The role of the Sustainability Committee in the context of BHP Billiton’s broader governance framework is summarised in the diagram below.~~

~~Our approach to HSEC and sustainable development governance is characterised by:~~

~~the Sustainability Committee overseeing material HSEC matters and risks across the Group;~~

~~business line management having primary responsibility and accountability for HSEC performance;~~

~~the HSEC function providing advice and guidance directly, as well as through a series of networks across the business;~~

~~seeking input and insight from external experts such as our Forum for Corporate Responsibility;~~

~~clear links between remuneration and HSEC performance.~~

The Sustainability Committee met ~~seven~~six times during the year. Information on meeting attendance by Committee members is included in the table in section ~~5.11.~~3.12.

During the year, the Sustainability Committee continued to assist the Board in its oversight of HSEC issues and performance. This included consideration of strategic ~~environmental~~HSEC issues, ~~HSEC~~ audits and trends, and ~~identifying~~the findings and ~~implementing findings~~action items from accidents and other incidents. In relation to incidents, tragically there were five work-related fatalities during FY2015. The Sustainability Committee ~~considered~~has been presented with the findings and recommendations of the investigations in each case. This included direct causes, root causes and contributing factors, along with the priority actions and responses of the management and Business teams.

Our approach to HSEC and sustainable development governance is characterised by:

the Sustainability Committee overseeing material HSEC matters and risks across the Group;

management having primary responsibility for the design and implementation of an effective HSEC management system;

management having accountability for HSEC performance;

the HSE and Community functions providing advice and guidance directly to the Sustainability Committee and the Board as a whole;

seeking input and insight from external experts, such as the BHP Billiton Forum on Corporate Responsibility;

clear links between remuneration and HSEC performance.

The key areas on which the Committee, management and the HSE and Community functions focus are outlined in the diagram below.

In addition to our focus on the health, safety and wellbeing of our people, the Committee spent considerable time considering environment and climate change scenarios and the actions being taken to manage the implications of climate change ~~regulation.~~ regulation in light of the Group’s public target for emissions through to FY2017, as set out in section 1.14.2.

Climate change is treated as a Board-level governance issue with the Sustainability Committee playing a key supporting role. The Committee, along with the Risk and Audit Committee, spends considerable time considering systemic climate change considerations relating to the resilience of, and opportunities for, the Group’s portfolio. The Committee also receives reports on scenarios and sign posts, which point to longer-term directional change and considers actions to manage the implications of climate change on the Company. Further information on our climate change position and how we consider the impacts on our portfolio is set out in section 1.14.2.

We also continued to monitor our progress in relation to our community investment, and met our target for investments in community programs, with such investments consisting of cash, in-kind support and administration. This was the equivalent of one per cent of our pre-tax profits, calculated on the average of the previous three years pre-tax profit. During FY2015, our voluntary community investment totalled US$225 million, comprising US$142 million of cash, in-kind support and administrative costs and a US$83 million contribution to the BHP Billiton Foundation.

The Committee reviewed and recommended to the Board the approval of the annual Sustainability Report for publication. The Sustainability Report identifies our targets for HSEC matters and our performance against those targets, with an emphasis on ~~fact based~~fact-based measurement and quality data in setting targets.

In order to link HSEC matters to remuneration, 20 per cent of the short-term incentive opportunity for GMC members was based on HSEC performance during the year. Given the importance placed on safety, the short-term incentive opportunity attached to HSEC has been increased for FY2016 to 25 per cent. The Sustainability Committee ~~reviewed~~assists the Remuneration Committee in determining appropriate HSEC metrics to be included in GMC scorecards, and ~~recommended~~also assists in relation to assessment of performance against those measures. The Board believes this method of assessment is transparent, rigorous and balanced, and provides an appropriate, objective and comprehensive assessment of performance. Further information on the ~~Board~~metrics and their assessment is set out in the ~~public targets~~Remuneration Report in section 4.

An externally facilitated evaluation of the Sustainability Committee was conducted for ~~FY2013-FY2017. Finally,~~FY2015. The evaluation was designed to draw out views on work, process and overall effectiveness of the Committee. The evaluation indicated that the Committee ~~oversaw the appointment~~receives high-quality information and uses time effectively. Additional areas of ~~a new Head of HSEC, with the appointment~~focus for FY2016 are an increased emphasis on community issues and continuing ~~the Group’s practice of bringing an asset president with deep operational experience, into this key role.~~to undertake site visits.

In FY2012, the continued evolution of the ~~Sustainability Report~~Board and ~~further information can be found on our website at~~~~www.bhpbilliton.com/home/aboutus/sustainability/Pages/default.aspx.~~

~~Sustainability Committee members during~~its committees resulted in the ~~year~~

During FY2011, the Committee retained the services of an external adviser to assist with an assessment of the Committee’s effectiveness, and this review continued into FY2012. The Committee also reviewed its performance in accordance with its terms of reference. As a result of this evaluation, the Committee is satisfied it has met its terms of reference.

~~The role~~formation of the Finance Committee. At that time, the Board was of the view that the governance structure was enhanced by a committee focused on capital management planning, including capital allocation and funding, as well as due diligence on divestments.

As noted in last year’s Annual Report, the Finance Committee ~~is to assist~~also assisted the Board in its consideration ~~for approval and ongoing oversight of matters pertaining to:~~

~~capital structure and funding;~~

~~capital management planning and initiatives;~~

~~due diligence on acquisitions and investments, including proposals that may have a material impact on the Group’s capital position;~~

~~matters the Board may refer to the Committee from time to time in connection with the Group’s capital position.~~

~~The Board is~~ of the ~~view that our governance structure is enhanced by a committee that focuses on capital structure and funding, capital management planning and initiatives, and due diligence.~~

~~Recognising that the focus~~creation of ~~the Committee’s activities encompasses matters of strategy reserved for the Board, the Committee does not,~~South32 as a ~~matter~~means of course, have a decision-making role. Instead, its focus is to advise the Board and make recommendations. The Board may, where it considers it appropriate, delegate decision-making power to the Committee in relation to specific matters.

The Board recognises that in establishing a new Board committee, it is important to avoid introducing complexity or overlap in the current governance framework. The matters specified for the consideration of the Finance Committee are not within the current scope or mandate of any of the other Board committees (because they were previously dealt with by ad hoc committees). However, to avoid any perceived overlap of responsibilities, the terms of reference of each of the Finance Committee and the RAC allow the respective committee chairmen to agree the most appropriate committee to fulfil the obligation in question.

~~The role of the Finance Committee in the context of BHP Billiton’s broader governance framework is summarised in the diagram below.~~

The Finance Committee met four times during the year. The formation of the Committee brought together the work of previous sub-committees of the Board and assisted the work of the Board by considering matters relating to capital structure and funding, capital management planning and initiatives, due diligence on acquisitions and divestments and other matters referred to the Committee.accelerating portfolio simplification. The Committee’s considerations resulted in recommendations to the Board on the matters considered.

Since that work was largely completed, the Board undertook a review of the Finance Committee and it was decided that with effect from 1 January 2015, a separate focused committee was no longer required by the Board. The work around capital management (funding, liquidity, balance sheet management, dividends), which was previously handled by the Finance Committee, has become part of the terms of reference for the Risk and Audit Committee.

In August 2014, the Board announced plans to simplify its portfolio by creating an independent global metals and mining company (South32) based on a selection of its high-quality alumina, aluminium, coal, manganese, nickel, silver, lead and zinc assets. As part of the ~~Board’s commitment~~Board governance process supporting and overseeing the demerger project, it was considered appropriate to ~~continuous improvement,~~establish two sub-committees of the ~~role~~Board, the Board Assurances Committee and ~~functions~~the Document Review Committee.

Members of the Board Assurances Committee (BAC) were all independent Non-executive Directors of the BHP Billiton Board: Shriti Vadera (Chairman), Malcolm Broomhead, David Crawford, Lindsay Maxsted and Wayne Murdy. The Board Chairman, the Chief Executive Officer and the Chairman of the Document Review Committee attended each of the meetings by invitation.

The BAC was tasked with considering the transaction plans and project execution, including reviewing and making recommendations to the Board on matters such as:

the timetable for the project;

the outcome of external stakeholder engagement and the progress of engagement with regulators;

proposed internal and external communications;

the Transitional Services Agreement, the Separation Deed, the Tax Separation Deed and the Implementation Deed, each between BHP Billiton and South32;

the funding of South32;

the steps required to implement the demerger proposal, including assembly of the various assets.

Project-related matters that would previously have been considered by the Finance Committee ~~will~~were considered by the BAC.

The Committee met five times and also considered some items out of session. The final recommendation of the Committee was to endorse the demerger and to recommend it for Board approval.

Members of the Document Review Committee (DRC) were Carolyn Hewson (Chairman), David Crawford, Lindsay Maxsted, Peter Beaven, Geoff Healy, Graham Kerr, Jane McAloon, Karen Wood and Neil Beaumont, as well as certain external advisers.

reviewing the overall nature and scope of the due diligence investigations undertaken in connection with the demerger;

approving the materiality guidelines to be ~~evaluated not later than 12 months after its establishment.~~applied in the preparation of the disclosure documents;

reviewing and where applicable, requesting reports and sign-offs from nominated persons (including BHP Billiton and South32 management and legal, tax, accounting, mineral reserves or other experts) in relation to the content of the disclosure documents;

overseeing and coordinating the preparation and finalisation of the disclosure documents to ensure that they complied with applicable legal and regulatory requirements;

reporting to the Board, prior to dispatch of the disclosure documents, confirming that they comply with the relevant content requirements.

With the completion of the South32 demerger in May 2015, both the BAC and DRC sub-committees have been dissolved. For further information on the South32 demerger, refer to sections 1.3.7, 1.6.4, 2.1.7 of this Annual Report and note 29 ‘Discontinued operations’ to the Financial Statements.

We believe ~~that~~ the identification and management of risk isare central to achieving the corporate purpose of creating long-term shareholder value. Our approach to risk is set out in section ~~1.5.~~1.7.1.

The principal aim of the Group’s risk management governance structure and internal control systems is to identify, evaluate and manage business risks, with a view to enhancing the value of shareholders’ investments and safeguarding assets.

Each year, the Board reviews and considers the Group’s risk profile, ~~for the whole business. This risk profile~~which covers both operational and strategic risks. The Group material risk profile is assessed to ensure it supports the achievement of the Group’s strategy while ~~maintaining~~seeking to maintain a solid ‘A’ credit rating. The Board’s approach to investment decision-making and portfolio management, and the consideration of risk in that process, is set out in sections 1.6.4 and 1.7 and includes a broad range of scenarios to assess our portfolio. This process allows us to be able to continually adjust the shape of our portfolio to match energy and commodity demand and meet society’s expectations, while maximising shareholder returns.

The Board has delegated the oversight of risk management to the RAC, although the Board retains overall accountability for the Group’s risk profile. In addition, the Board specifically requires the CEO to implement a system of control for identifying and managing risk. The Directors, through the RAC, review the systems that have been established for this purpose, ~~and~~ regularly review ~~their effectiveness.~~the effectiveness of those systems and monitor that necessary actions have been taken to remedy any significant failings or weaknesses identified from that review. The RAC regularly reports to the Board to enable it to review the Group’s risk framework.

The RAC has established review processes for the nature and extent of material risks taken in achieving our corporate purpose. These processes include the application of materiality and tolerance criteria to determine and assess material risks. Materiality criteria include maximum foreseeable loss and residual risk thresholds and are set at the Group ~~CSG and Asset organisational levels.~~level. Tolerance criteria additionally assess the control effectiveness of material risks.

Management has put in place a number of key policies, processes, performance requirements and independent controls to provide assurance to the Board and the RAC as to the integrity of our reporting and effectiveness of our systems of internal control and risk management. Some of the more significant internal control systems include Board and management committees, Business ~~Group~~ RACs and internal audit.

The Business ~~Group~~ RACs assist the RAC to monitor the Group’s obligations in relation to financial reporting, internal control structure, risk management processes and the internal and external audit functions.

Directors also monitor risks and controls through the RAC, the Remuneration Committee and the Sustainability Committee.

Management committees also perform roles in relation to risk and control. Strategic risks and opportunities arising from changes in our business environment are regularly reviewed by the GMC and discussed by the

Board. The Financial Risk Management Committee (FRMC) reviews the effectiveness of internal controls relating to commodity price risk, counterparty credit risk, currency risk, financing risk, interest rate risk and insurance. Minutes of the ~~GMC and the~~ FRMC meetings are provided to the ~~Board.~~Board through the RAC. The Investment Committee (IC) provides oversight for investment processes across the ~~business~~Company and coordinates the investment toll-gating process for major investments. Reports are made to the Board on findings by the ~~Investment Committee~~IC in relation to major capital projects. The Disclosure Committee oversees the Group’s compliance with securities dealing and continuous and periodic disclosure requirements, including reviewing information that may require disclosure through stock exchanges and overseeing processes to ensure information disclosed is timely, accurate and complete.

Below the level of the Board, key management decisions are made by the CEO, the GMC, other management committees and individual members of management to whom authority has been delegated.

The diagram below describes the responsibilities of the CEO and four key management committees.

The performance of executives and other senior employees is reviewed on an annual basis. For the members of the GMC, this review includes their contribution, engagement and interaction at Board level. The annual performance review process that we employ considers the performance of executives against criteria designed to capture both ‘what’ is achieved and ‘how’ it is achieved. All performance assessments of executives consider how effective they have been in undertaking their role; what they have achieved against their specified key performance indicators; how they match up to the behaviours prescribed in our leadership ~~model~~model; and how those behaviours align withOur Charter values. The assessment is therefore holistic and balances absolute achievement with the way performance has been delivered. Progression within the Group is driven equally by personal leadership behaviours and capability to produce excellent results.

A performance evaluation as outlined above was conducted for all members of the GMC ~~in FY2012.~~during FY2015. For the CEO, the performance evaluation was led by the Chairman of the Board on behalf of all the Non-executive Directors, drawing on guidance from the Remuneration Committee.

~~We have published~~Our Charter is central to our business. It articulates the values we uphold, our strategy and how we measure success.

~~Code of Business Conduct~~~~. The~~Our Code of Business Conduct ~~reflects~~(the Code) is based onOur Charter values and describes the behaviours that we expect of ~~integrity and respect. It provides clear direction and advice~~those who work for or on ~~conducting business internationally, interacting with communities, governments and business partners and general workplace behaviour.~~behalf of BHP Billiton. The Code ~~of Business Conduct~~ applies to ~~Directors~~employees, directors, officers and ~~to all employees, regardless of their position or location.~~controlled entities. Consultants and contractors are also expected to act in accordance with the Code when working for BHP Billiton.

The Code describes the behaviours expected to support a safe, respectful and legally compliant working environment, when interacting with governments and the communities in which we operate, when dealing with third parties and when using company resources.

Working with integrity is a condition of ~~Business Conduct.~~employment with BHP Billiton and in some cases a contractual obligation of many of our contractors and suppliers. All employees are required to undertake annual training in relation to the Code to promote awareness and understanding in the behaviours expected of them. Demonstration of the values described inOur Charter and the Code is part of the annual employee performance review process.

Where an employee or third party has a concern regarding behaviour that may not be consistent with ourCode of Business Conduct, there are reporting options available, which include BHP Billiton’s business conduct advisory service, EthicsPoint. EthicsPoint is a worldwide service available to internal and external stakeholders that facilitates the raising, management and resolution of business conduct queries and concerns via a confidential24-hour, multilingual hotline and online case management system. Reports can be made anonymously and without fear of retaliation. Arrangements are in place to investigate all matters appropriately. Levels of activity and support processes for EthicsPoint are monitored, with activity reports presented to the Board. Further information on EthicsPoint can be found ~~on our website~~in theCode of Business Conduct, available online at www.bhpbilliton.com.

~~Following requests for information in August 2009 from~~In May 2015, BHP Billiton announced the resolution of the previously disclosed investigation by the SEC into potential breaches of the US ~~Securities~~Foreign Corrupt Practices Act (FCPA). The US Department of Justice has also completed its investigation into BHP Billiton without taking any action.

The investigations related primarily to previously terminated minerals exploration and ~~Exchange Commission,~~development efforts as well as hospitality provided by BHP Billiton at the ~~Group~~2008 Beijing Olympic Games. This concluded the US investigations on all matters.

The matter was resolved with the SEC pursuant to an administrative order, which imposed a US$25 million civil penalty. The SEC order makes no findings of corrupt intent or bribery by BHP Billiton.

The findings announced by the SEC related to a hospitality program hosted by BHP Billiton that supported its sponsorship of the 2008 Beijing Olympic Games. As part of this program, BHP Billiton invited customers, suppliers, business partners, and government officials, along with BHP Billiton employees, to the Olympic Games. While BHP Billiton made efforts at the time to address the risks related to inviting government officials to the Olympics, the controls it relied upon were insufficient to satisfy the civil books and records and internal accounting controls requirements of the FCPA.

The SEC noted the ‘significant cooperation’ BHP Billiton provided during the extensive investigation, which commenced in 2009. It also noted the ‘significant remedial actions’ BHP Billiton has taken over the past five years to enhance its compliance program.

At the time of its sponsorship of the 2008 Beijing Olympics and Paralympics, BHP Billiton had no independent compliance function. Instead, accountability for complying with BHP Billiton’s anti-corruption policies, which were set out in BHP Billiton’s Guide to Business Conduct, was vested in its operating business units. BHP Billiton has since created an ~~internal investigation and disclosed~~independent compliance function that reports to ~~relevant authorities evidence that it has uncovered regarding possible violations~~the head of ~~applicable anti-corruption laws involving interactions with government officials. The internal investigation is continuing~~the legal function and the ~~Group is cooperating~~Risk and Audit Committee of the Board. Today, this function would be required to approve any offer of hospitality of this kind to a government official. Under the SEC order, BHP Billiton will self-report on its compliance program to the SEC for a period of 12 months following the date of the SEC order (20 May 2015).

BHP Billiton will continue to cooperate with the ~~relevant authorities and reporting the facts found~~Australian Federal Police investigation, which was announced in ~~the investigation. It is not possible at this time to predict the likely outcomes of the matter.~~2013.

We have aSecurities Dealing ~~GLD~~Group Level Document that covers dealings by Directors and identified employees, is consistent with the UK Model Code contained in the UK Financial ~~Services~~Conduct Authority Listing Rules, and complies with the ASX Listing Rule requirements for a trading policy. TheSecurities Dealing ~~GLD~~ Group Level Document restricts dealings by Directors and identified employees in shares and other securities during designated prohibited periods and at any time that they are in possession of unpublished price-sensitive information. As part of a regular, planned process, theSecurities Dealing ~~GLD was~~ Group Level Document is reviewed ~~in FY2012~~every two years to ensure it remains current, fit for purpose and in line with our broader governance framework.

We have established a Business Conduct Advisory Service so that employees can seek guidance or express concerns on business-related issues and report cases of suspected misappropriations, fraud, bribery or corruption. Reports can be made anonymously and without fear of retaliation. Arrangements are in place to investigate such matters. Where appropriate, investigations are conducted independently. Levels of activity and support processes for the Business Conduct Advisory Service are monitored, with activity reports presented to the Board. Further information on the Business Conduct Advisory Service can be found in the~~Code of Business Conduct~~.

We maintain a position of impartiality with respect to party politics and do not make political contributions/donations for political purposes to any political party, politician, elected official or candidate for public office. We do, however, contribute to the public debate of policy issues that may affect ~~our business~~the Company in the countries in which we operate.

~~The BHP Billiton~~~~Human Resources Policy~~ ~~guides the Board and management on all aspects of human resource management. The~~~~Human Resources Policy~~ is supported by processes that set out measurable objectives to support the achievement of diversity across the Group. The Board believes that critical mass is important for diversity and, in relation to gender, has set an aspirational goal of increasing the number of women on the Board to at least three over the next two years. The Board continues to focus on diversity As explained in the ~~context of~~Directors’ Report, the overall skills and experience mix on the Board. See section 5.7 for further detail about gender diversity on the Board. In addition, the Board considers and approves the Group’s measurable objectives, and oversees the Group’s progress. Further information about the Group’s measurable objectives and progress against those objectives is set out below.

reportable for AEC purposes. For example, where a ~~diverse workforce is necessary to the delivery of our strategy that is predicated on diversification by commodity, geography and market;~~

~~our aspiration is to have a workforce that best represents the communities~~political party or organisation owns shares in ~~which our assets are located and our employees live;~~

~~actions that support our diversity aspirations should be consistent with our established approach to talent, performance and reward;~~

~~achieving an appropriate level of diversity will require structured programs at an early career stage that ensure the development of necessary skills and experience for leadership roles;~~

~~measurable objectives in support of diversity will be transparent, achievable over a period of time and fit for purpose;~~

~~the set of measurable objectives will focus on (i) enabling a diverse workforce by way of removing barriers and (ii) establishing appropriate representation targets.~~

~~In FY2011, we committed to three key measurable objectives to enhance our gender diversity profile. A summary of those objectives and a report of our progress is set out below:~~

Continue to focus on increasing female participation in the Accelerated Leadership Development Program (ALDP), moving to 40 per cent for FY2012. We are pleased to report that participation in the ALDP was 29 per cent in FY2011 and is 43 per cent for FY2012.

Reviewing our graduate recruitment process and identifying and implementing the necessary actions to address low female representation. The following are highlights of the work executed during FY2012 to increase female graduate intake representation:

The Australian Graduate Intake Recruitment campaign incorporated a number of new initiatives focused on attracting female graduates such as: targeted digital media advertising, active promotion of female graduate opportunities directly with university faculties and featuring graduate opportunities for women in our marketing materials, industry events and engagement activities.

At a global level, the assets have coordinated with universities and mining industry bodies on a range of promotional and sponsorship initiatives to raise the profile of both graduate and broader opportunities for women within the mining sector.

We continued to support the South African GirlEng Program that aims to attract, retain and develop women engineers. The GirlEng Program uses peer mentors, who are final year engineering students and engineers working at BHP Billiton, the AEC filing requires the political party or organisation to ~~inspire high school students and encourage them to study engineering.~~

~~The above initiatives, coupled with~~disclose the ~~continued focus during the selection and recruitment process~~dividend payments received for ~~graduates globally has demonstrated an improvement in the percentage of female graduates hired from 29.0 per cent in FY2011 to 32.5 per cent in FY2012.~~their shareholding.

Each CSG, Group Function, Marketing and Minerals Exploration was required to develop and implement a diversity plan taking into account the objectives of the Human Resources Policy and the principles set out above. In FY2012, each business was required to refine its multi-year diversity plan by identifying measurable objectives that would result in an improved diversity profile. The measurable objectives identified through this process formed a part of each business’s performance requirements. Each business’s performance was evaluated against its FY2012 measurable objectives and that evaluation was taken into account in determining bonus remuneration. All businesses made progress against their measurable objectives set out in their multi-year diversity plan. The following are highlights of the work that was delivered:

~~Manager level and above participated in inclusive leadership workshops to bolster their understanding of unconscious bias and actions that support or impede inclusion.~~

~~Manager toolkits were developed and implemented on diversity and inclusion.~~

~~Diversity champions were identified and helped drive diversity.~~

~~High-potential women were identified as part of the succession management process and development plans were created to foster their development.~~

~~Recruitment practices were reviewed to assist with removing unconscious bias and to assist in attracting women.~~

~~Clear expectations and targets were set with external recruitment partners in providing qualified diverse candidates.~~

~~Mentoring programs for Indigenous employees were delivered.~~

~~Focus groups were held with female employees to better understand and identify actions that would help support retention.~~

~~Employees and managers participated in diversity awareness events.~~

~~In FY2013, we will take the following steps to further enhance our gender diversity profile:~~

~~Implement targeted graduate attraction initiatives, focused on shortage disciplines, to increase the proportion of female graduates hired year on year.~~

For FY2013, each business will continue to be evaluated on progress in executing its measurable objectives that form part of its multi-year diversity plan. These will again be taken into account in determining bonus remuneration. Monitoring and tracking performance against diversity plans will continue to be undertaken as part of the Group’s internal compliance requirements.

Progress against each year’s measurable objectives will continue to be disclosed in the Annual Report, along with the proportion of women in our workforce, in senior management and on the Board. There are currently two women on the Board. For further information on the proportion of women in our workforce and in senior management, and our employee profile more generally, please see section 2.9.

We are committed to maintaining the highest standards of disclosure, ensuring that all investors and potential investors have the same access to high-quality, relevant information in an accessible and timely manner to assist them in making informed decisions. AThe Disclosure Committee manages our compliance with ~~the~~ market disclosure obligations and is responsible for implementing reporting processes and controls and setting guidelines for the release of information. As part of our commitment to continuous improvement, we continue to ensure alignment with best practice as it develops in the jurisdictions in which BHP Billiton is listed.

Disclosure ~~Officers~~officers have been appointed in the Group’s ~~CSGs~~Businesses, Group Functions and ~~Group Functions.~~Marketing. These officers are responsible for identifying and providing the Disclosure Committee with ~~material~~referral information about the activities of the ~~CSG~~Business or functional areas using disclosure guidelines developed by the Committee. The Committee then makes the decision whether a particular piece of information is material and therefore needs to be disclosed to the market.

To safeguard the effective dissemination of information, we have developed a ~~Market Disclosure~~market disclosure and ~~Communications~~communications document, which outlines how we identify and distribute information to shareholders and market participants.

Copies of announcements to the stock exchanges on which we are listed, investor briefings, ~~half-yearly financial statements,~~Financial Statements, the Annual Report and other relevant information can be found ~~on our website~~online atwww.bhpbilliton.com. Any person wishing to receive advice by email of news releases can subscribe atwww.bhpbilliton.com.

Details of our remuneration policies and practices, and the remuneration paid to the Directors (Executive and Non-executive) and members of the GMC, are set out in the Remuneration Report in section 64 of this Annual Report. ~~Shareholders will be invited to consider and to approve the Remuneration Report at the 2012 AGMs.~~

Non-executive Directors have agreed to apply at least 25 per cent of their remuneration to the purchase of BHP Billiton shares until they achieve a shareholding equivalent in value to one year’s remuneration. Thereafter, they must maintain at least that level of shareholding throughout their tenure. All dealings by Directors are subject to the Group’sSecurities Dealing ~~GLD~~Group Level Document and are reported to the Board and to the stock exchanges.

Information on our policy governing the use of hedge arrangements over shares in BHP Billiton by both Directors and members of the GMC is set out in section ~~6.3.4 of this Annual Report.~~4.4.2.

Details of the shares held by Directors are set out in section ~~7.20 of this Annual Report.~~4.2.27.

Jane McAloon is the Group Company Secretary. Ms McAloon’s qualifications and experience are set out in section 4.1. The Group Company Secretary is responsible for developing and maintaining the information systems and processes that enable the Board to fulfil its role. The Group Company Secretary is also responsible to the Board for ensuring that Board procedures are complied with and advising the Board on governance matters. All Directors have access to the Group Company Secretary for advice and services. Independent advisory services are retained by the Group Company Secretary at the request of the Board or Board committees. Ms McAloon is supported by Nicola Evans, who was appointed in December 2011 as Deputy Company Secretary of BHP Billiton Limited, and Elizabeth Hobley and Geof Stapledon, who are Deputy Company Secretaries of BHP Billiton Plc. The Board appoints and removes the Company Secretaries.

Our compliance with the governance standards in our home jurisdictions of Australia and the United Kingdom, and with the governance requirements that apply to us as a result of our New York Stock Exchange (NYSE) listing and our registration with the SEC in the United States, is summarised in this Corporate Governance Statement, the Remuneration Report, the Directors’ Report and the ~~financial statements.~~Financial Statements.

The Listing Rules and the Disclosure and Transparency Rules of the UK Financial ~~Services~~Conduct Authority require ~~UK-listed~~ companies listed in the UK to report on the extent to which they comply with the Main Principles and the provisions of the UK Corporate Governance Code (UK Code), and explain the reasons for any non-compliance. In September 2014, the Financial Reporting Council (FRC) issued the UK Corporate Governance Code 2014 (2014 Code). The FRC has also published guidance for Boards on risk management and internal control and related financial and business reporting. As the 2014 Code and the guidance apply to financial years beginning on or after 1 October 2014, BHP Billiton has considered the impact of the changes, will comply with the 2014 Code and guidance from 1 July 2015 and will report on compliance in the Annual Report for FY2016. The UK Code is available online atwww.frc.org.uk/corporate/ukcgcode.cfm.

The Listing Rules of the ASX require ~~Australian-listed~~ASX-listed companies to report on the extent to which they meet the Corporate Governance Principles and Recommendations published by the ASX Corporate Governance Council (ASX Principles and Recommendations) and explain the reasons for any non-compliance. The ASX Principles and Recommendations are available online at~~www.asx.com.au/about/corporate_governance/index.htm.~~www.asxgroup.com.au/corporate-governance-council.htm.

Both the UK Code and the ASX Principles and Recommendations require the Board to consider the application of the relevant corporate governance principles, while recognising that departures from those principles are appropriate in some circumstances. We complied with the provisions set out in the UK Code and with the ASX Principles and Recommendations during the financial ~~period and continue to comply up to the date of this Annual Report.~~period.

BHP Billiton Limited and BHP Billiton Plc are registrants with the SEC in the United States. Both companies are classified as foreign private issuers and both have American Depositary Shares listed on the NYSE.

We have reviewed the governance requirements currently applicable to foreign private issuers under the Sarbanes-Oxley Act (US), including the rules promulgated by the SEC and the rules of the NYSE and are satisfied that we comply with those requirements.

Section 303A of the ~~NYSE Listed~~NYSE-Listed Company Manual contains a broad regime of corporate governance requirements for NYSE-listed companies. Under the NYSE rules, foreign private issuers, such as ourselves, are permitted to follow home country practice in lieu of the requirements of Section 303A, except for the rule relating to compliance with Rule 10A-3 of the 1934 Securities Exchange Act ~~of 1934~~ (audit committee independence) and certain notification provisions contained in Section 303A of the Listed Company Manual. Section 303A.11 of the Listed Company Manual, however, requires us to disclose any significant ways in which our corporate governance practices differ from those followed by US companies under the NYSE corporate governance standards. ~~Following~~After a comparison of our corporate governance practices with the requirements of Section 303A of the Listed Company Manual followed by US companies, the following significant ~~differences were~~difference was identified:

Our Nomination Committee’s Terms of Reference (charter) do not include the purpose of developing and recommending to the Board a set of corporate governance principles applicable to the corporation. While we have a Nomination Committee, it is not specifically charged with this responsibility. We believe that this task is integral to the governance of the Group and is therefore best dealt with by the Board as a whole.

Rule 10A-3 of the 1934 Securities Exchange Act ~~of 1934~~ requires NYSE-listed companies to ensure that their audit committees are directly responsible for the appointment, compensation, retention and oversight of the work of the external auditor unless the company’s governing law or documents or other home country legal requirements require or permit shareholders to ultimately vote on or approve these matters. While the RAC is directly responsible for remuneration and oversight of the External Auditor, the ultimate responsibility for appointment and retention of the External Auditor rests with our shareholders, in accordance with UK law and our constitutional documents. The RAC does, however, make recommendations to the Board on these matters, which are in turn reported to shareholders.

While the Board is satisfied with its level of compliance with the governance requirements in Australia, the United Kingdom and the United States, it recognises that practices and procedures can always be improved, and there is merit in continuously reviewing its own standards against those in a variety of jurisdictions. The Board’s program of review will continue throughout the year ahead.

The information specified in the UK Financial ~~Services~~Conduct Authority Disclosure and Transparency Rules, DTR 7.2.6, is located elsewhere in this Annual Report. The Directors’ Report, atin section ~~7.23,~~5.9 of this Annual Report, provides cross-references to where the information is located.

This Corporate Governance Statement was approved by the Board on 1210 September ~~2012~~2015 and signed on its behalf by:

The following guide is intended to help the reader to use this Remuneration Report. It explains the linkages between BHP Billiton’s remuneration strategy and the remuneration outcomes for Directors and members of the Group Management Committee (GMC) (as listed in sections 6.7.1 and 6.10.1 of the Remuneration Report). All acronyms used are defined in the Remuneration Report or in section 10 of this Annual Report.

~~6.1 Message from~~4.1 Annual statement by the Remuneration Committee Chairman

I am pleased to introduce BHP Billiton’s Remuneration Report for the financial year ~~ended~~to 30 June ~~2012.~~2015. This is my first as Chairman of the Remuneration Committee, and I want to begin by acknowledging Sir John Buchanan, our esteemed colleague, the former Chairman of the Committee and Senior Independent Director of BHP Billiton Plc who passed away on 13 July 2015. Sir John’s many years of experience and perspective underpinned the Committee’s ability to navigate the complexities of executive remuneration, and his intellectual rigour, fairness and judgement served both shareholders and executives well during his decade-long tenure as Committee Chairman. He leaves a very strong foundation for BHP Billiton with respect to remuneration matters and my fellow Committee members and I hold Sir John, and his contribution, in the highest regard. We will endeavour to build on his legacy in the years ahead.

Our Charter sets out our values, placing health and safety first, upon which the Remuneration Committee places great weight in the determination of performance-based remuneration outcomes for BHP Billiton’s executives.Our Charter also sets out our purpose, our strategy and how we measure success. The Committee is guided by those measures in supporting our executives in taking a long-term approach to decision-making in order to build a sustainable and value-adding business. Our remuneration policy and strategy is focussed on long-term success and minimising short-term behaviours or results that would jeopardise longer-term outcomes.

We want executive remuneration to reflect the Group’s performance and share price over an extended period and this is primarily achieved with ~~you our plan to conduct~~the equity component of the STI award being deferred for a ~~comprehensive review of our remuneration arrangements.~~ two-year period, and with TSR under the LTIP being measured over a five-year performance period.

We have ~~completed the review and, after consideration of all relevant issues, concluded that our current arrangements, including the~~made no changes to the ~~long-term incentive plan approved~~underlying approach to remuneration in the last year. It is an approach that BHP Billiton has practised for over 10 years and we believe it continues to serve our executives and shareholders well. The remuneration outcomes continue to appropriately reflect the performance of the Group, of the Businesses and of individuals.

While our approach has been given strong support by shareholders, ~~in 2010, remain~~

appropriate. Importantly, we believe that the arrangements continue to support our focus on operational excellence, risk management and the execution of the Group’s strategy. While several feasible alternatives were examined, including introducingwith a ‘second measure’ to operate in conjunction with total shareholder return, we have elected not to introduce significant change at this time. As always, we will continue to seek further improvement opportunities, including an appropriate ‘second measure’. Further details of our review and its outcomes are in section 6.4.4.

~~Shareholders have provided a strong level of support for~~vote ‘for’ the Remuneration Report in ~~recent~~excess of 97 per cent at last year’s AGMs, and indeed over 96 per cent in each of the prior five years, through your votes at annual general meetings. In addition, our policies and approach to providing appropriate remuneration for our senior executives have been broadly endorsed during regular consultation sessions with shareholders. In particular our long-term incentive plan, approved in 2004 and applied consistently since, is a five-year plan, a longer period than most other companies employ. This remains a very important feature for the Remuneration ~~Committee and shareholders.~~

~~The~~ Committee and the Board will continue to ~~adopt an open-door approach~~listen and give attention to ~~existing shareholders’~~feedback and views ~~so they can be factored into~~from shareholders on the Group’s ~~future~~ approach to pay.

~~Two remuneration~~Remuneration outcomes for ~~FY2012 provide tangible evidence of our policy~~the CEO

Mr Mackenzie, on his appointment as CEO in ~~action. First, as a result~~2013, supported the view of the ~~impairment against the carrying value~~Board and Committee that his remuneration package should be rebased downwards relative to that of the Fayetteville shale gas assets acquired from Chesapeake Energy in March 2011, CEO Marius Kloppers and Group Executive and Chief Executive – Petroleum Mike Yeager advised the Remuneration Committee that they did not wish to be considered for an incentive under the short-term incentive plan for FY2012. The Committee and the Board respected and agreed with that decision. Short-term incentives for other members of the GMC are significantly lower than in FY2011. Second, as a consequence of theformer CEO. Mr Mackenzie’s base salary has not been increased since then, and again, after review ~~for GMC members undertaken this year,~~in 2015, it will remain unchanged at US$1.700 million per annum. In addition, the other components of his total target remuneration (pension contributions, benefits and in recognition of the prevailing business climate, a decision has been taken to freeze the base salaries of GMC members for FY2013. The Board also decided not to adjust remuneration for Non-executive Directors. These outcomes represent an appropriate alignment of remuneration with business outcomes.

In this year’s Remuneration Report, we have included a new ‘Remuneration at a glance’ section to provide a clearer explanation of the remuneration provided to our CEO. This addition, in section 6.2, reinforces the importance we see in seeking to explain clearly how BHP Billiton’s remuneration policies supportshort-term and long-term ~~sustainable value creation.~~

At BHP Billiton, our executive remuneration arrangements are designed to attract, retain and motivate highly skilled people and ensure that their interests are aligned with the interests of our shareholders.Executives are only eligible to receive their maximum remuneration if we perform exceptionally well in the short term and our shareholders have also benefited significantly from the relative performance of the Group in the longer term.

~~Executive remuneration is linked substantially to relative shareholder returns.~~ ~~However, it is also linked to the wellbeing of the Group, meaning that other elements that may not be reflected so directly or immediately in shareholder returns~~incentive targets) are also ~~taken into account in determining~~unchanged since 2013. Mr Mackenzie is the ~~quantum of executive remuneration, including various health, safety, environment, community (HSEC), financial and capital management measures.~~only Executive Director.

~~Regulatory requirements also change from time to time, which means our reporting has to change too.~~ ~~We are aware of deliberations taking place in the UK and Australian jurisdictions that will provide additional~~

guidance to companies in respect of the reporting of executive remuneration; however, those deliberations have not yet reached the stage necessary to provide certainty as to their outcomes for inclusion in this Remuneration Report. We will be making the necessary changes to our Remuneration Report in future years in accordance with those reporting requirements when the outcomes are known.

We have continued to try to improve the transparency of our reporting by including this new section to provide a clearer explanation of the remuneration provided to the CEO, Marius Kloppers, in relation to FY2012.

~~Further details of all of the remuneration aspects described below can be found in later sections of the Remuneration Report.~~

~~BHP Billiton ensures that the remuneration arrangements for the CEO, Marius Kloppers, include a large proportion that is at risk~~ ~~– meaning that set performance targets must be achieved in order to receive part or all of the remuneration available.~~

The following table shows the actual remuneration received by the CEO as determined by the Remuneration Committee in relation to the FY2012 and FY2011 performance years. Descriptions of all of the remuneration components in the table are included in section 6.5.2.

Non-statutory table: The ‘non-statutory remuneration’ data set out in the final two columns of the table below do not match the Statutory Total Remuneration Table in section 6.7.2, which complies with the requirements to use Accounting Standards under the Australian Corporations Act 2001 and the UK Companies Act 2006, including allocation of the IFRS fair value of equity awards across the vesting period⁽¹⁾.

Mr ~~Kloppers’~~Mackenzie’s annual STI is at ~~risk.~~ ~~The Committee determined an individual scorecard~~risk, with a target outcome of measures for the CEO at the commencement of the performance year. These measures have been chosen as they reward the CEO for overall performance in the current year, comprising both financial performance and delivery against measures that impact the long-term sustainability of the Group, along with his individual contribution to the business. The Board believes this method of assessment is transparent, rigorous and balanced, and provides an appropriate, objective and comprehensive assessment of performance.

~~The maximum possible cash STI Mr Kloppers can be paid is~~ 160 per cent of base salary, ~~with~~ a ~~target~~maximum outcome of 80240 per cent of base ~~salary.~~salary, and a minimum outcome of zero.

~~Mr Kloppers’ STI~~As in past years, the scorecard ~~includes~~against which his short-term performance is assessed comprises performance measures including HSEC, financial, capital project management and personal elements. ~~In assessing~~For FY2015, the Remuneration Committee has assessed the performance against elements such as financial measures, we do not include impacts that are outside management’s control, such as movements in exchange rates or commodity prices. Removing those elements means remuneration is tiedof Mr Mackenzie and concluded it was below target with a STI outcome of 85 per cent of target (or 136 per cent of base salary). This outcome was primarily due to the ~~things management can control – primarily,~~CEO’s overarching accountability for the five fatalities that occurred during FY2015. The Committee takes the Group’s safety ~~volume~~record very seriously and ~~cost.~~

Asconcluded, after taking advice from the Sustainability Committee, that a ~~result~~zero outcome was appropriate for the CEO’s FY2015 STI HSEC component, with the decision supported by Mr Mackenzie. While attributable profit fell from US$13.8 billion in FY2014 to US$1.9 billion in FY2015, controllable financial performance was largely in line with targets. The Committee made a discretionary downwards adjustment to the formulaic financial outcomes in light of the impairment of Onshore US Assets. Capital project management outcomes were largely in line with expectations. The Committee also considered the CEO’s strong performance against personal objectives, including significant productivity and capital expenditure improvements, together with the ~~carrying~~successful demerger of South32.

Given the importance the Committee places on safety, the scorecard weighting attached to HSEC has been increased for FY2016 to 25 per cent from 20 per cent in FY2015. The capital project management weighting has been reduced to 10 per cent from 20 per cent reflecting a lower number and value of ~~Fayetteville shale gas assets acquired from Chesapeake Energy~~major capital projects in ~~March 2011, Mr Kloppers advised the Remuneration Committee that he did not wish to be considered for a STI award for FY2012. The Committee~~execution, and the ~~Board respected and agreed with that decision. For the FY2011 performance year, Mr Kloppers received 69~~personal component weighting has been increased to 25 per cent ~~of the maximum possible.~~from 20 per cent. The financial weighting is unchanged at 40 per cent.

Mr ~~Kloppers’ cash STI outcome~~Mackenzie’s LTI is ~~ordinarily matched in value by an award of Deferred Shares, vesting in two years. These Deferred Shares are~~ also at risk, ~~because they are matched~~and forms an important part of recognising long-term performance.

In relation to the ~~cash STI measured against scorecard outcomes~~LTI awards granted in 2010, BHP Billiton’s five-year TSR performance was negative 15.2 per cent over the five-year period from 1 July 2010 to 30 June 2015. This is below the weighted median TSR of peer companies of negative 4.5 per cent and ~~have service conditions attached.~~

~~Mr Kloppers’ LTI outcome is also at risk.~~ ~~The purpose~~below the TSR of the ~~LTI is to focus~~MSCI World index of positive 78.6 per cent. This level of performance results in zero vesting for the ~~CEO’s efforts~~2010 LTIP awards, and accordingly the awards have lapsed.

In line with the approach for Mr Mackenzie, the base salaries and total target remuneration packages will also be held constant in FY2016 for all other GMC members.

Remuneration outcomes for Non-executive Directors

Fee levels for the Non-executive Directors and the Chairman, which are reviewed annually, have remained unchanged since 2011. The annual review includes benchmarking, with the assistance of external advisers, against peer companies. Based on the ~~achievement~~review conducted in June 2015 the Board, with support from the Chairman, has decided to reduce the Chairman’s fee by approximately 13 per cent from US$1.100 million to US$0.960 million per annum, and the Chairman and the CEO have decided to reduce the Non-executive Director base fee by approximately six per cent from US$0.170 million to US$0.160 million per annum.

These reductions were considered appropriate in light of ~~sustainable~~the challenging external environment and the benchmarking data for peer companies. The different percentage reduction for the Chairman compared with that for Non-executive Directors reflects the relevant benchmarks for those roles.

A decision was also taken to include mandatory superannuation contributions within the relevant base fee from 1 July 2015, which is more closely aligned to the practices of other companies. This has the effect of further reducing remuneration for those Directors who receive mandatory Australian superannuation contributions. For those Directors, this results in an average reduction of approximately 12 per cent in the aggregate of their base fees and superannuation contributions.

Summary

The Committee remains confident that our philosophy and policies on remuneration are appropriate to support long-term ~~growth~~value creation, and ~~success~~the outcomes for FY2015 continue to demonstrate the alignment between remuneration and performance at BHP Billiton. I would welcome any comments you may have.

Carolyn Hewson

Chairman, Remuneration Committee

10 September 2015

4.2 Introduction to the Remuneration Report

The contents of this Remuneration Report are governed by legislation in the United Kingdom and Australia.

The UK Companies Act 2006 and the Large and Medium-sized Companies and Groups (Accounts and Reports) Regulations 2008 (as amended), which are generally described as UK requirements in this Remuneration Report, require BHP Billiton to make certain disclosures in regard to Directors.

The Australian Corporations Act 2001, Australian Accounting Standards and IFRS require BHP Billiton to make certain disclosures for KMP, defined as those persons having authority and responsibility for planning, directing and controlling the activities of the Group, ~~(including appropriate management of business risks) and to align CEO rewards with sustained shareholder wealth creation through the relative US$ Total Shareholder Return (TSR) performance condition.~~

~~The five-year duration of the Long-Term Incentive Plan (LTIP) is longer than most other plans in the market, and has received strong voting support from shareholders since it was introduced in 2004.~~

The actual value on vesting will not be known until the vesting time (i.e. five years from award allocation) and will depend on the level of achievement against the performance condition (as detailed in section 6.8.5), achievement of the service conditions (continued employmentdirectly or ~~leaving the Group under specific circumstances) and on the share price at the time of vesting. The actual value of the award may ultimately be zero.~~

~~Further information on how the Committee determines remuneration and how each component of remuneration is measured for~~indirectly. For the purposes of this Remuneration Report, it has been determined that ~~process is provided in section 6.5. Details~~the KMP includes the Non-executive Directors, and the members of ~~how~~ the ~~determinations made~~GMC including the CEO.

The GMC makes key management decisions under the authorities that have been delegated to it by the ~~Committee translate into remuneration as measured by accounting standards under Australian and United Kingdom disclosure regulations are provided in section 6.7.~~

~~6.2.3 2007 allocation under~~Board. The members of the ~~LTIP – tested to the end of FY2012 and vested in FY2013~~

~~The five-year performance period for the 2007 LTIP ended~~GMC on 30 June 2012 and 333,327 Performance Shares that were allocated to the CEO in December 2007 will vest. This was the first LTIP allocation to Mr Kloppers as CEO. The allocation of 225,000 Performance Shares that vested last year was made prior to him becoming CEO. Over the five-year performance period, BHP Billiton’s US$ TSR was 41.6 per cent. In contrast, the weighted average US$ TSR for the peer group against which the Group’s performance was measured was -4.0 per cent. Of the 15 peer companies, only two companies recorded US$ TSR outcomes in excess of BHP Billiton’s 41.6 per cent US$ TSR performance (one at 45.6 per cent and one at 41.9 per cent), and eight peer companies recorded negative US$ TSR performance over the five-year performance period. The impact of this 45.6 per cent US$ TSR outperformance by BHP Billiton over the weighted average was to add US$75.4 billion of shareholder value from 1 July 2007 to 30 June 2012 over and above performance in line with the weighted average of the comparators (as2015 are shown in the ~~following graphs).~~table below.

In addition to the KMP listed above, Karen Wood (President to 19 August 2014), Graham Kerr (Chief Financial Officer to 30 September 2014), Mike Fraser (President, Human Resources to 31 December 2014) and Jane McAloon (President, Governance and Group Company Secretary to 31 May 2015) served as KMP during FY2015.

Details of the Non-executive Directors who held office during FY2015 are set out below. Each Non-executive Director held office for the whole of FY2015 unless otherwise indicated.

This section of the Report describes the overarching remuneration policy that guides the Remuneration Committee’s decisions. Our remuneration policy has not changed from that approved by shareholders at the 2014 AGMs and so the remuneration policy as set out in the 2014 Annual Report continues to apply as set out in this section.

This section of the Report was introduced last year as a result of new UK legislation, under which this policy report was required to be put to a binding vote at the Group’s 2014 AGMs. Shareholder approval was provided at those meetings, and this remuneration policy became effective for Directors of BHP Billiton immediately after the final 2014 AGM. Under the UK legislation, this policy is binding only in regard to the Directors (including the CEO) and not for other members of the GMC. The UK legislation requires BHP Billiton to present the remuneration policy for this vote at least every three years.

Where the remuneration policy report includes cross-references to other sections of the Remuneration Report or the Annual Report, these are solely for the purposes of assisting the reader to locate related information. The referenced information is not part of the remuneration policy report.

BHP Billiton currently has a single Executive Director, being the CEO. Therefore, for simplicity, this section refers only to the CEO. This remuneration policy would, however, apply for any new Executive Director role, in

the event that one were created during the life of this remuneration policy. In that case, references in this section to the CEO should be read as being to each Executive Director.

The Remuneration Committee recognises that remuneration has an important role to play in supporting the implementation and achievement of the Group’s strategy and our ongoing performance, aligning the activities of management to the interests of shareholders, and in supportingOur Charter.

On page i of this document:Our Chartersets out our purpose, strategy, values and how we judge our success

The Committee determines the appropriate remuneration for the CEO, taking into account his responsibilities, location, skills, experience and performance within the Group. In doing so, the Committee recognises that levels of remuneration should be sufficient to attract, motivate and retain a highly skilled CEO, but also that the Group should avoid paying more than is necessary for this purpose.

The key principles of our remuneration policy, which remain unchanged, are to:

support the execution of the Group’s business strategy in accordance with a risk framework that is appropriate for the organisation;

provide competitive rewards to attract, motivate and retain highly skilled executives willing to work around the world;

apply demanding performance measures, including key financial and non-financial measures of performance;

link a significant component of pay to our performance and the creation of value for our shareholders from relative outperformance;

ensure remuneration arrangements are equitable and facilitate the deployment of people around the Group;

limit severance payments on termination to pre-established contractual arrangements (which do not commit us to making any unjustified payments).

BHP Billiton’s remuneration arrangements reinforce the achievement of our success, as set out in Our Charter, and are designed to ensure that the CEO takes a long-term approach to decision-making and to minimise activities that focus only on short-term results at the expense of longer-term business growth and success. The Remuneration Committee has considered the ways in which risk management and the long-term horizon are reflected throughout BHP Billiton’s remuneration arrangements for the CEO and all executives, and is satisfied that the approach reinforces the desired behaviours.

This is largely achieved through the Group’s approach to STI and LTI awards, which comprise a significant portion of total remuneration. The equity component of any STI award is deferred for a two-year period, and performance under the LTIP is measured over a five-year period. The actual rewards received by the CEO therefore reflect the Group’s performance and share price over an extended period.

It is the Committee’s view that this provides an appropriate focus on BHP Billiton’s sustained performance beyond the end of the initial measurement period. This approach also provides a transparent mechanism for clawback or adjustment in the event of a restatement of Group results, through changes to the vesting or non-vesting of deferred awards.

In addition, STI and LTI outcomes are not driven by a purely formulaic approach. The Committee holds discretion to determine that awards are not to be provided or vested in circumstances where it would be inappropriate or would provide unintended outcomes. The Committee has no discretion to allow vesting of equity awards when performance conditions have not been satisfied (other than in the event of death or serious injury, disability, illness that prohibits continued employment or total and permanent disablement of the CEO).

The following table shows the components of total remuneration, the link to strategy, how each component operates, how performance is assessed and will impact remuneration, and the maximum opportunity for each component.

Remuneration component
and link to strategy

Operation and performance framework

Maximum⁽¹⁾

Benefits

Provides personal insurances and assistance where BHP Billiton’s structure gives rise to tax obligations across multiple jurisdictions, and a market-competitive level of benefits to attract and retain a high-quality and experienced CEO.

• Benefits may be provided as determined by the Committee. Currently, this includes such items as the costs of private family health insurance, death and disability insurance, car parking, and personal tax return preparation in the required countries where BHP Billiton has requested that the CEO relocate internationally, or where BHP Billiton’s Dual Listed Company structure requires personal tax returns in multiple jurisdictions.

• The CEO may from time to time be accompanied by his spouse/partner on business related travel, including for Board meetings. The costs associated with spouse/partner attendance are met by BHP Billiton. In some instances, they are deemed to be taxable benefits for the CEO. In such cases, BHP Billiton reimburses the CEO for this tax cost.

• The CEO is eligible to participate in Shareplus, which is BHP Billiton’s all-employee share purchase plan.Section 4.4.26 for information about Shareplus and the CEO’s participation

• The Committee’s discretion in respect of benefits applies up to the maximums shown.

• A relocation allowance and assistance is provided only where a change of location is made at BHP Billiton’s request. The Group’s mobility policies provide ‘one-off’ payments with no trailing entitlements.

Benefits as determined by the Committee but to a limit not exceeding 10% of base salary and (if applicable) a one-off taxable relocation allowance up to US$700,000.

Remuneration component
and link to strategy

Operation and performance framework

Maximum⁽¹⁾

STI

The purpose of STI is to focus the CEO’s efforts on those performance measures and outcomes that are priorities for the Group for the relevant financial year, and to motivate the CEO to strive to achieve stretch performance objectives.

The performance measures for each year are chosen on the basis that they are expected to have a significant short- and long-term impact on the success of the Group.

Deferral of a portion of STI awards in deferred equity over BHP Billiton shares encourages a longer-term focus aligned to that of shareholders.

Section 4.4.3 for information on MSR for the CEO

Section 1.10 for a description of KPIs for the Group

Setting performance measures and targets

• A scorecard of measures is set at the commencement of each financial year.

• The measures and their relative weightings are chosen by the Committee, in their discretion, in order to appropriately drive overall performance for the coming year. Specified financial measures will constitute the largest weighting. The scorecard will also include measures that impact the long-term sustainability of the Group. The Sustainability Committee assists the Remuneration Committee in determining appropriate HSEC measures and weightings.

• We plan to disclose the weightings of HSEC, financial and individual measures around the beginning of each performance period.

• The target is determined for each performance measure at a level that will motivate the CEO to achieve an appropriately stretching annual performance outcome and that will contribute to the longer-term success of the Group and shareholder wealth. The target for each financial measure is derived from the annual budget as approved by the Board for the relevant financial year.

• For HSEC and for individual measures the target is ordinarily expressed in narrative form and will be disclosed near the beginning of the performance period. For reasons of commercial sensitivity, while we will provide a narrative description of financial target performance in broad terms, the actual target for each financial measure will not be disclosed in advance. However, we plan to disclose the target for each measure retrospectively. In the rare instances where this may not be prudent on grounds of commercial sensitivity, we will seek to explain why and give an indication of when the target may be disclosed.

• Should any other performance measures be added at the discretion of the Committee, we will determine the timing of disclosure of the relevant target with due consideration of commercial sensitivity.

Section 4.4.6 for details of performance measures and outcomes for FY2015

Section 4.4.11 for details of performance measures for FY2016

Maximum award

240% of base salary (cash 120% and 120% in deferred equity).

Target performance

160% of base salary (cash 80% and 80% in deferred equity).

Threshold performance

80% of base salary (cash 40% and 40% in deferred equity).

Minimum award

Zero

Remuneration component
and link to strategy

Operation and performance framework

Maximum⁽¹⁾

Assessment of performance

• At the conclusion of the financial year, the CEO’s achievement against each measure is assessed by the Remuneration Committee and the Board, and an STI award determined. If performance is below the Threshold level for any measure, no STI will be provided in respect of that portion of the STI opportunity.

• The Remuneration Committee is assisted by the Sustainability Committee in relation to assessment of performance against HSEC measures, and considers guidance provided by other Committees in respect of other measures.

• The Board believes this method of assessment is transparent, rigorous and balanced, and provides an appropriate, objective and comprehensive assessment of performance.

• In the event that the Remuneration Committee does not consider the level of vesting that would otherwise apply to be a true reflection of the performance of the Group or should it consider that individual performance or other circumstances makes this an inappropriate outcome, it retains the discretion to not provide all or a part of any STI award. This is an important mitigation against the risk of unintended award outcomes.

Delivery of award

• STI awards are provided under the STIP.

• The value of any STI award is provided half in cash and half in an award of the equivalent value of BHP Billiton equity, which is deferred for two years and may be forfeited if the CEO leaves the Group within the deferral period.

• The award of deferred equity comprises rights to receive ordinary BHP Billiton shares in the future if the CEO is still employed by BHP Billiton at the end of the deferral period⁽²⁾. Before vesting (or exercise), these rights are not ordinary shares and do not carry entitlements to ordinary dividends or other shareholder rights; however, a DEP is provided on vested awards⁽³⁾. The Committee has a discretion to settle STI awards in cash.

• Both cash and equity STI awards are subject to malus and clawback as described below this table.

Remuneration component
and link to strategy

Operation and performance framework

Maximum⁽¹⁾

LTI

The purpose of the LTI is to focus the CEO’s efforts on the achievement of sustainable long-term value creation and success of the Group (including appropriate management of business risks).

It aligns the CEO’s reward with sustained shareholder wealth creation in excess of that of relevant comparator group(s), through the relative TSR performance condition.

The provision of LTIP awards over BHP Billiton shares also encourages long-term share exposure for the CEO, and aligns the long-term interests of the CEO and shareholders.

Demonstration of this alignment between the interests of the CEO and shareholders is seen through the five-year performance period of the LTI, which is consistent with the long-term nature of the resources industry.

Section 4.4.3 for information on MSR for the CEO

Section 4.4.21 for a table of awards held under the LTIP

Section 1.10 for a description of KPIs for the Group

Relative TSR performance condition

• The award is subject to a relative TSR performance condition, which must be achieved over a five-year period. Full vesting under the LTIP only occurs where BHP Billiton’s relative TSR⁽⁴⁾ significantly outperforms the TSR of the comparator group(s). The comparator group(s) and the weighting between comparator groups will be determined by the Committee in relation to each grant.

Section 4.4.8 for further detail on LTIP comparator group(s)

• Relative TSR has been chosen as the most appropriate measure as it allows for an objective external assessment over a sustained period on a basis that is familiar to shareholders.

Level of performance required for vesting

• None of the award will vest if BHP Billiton’s TSR is below the Peer Group TSR (being the weighted median TSR⁽⁶⁾ where the comparator group is a specified group of peer companies) and/or below Index TSR (being the index value where the comparator group is a market index such as the MSCI World index).

• For each award, the Committee will determine the level of relative TSR outperformance required on a per annum basis, or on a compounded basis over the five-year period, against the peer group and/or market index in order for the whole of the LTI award to vest.

Section 4.4.8 for details of the outperformance required for recent grants

• 25% of the award will vest if BHP Billiton’s TSR is equal to the Peer Group TSR and/or Index TSR (as applicable), and vesting occurs on a sliding scale between that point and the point of full vesting.

• There is no retesting if the performance condition is not met. In the event that the Committee does not consider the level of vesting that would otherwise apply based on the Group’s achievement of the relative TSR performance condition to be a true reflection of the underlying performance of the Group, or should it consider that individual performance or other circumstances makes this an inappropriate outcome, it retains the discretion to lapse any portion or all of the award. This is an important mitigation against the risk of unintended vesting outcomes.

Normal Maximum Award

Face value of 400% of base salary.

Exceptional Maximum Award ⁽⁵⁾

Face value of 488% of base salary.

Remuneration component
and link to strategy

Operation and performance framework

Maximum⁽¹⁾

• To ensure that the LTI performance conditions continue to support operational excellence, risk management and the execution of the Group’s strategy, the Committee retains discretion to add further performance measures to supplement the existing relative TSR performance condition. Prior to doing so, consultation would be undertaken with key stakeholders. Should this be the case, the vesting of a portion of any LTI award may instead be linked to performance against the new measure(s). The Committee expects that in the event of introducing an additional performance measure(s), the weighting on relative TSR would remain the majority weighting.

Delivery of award

• LTI awards are provided under the LTIP approved by shareholders at the 2013 AGMs. When considering the value of the award to be provided, the Committee primarily considers the face value of the award, and also considers its fair value which includes consideration of the performance conditions.⁽⁷⁾

• The award of deferred equity comprises rights to receive ordinary BHP Billiton shares in the future if the performance and service conditions are met⁽²⁾. Before vesting (or exercise), these rights are not ordinary shares and do not carry entitlements to ordinary dividends or other shareholder rights; however, a DEP is provided on vested awards⁽³⁾. The Committee has a discretion to settle LTI awards in cash.

• LTI awards are subject to malus and clawback as described below this table.

41 per cent of face value. The maximum fair value of 200 per cent of base salary is therefore currently equivalent to a face value of 488 per cent of base salary (488% x 41% = 200%). This is shown as the Exceptional Maximum Award in the table. However, it is current policy to provide a maximum award of 400 per cent of base salary, which is therefore shown in the table as the Normal Maximum Award. In any case, all LTI awards to the CEO will only be provided with prior approval by shareholders in the relevant AGMs.

The STIP and LTIP provisions allow the Committee to reduce or clawback awards in the following circumstances:

the participant acting fraudulently or dishonestly or being in material breach of their obligations to the Group;

where BHP Billiton becomes aware of a material misstatement or omission in the financial statements of a Group company or the Group; or

any circumstances occur that the Committee determines in good faith to have resulted in an unfair benefit to the participant.

These malus and clawback provisions apply whether or not awards are made in the form of cash or equity, and whether or not the equity has vested.

The remuneration policy approved by shareholders is required to cover awards that were granted under legacy plans and that may vest in the future on their existing terms. Key terms are shown in the table below.

Remuneration component
and link to strategy

Operation and performance framework

Maximum value on
vesting

LTI under the former LTIP

The former LTIP was replaced by the new LTIP (described in the previous table) from FY2014. Awards were provided for the same purpose as the new LTIP.

• The terms of LTI awards provided under the former LTIP were similar to those provided under the new LTIP as described in the previous table, including the performance conditions.

• Awards provided to the CEO in December 2010 did not vest in FY2015, as the performance condition was not met, and lapsed. Awards provided to the CEO in December 2011 and 2012 are due to vest from FY2017 to FY2018 to the extent that the performance conditions are met.

Section 4.4.7 for details of the 2010 LTIP performance outcomes

Section 4.4.21 for a table of awards held under the former LTIP

The face value of the awards on vesting plus the value of any associated DEP.

The ongoing remuneration arrangements for a newly recruited or promoted CEO, or for another Executive Director should one be appointed, will reflect the remuneration policy as set out in this report. The ongoing components will therefore comprise base salary, pension contributions, benefits, STI and LTI.

A market competitive level of base salary, benefits and pension contributions will be provided to a newly recruited or promoted CEO, or another Executive Director. The same maximum STI and LTI apply as per the remuneration policy for the current CEO. The combined maximum level of STI and LTI that may be provided is 728 per cent of base salary, which is the combination of the maximum 240 per cent of base salary in STI and the exceptional maximum 488 per cent of base salary in LTI as per the remuneration policy for the CEO.

For external appointments, the Remuneration Committee may determine that it is appropriate to provide additional cash and/or equity components to replace any remuneration forfeited from a former employer. It is anticipated that any foregone equity awards would be replaced by equity. The value of the replacement remuneration would not be any greater than the fair value of the awards forgone (as determined by the Committee’s independent adviser). The Committee would determine appropriate service conditions and performance conditions within BHP Billiton’s framework, taking into account the conditions attached to the forgone award. The Committee is mindful of limiting such payments and not providing any more compensation than is necessary.

For any internal CEO (or another Executive Director) appointments, any entitlements provided under former arrangements will be honoured according to their existing terms.

When setting remuneration for the CEO, the Remuneration Committee considers the prevailing market conditions, the competitive environment and the positioning and relativities of pay and employment conditions across the wider BHP Billiton workforce.

The Committee is briefed regularly about the pay and conditions of the wider employee population, and takes into account the annual base salary increases for our employee population when determining any change in the CEO’s base salary. Salary increases in Australia, where the CEO is located, are particularly relevant, as they reflect the local economic conditions.

The principles that underpin the remuneration policy for the CEO are the same as those that apply to other employees, although the CEO’s arrangements have a greater emphasis on performance-related pay and a higher proportion of the CEO’s total remuneration is variable in the form of STI and LTI. Like those for the CEO, the performance measures used to determine STI outcomes for all employees are linked to achievement of the Group’s strategy and behaviours aligned to the values inOur Charter.

Although BHP Billiton does not consult directly with employees on Directors’ remuneration, the Group conducts regular employee engagement surveys which give employees an opportunity to provide feedback on remuneration matters. Many employees are ordinary shareholders and have the opportunity to vote on AGM resolutions. In FY2015, more than 14,000 continuing employees were enrolled to purchase BHP Billiton shares under Shareplus, our all-employee share plan.

Part of the Board’s commitment to high-quality governance is expressed through the approach we take to engaging and communicating with shareholders. We encourage shareholders to make their views known to us.

Our shareholders are based across the globe. Regular proactive engagement on remuneration and governance matters takes place with institutional shareholders and investor representative organisations. This is overseen by the Remuneration Committee Chairman.

In addition, shareholders can contact us at any time through our Investor Relations team, with contact details available on our website:www.bhpbilliton.com.

Feedback from shareholders and investors is shared with the Board and Remuneration Committee through the Chairman and the Remuneration Committee Chairman and is used as input to decision-making by the Board and the Committee, in respect of executive remuneration policy and application. In particular, this feedback has had a direct bearing on the Committee’s decisions in formulating this remuneration policy report content.

The Committee considers that this approach provides a robust mechanism to ensure Directors are aware of matters raised, have a good understanding of current shareholder views, and formulate policy and make decisions as appropriate.

While the Remuneration Committee recognises that market forces necessarily influence remuneration practices, it strongly believes that the fundamental driver of remuneration outcomes should be business performance. It also believes that overall remuneration should be both fair to the individual and commensurate with the expectations of our shareholders.

Accordingly, while target total remuneration is structured to attract and retain a high calibre CEO, the amount of remuneration actually received each year depends on:

the achievement of superior business and individual performance;

generating sustained shareholder value from relative outperformance;

the view of the Committee as to what is fair to the individual and commensurate with shareholder expectations.

STI and LTI are the two components of remuneration that are measured on business performance, with the outcome assessed against pre-determined performance conditions.

The minimum amount the CEO could earn in respect of FY2016 is US$2.270 million, which is fixed remuneration, and made up of his base salary of US$1.700 million, pension contributions of US$0.425 million and benefits of US$0.145 million.

The maximum is US$13.150 million. This assumes he earns the maximum under the STI of US$4.080 million and the normal maximum under the LTI of US$6.800 million. All of these components are shown in the table below at the minimum, target and maximum levels. The normal maximum amount of the LTI has been calculated on the basis of full vesting at the share price on the date of grant. The normal maximum LTI is 400 per cent of base salary.

Before deciding on the final outcome for the CEO (and for other members of the GMC), the Committee first considers the outcome against the pre-determined performance conditions. It then applies its overarching discretion. It can exercise discretion downwards only (i.e. to reduce remuneration).

When the CEO was appointed in May 2013, the Board advised him that the Committee would exercise its discretion on the basis of what it considered to be a fair and commensurate remuneration level to decide if the outcome should be reduced.

To be fair to the individual, remuneration levels need to accurately reflect the CEO’s responsibilities and contributions. To be commensurate with the expectations of shareholders, remuneration levels need to reflect the expectations of our shareholders that their Company’s funds would be used to remunerate our employees in a way that is proportionate to both performance and overall value.

In this way, the Committee believes it can set a remuneration level for the CEO that is sufficient to incentivise him and that is also fair to him and commensurate with shareholder expectations and prevailing market conditions. These same considerations led the Committee to set the incoming CEO’s remuneration when he was appointed in 2013 at a lower level than the previous level for this role.

The diagram below shows the relative proportion of each remuneration component for the CEO if the minimum, target and maximum levels of performance were achieved.

Group and/or Index TSR (as applicable for each grant). The impact of potential future share price movements (up and down) on the value of LTI awards is not included.

Section 4.3.3for more information on the components of remuneration for the CEO

The terms of employment for the CEO are formalised in his employment contract. Key terms of the current contract and relevant payments on loss of office are shown below. If a new CEO or another Executive Director was appointed, similar contractual terms would apply, other than where the Remuneration Committee determines that different terms should apply for reasons specific to the individual.

The CEO’s contract has no fixed term. It can be terminated by BHP Billiton on 12 months’ notice. BHP Billiton can terminate the contract immediately by paying base salary plus pension contributions for the notice period. The CEO must give six months’ notice for voluntary resignation. The table below sets out the basis on which payments on loss of office may be made.


	Leaving reason^(1) (2)
	Voluntary resignation	Termination for cause	Death, serious injury, disability or illness⁽³⁾	Cessation of employment with the agreement of the Board⁽⁴⁾
Benefits	• Applicable benefits may continue to be provided during the notice period. • Accumulated annual leave entitlements and any statutory payments will also be paid. • Applicable expenses may be paid for repatriation to the home location where a relocation has been requested by BHP Billiton. • Unvested Shareplus Matched Shares will lapse.	• No benefits will be provided. • Accumulated annual leave entitlements and any statutory payments will be paid. • Applicable expenses may be paid for repatriation to the home location where a relocation has been requested by BHP Billiton. • Unvested Shareplus Matched Shares will lapse.	• Applicable benefits may continue to be provided during the notice period. • Accumulated annual leave entitlements and any statutory payments will also be paid. • Applicable expenses may be paid for repatriation to the home location where a relocation has been requested by BHP Billiton. • Unvested Shareplus Matched Shares will vest in full.	• Applicable benefits may continue to be provided for the relevant year in which employment ceases. • Accumulated annual leave entitlements and any statutory payments will also be paid. • Applicable expenses may be paid for repatriation to the home location where a relocation has been requested by BHP Billiton. • Unvested Shareplus Matched Shares will vest in full.

STI Where CEO leaves during the financial year or after the end of the financial year, but before an award is provided.	• No STI will be paid.	• No STI will be paid.	• The Committee may determine in its discretion to pay an amount in respect of the participant’s performance for that year.	• The Committee may determine in its discretion to pay an amount in respect of the participant’s performance for that year.


	Leaving reason^(1) (2)
	Voluntary resignation	Termination for cause	Death, serious injury, disability or illness⁽³⁾	Cessation of employment with the agreement of the Board⁽⁴⁾
Unvested STIP equity	• Will lapse.	• Will lapse.	• Will vest in full.	• Will continue to be held, on the existing terms, for the scheduled deferral period before vesting (subject to a Committee discretion to lapse some or all of the award). • The awards remain subject to malus and clawback.

Vested but unexercised STIP equity	• Will remain exercisable for the rest of the exercise period, unless the Committee determines they will lapse.	• Will remain exercisable for the rest of the exercise period, unless the Committee determines they will lapse.	• Will remain exercisable for the rest of the exercise period.	• Will remain exercisable for the rest of the exercise period, or for a reduced exercise period, unless the Committee determines they will lapse.

Unvested GIS equity	• Will lapse.	• Will lapse.	• Will vest in full.	• Will vest in full, except in the case of a leaving reason not specified in the plan rules, in which case the Committee has discretion to determine the treatment of equity awards.

Vested GIS Options (with a market-based exercise price) previously provided to the CEO – if still held on leaving.	• Will be retained for the scheduled exercise period, and on the existing terms.	• Will lapse.	• Will be retained for the scheduled exercise period, and on the existing terms.	• Will be retained for the scheduled exercise period, and on the existing terms.


	Leaving reason^(1) (2)
	Voluntary resignation	Termination for cause	Death, serious injury, disability or illness⁽³⁾	Cessation of employment with the agreement of the Board⁽⁴⁾
LTI Unvested awards	• Will lapse.	• Will lapse.	• Will vest in full.	• A pro rata portion of unvested awards (based on the proportion of the performance period served) will continue to be held subject to the LTIP rules and terms of grant. The balance will lapse. • The awards remain subject to malus and clawback.

Vested but unexercised awards	• Will remain exercisable for the rest of the exercise period, unless the Committee determines they will lapse.	• Will remain exercisable for the rest of the exercise period, unless the Committee determines they will lapse.	• Will remain exercisable for the rest of the exercise period.	• Will remain exercisable for the rest of the exercise period, or for a reduced exercise period, unless the Committee determines they will lapse.

base salary, pension contributions and benefits will be paid until the date of the change of control event;

the Committee may determine that a cash payment be made in respect of performance during the current financial year and all unvested STI equity awards would vest in full;

the Committee may determine that unvested LTI awards will either vest to the extent that the Committee determines appropriate (with reference to performance against the performance condition up to the date of the change of control event and expectations regarding future performance) or that the awards be lapsed if the Committee determines that the holders will participate in an acceptable alternative employee equity plan as a term of the change of control event.

Our Non-executive Directors are paid in compliance with the UK Corporate Governance Code (2012) and the ASX Corporate Governance Council’s Principles and Recommendations (3rd Edition).

The following table shows the ~~share prices~~components of total remuneration for Non-executive Directors, the link to strategy, how each component operates, and how performance is assessed and will impact remuneration and the maximum opportunity for each component.


Remuneration component and link to strategy	Operation and performance framework	Maximum ⁽¹⁾

Benefits

Travel allowances • Competitive benefits are paid in order to attract and retain high-quality individuals and adequately compensate for the considerable travel burden.	• Non-executive Directors receive travel allowances on a per-trip basis reflecting the considerable travel burden imposed on members of the Board as a consequence of the Dual Listed Company structure and the resulting Board meetings in Australia and the UK, along with site visits at our multiple geographic locations.	8% increase per annum (annualised), or inflation if higher in the location in which duties are primarily performed, on a per-trip basis.

Other benefits • Competitive benefits are paid in order to attract and retain high-quality individuals, and to provide appropriate remuneration for the role undertaken.	• As a consequence of the Dual Listed Company structure, Non-executive Directors are required to prepare personal tax returns in both Australia and the UK, regardless of whether they reside in one or neither of those countries. They are accordingly reimbursed for the costs of personal tax return preparation in whichever of the UK and/or Australia is not their place of residence (including payment of the tax cost associated with the provision of the benefit). • Non-executive Directors may from time to time be accompanied by their spouse/partner to business meetings. The costs associated with spouse/partner attendance at one business meeting per annum are met by BHP Billiton and, in some instances, they are deemed to be taxable benefits for the Non-executive Director. In such cases BHP Billiton reimburses the Non-executive Director for this tax cost.	Up to a limit not exceeding 20% of fees.

STI and LTI	• Non-executive Directors are not eligible to participate in any STI or LTI arrangements.


Remuneration component and link to strategy	Operation and performance framework	Maximum ⁽¹⁾
Payments on early termination	• There are no provisions in any of the Non-executive Directors’ appointment arrangements for compensation payable on early termination of their directorship.

The ongoing remuneration arrangements for a newly recruited Non-executive Director will reflect the remuneration policy in place for other Non-executive Directors, as above. The components will therefore comprise fees, pension contributions where required by law and benefits as set out in the table above. No variable remuneration (STI and LTI) will be provided to newly recruited Non-executive Directors.

The standard letter of appointment for Non-executive Directors is available on our website. The Board has adopted a policy consistent with the UK Corporate Governance Code, under which all Non-executive Directors must seek re-election by shareholders annually, if they wish to remain on the Board. As such no Non-executive Directors seeking re-election have an unexpired term in their letter of appointment.

A Non-executive Director may resign on reasonable notice. No payments are made to Non-executive Directors on loss of office. A legacy arrangement provides accrued retirement benefits under the now closed Retirement Plan of BHP Billiton Limited, and ~~BHP Billiton Plc in US$~~this will continue to be honoured.

Section 4.4.30for retirement disclosures for the ~~three months up~~Non-executive Directors

When Non-executive Director remuneration is determined, the same considerations in respect of employment conditions elsewhere in the Group and shareholder views, as described in relation to setting remuneration for the CEO, are taken into account.

Section 4.3.5for consideration of employment conditions elsewhere in the Group

This section of the Report shows the impact of the remuneration policy in FY2015 and ~~including 30 June 2007 and 30 June 2012 and the dividends paid over the five-year~~how remuneration outcomes are linked to actual performance period. The three-month average US$ share prices have been determined with reference to three-month average share prices quoted on the London Stock Exchange in £ and the Australian Stock Exchange in A$, converted to US$ at the relevant three-month average exchange rates.outcomes. It is divided as follows.

they are eligible for benefits under the Australian Tax Treaty ~~Australia reserves~~but the ~~right to tax certain income, including:~~

~~business profits~~gain constitutes any of ~~an enterprise attributable to a permanent establishment situated in Australia through which~~ the ~~enterprise carries on business in Australia;~~

following:

–

business profits of an enterprise attributable to a permanent establishment situated in Australia through which the enterprise carries on business in Australia; or

–

income or gains from the alienation of property that form part of the business property of a permanent establishment of an enterprise that the US holder has in Australia, or pertain to a fixed base available to the US holder in Australia for the purpose of performing independent personal services; or

–

income derived from the disposition of shares in a company, the assets of which consist wholly or principally of real property (which includes rights to exploit or to explore for natural resources) situated in Australia, whether such assets are held directly or indirectly through one or more interposed entities.

Where the ~~alienation of property that forms part of the business property of a permanent establishment an enterprise has in Australia,~~gain is either not Australian sourced or ~~pertains to a fixed base available to a non-resident US holder in Australia for the purpose of performing independent personal services;~~

income derived from the disposition of shares in a company, the assets of which consist wholly or principally of real property (which includes rights to exploit or to explore for natural resources) situated in Australia, whether such assets are held directly, or indirectly through one or more interposed entities.

The Australian Government has announced proposals to exempt certain categories of non-resident investors from tax on profits of an income nature on disposals of portfolio interests in Australian public companies, including where ordinary shares or ADSs are held through a non-resident managed fund, with effect from 1 July 2011 (or earlier, in some cases). However, these reforms are not yet law.

~~If the profit on sale~~ is not of an income nature, ~~there~~the US holder will generally only be ~~no liability~~liable to ~~tax unless capital gains tax applies.~~ Australian capital gains tax ~~will not generally apply~~on an assessment basis if they acquired (or are deemed to ~~a disposal of the ordinary~~have acquired) their shares or ADSs ~~by a non-resident US holder unless the shares or ADSs have been acquired~~ after 19 September 1985 ~~and:~~and one or more of the following applies:

the US holder is an Australian resident for Australian tax purposes; or

the ordinary shares or ADSs have been used by the US holder in carrying on a ~~trade or~~ business through a permanent establishment in Australia; or

the US holder ~~(together~~(either alone or together with associates) directly or indirectly owns or owned 10 per cent or more of the issued share capital of BHP Billiton Limited at the time of the disposal or throughout a12-month period during the two years prior to the time of disposal and, at the time of the disposal, the sum of the market values of BHP Billiton Limited’s assets that are taxable Australian real property (held directly or through interposed entities) exceeds the sum of the market values of BHP Billiton Limited’s assets (held directly or through interposed entities) that are not taxable Australian real property at that time ~~(real property,~~(which, for these purposes currently includes mining, quarrying or prospecting rights in respect of minerals, petroleum or quarry materials situated in ~~Australia)~~Australia – and may be extended to associated information and goodwill); or

the US holder is an individual who is not eligible for benefits under the Australian Tax Treaty as a treaty resident of the US and elected on becoming a non-resident of Australia to continue to have the ordinary shares or ADSs subject to Australian capital gains tax.

The comments above on the sale of ordinary shares and ADSs do not apply:

to temporary residents of Australia who should seek advice that is specific to their circumstances;

if the Investment Management Regime (IMR) applies to the US holder. In this regard, the Australian Government has passed legislation to exempt from Australian income tax and capital gains tax gains made on disposals by certain categories of non-resident funds – called IMR entities – of (relevantly) portfolio interests in Australian public companies (subject to a number of conditions). The IMR exemptions broadly apply to widely held IMR entities in relation to their direct investments and indirect investments made through an independent Australian fund manager. The exemptions apply to gains made by IMR entities that are treated as companies for Australian tax purposes as well as gains made by non-resident investors in IMR entities that are treated as trusts and partnerships for Australian tax purposes. The IMR exemptions will apply for the 2015-16 income year and later income years (but an entity may choose for the provisions to apply to certain earlier income years).

Stamp duty, gift, estate and inheritance tax

Australia does not impose any stamp duty, gift, estate or inheritance taxes in relation to transfers or gifts of shares or ADSs or upon the death of a shareholder.

(b) US taxation

This section describes the material US federal income tax consequences to a US holder of owning ordinary shares or ADSs. It applies only to ordinary shares or ADSs that are held as capital assets for tax purposes. This section does not apply to a holder of ordinary shares or ADSs that is a member of a special class of holders subject to special rules, including a dealer in securities, a trader in securities that elects to use a mark-to-market method of accounting for its securities holdings, a tax-exempt organisation, a life insurance company, a person liable for alternative minimum tax, a person who actually or constructively owns 10 per cent or more of the voting stock of BHP Billiton Limited, a person that holds ordinary shares or ADSs as part of a straddle or a hedging or conversion transaction, a person that purchases or sells ordinary shares or ADSs as part of a wash sale for tax purposes, or a person whose functional currency is not the US dollar.

If a partnership holds the ordinary shares or ADSs, the US federal income tax treatment of a partner generally will depend on the status of the partner and the tax treatment of the partnership. A partner in a partnership holding the ordinary shares or ADSs should consult its tax adviser with regard to the US federal income tax treatment of an investment in the ordinary shares or ADSs.

This section is in part based on the representations of the Depositary and the assumption that each obligation in the deposit agreement and any related agreement will be performed in accordance with its terms.

In general, for US federal income tax purposes, a holder of ADSs will be treated as the owner of the ordinary shares represented by those ADSs. Exchanges of ordinary shares for ADSs, and ADSs for ordinary shares, generally will not be subject to US federal income tax.

Dividends

Under US federal income tax laws and subject to the ~~passive foreign investment company~~Passive Foreign Investment Company (PFIC) rules discussed below, a US holder must include in its gross income the amount of any dividend paid by BHP Billiton Limited out of its current or accumulated earnings and profits (as determined for US federal income tax purposes) plus any Australian tax withheld from the dividend payment even though the holder does not receive it. The dividend is taxable to the holder when the holder, in the case of ordinary shares, or the Depositary, in the case of ADSs, actually or constructively receives the dividend.

~~that~~ the US holder holds the shares or ADSs for more than 60 days during the 121-day period beginning 60 days before the ex-dividend date and does not enter into certain risk reduction transactions with respect to the shares or ADSs during the abovementioned holding period. ~~In addition,~~However, a non-corporate US holder that elects to treat the dividend income as ‘investment income’ pursuant to Section 163(d)(4) of the US Internal Revenue Code will not be eligible for ~~the reduced rate of taxation.~~such preferential rates. In the case of a corporate US holder, dividends on shares and ADSs are taxed as ordinary income and will not be eligible for the dividends received deduction generally allowed to US corporations in respect of dividends received from other US corporations.

Distributions in excess of current and accumulated earnings and profits, as determined for US federal income tax purposes, will be treated as a non-taxable return of capital to the extent of the holder’s tax basis, determined in US dollars, in the ordinary shares or ADSs and thereafter as a capital gain.

The amount of any cash distribution paid in any foreign currency will be equal to the US dollar value of such currency, calculated by reference to the spot rate in effect on the date such distribution is received by the US holder or, in the case of ADSs, by the Depositary, regardless of whether and when the foreign currency is in fact converted into US dollars. If the foreign currency is converted into US dollars on the date received, the US holder generally should not recognise foreign currency gain or loss on such conversion. If the foreign currency is not converted into US dollars on the date received, the US holder will have a basis in the foreign currency equal to its US dollar value on the date received, and generally will recognise foreign currency gain or loss on a subsequent conversion or other disposal of such currency. Such foreign currency gain or loss generally will be treated as US source ordinary income or ~~loss.~~loss for foreign tax credit limitation purposes.

Subject to certain limitations, Australian tax withheld in accordance with the Australian Treaty and paid over to Australia will be creditable against an individual’s US federal income tax liability. Special rules apply in determining the foreign tax credit limitation with respect to dividends that are taxed at the preferential rates applicable to long-term capital ~~gains rate.~~gains. To the extent a refund of the tax withheld is available to a US holder under Australian law or under the Australian Treaty, the amount of tax withheld that is refundable will not be eligible for credit against the holder’s US federal income tax liability. A US holder that does not elect to claim a US foreign tax credit may instead claim a deduction for Australian income tax withheld, but only for a taxable year in which the US holder elects to do so with respect to all foreign income taxes paid or accrued in such taxable year.

Dividends will be income from sources outside the US, and generally will be ‘passive category’ income or, for certain taxpayers, ‘general category’ income, which are treated separately from each other for the purpose of computing the foreign tax credit allowable to a US holder. In general, a taxpayer’s ability to use foreign tax credits may be limited and is dependent on the particular circumstances. US holders should consult their ~~own~~ tax advisers with respect to these matters.

Sale of ordinary shares and ADSs

Subject to the PFIC rules discussed below, a US holder who sells or otherwise disposes of ordinary shares or ADSs will recognise a capital gain or loss for US federal income tax purposes equal to the difference between the US dollar value of the amount realised and the holder’s tax basis, determined in US dollars, in those ordinary shares or ADSs. The gain or loss will generally be income or loss from sources within the US for foreign tax credit limitation purposes. The capital gain of a non-corporate US holder is generally taxed at preferential rates where the holder has a holding period greater than 12 months in the shares or ADSs sold. There are limitations on the deductibility of capital losses.

The US dollar value of any foreign currency received upon a sale or other disposition of ordinary shares or ADSs will be calculated by reference to the spot rate in effect on the date of sale or other disposal (or, in the case of a cash basis or electing accrual basis taxpayer, on the settlement date). A US holder will have a tax basis in the foreign currency received equal to that US dollar amount, and generally will recognise foreign currency gain or loss on a subsequent conversion or other disposal of the foreign currency. This foreign currency gain or loss generally will be treated as US source ordinary income or ~~loss.~~

loss for foreign tax credit limitation purposes.

Passive Foreign Investment Company ~~Rules~~rules

We do not believe that the BHP Billiton Limited ordinary shares or ADSs will be treated as stock of a PFIC for US federal income tax purposes, but this conclusion is a factual determination that is made annually at the end of the year and thus may be subject to change. If BHP Billiton Limited were treated as a PFIC, any gain realised on the sale or other disposition of ordinary shares or ADSs would in general not be treated as a capital gain. Instead, a US holder would be treated as if it had realised such gain and certain ‘excess distributions’ ratably over its holding period for the ordinary shares or ADSs and would be taxed at the highest tax rate in effect for each such year to which the gain was allocated, together with an interest charge in respect of the tax attributable to each such year. In addition, dividends received with respect to ordinary shares or ADSs would not be eligible for the special tax rates applicable to qualified dividend income if BHP Billiton Limited were a PFIC either in the taxable year of the distribution or the preceding taxable year, but instead would be taxable at rates applicable to ordinary income. Assuming the shares or ADSs are ‘marketable stock’, a US holder may mitigate the adverse tax consequences described above by electing to be taxed annually on a mark-to-market basis with respect to such shares or ADSs.

US ~~Holders~~holders in BHP Billiton Plc

(a) UK taxation

Dividends

Under UK law, no UK tax is required to be withheld at source from dividends paid on ordinary shares or ADSs.

Sale of ordinary shares and ADSs

US holders will not be liable for UK tax on capital gains realised on disposal of ordinary shares or ADSs unless:

they are ~~resident or ordinarily~~ resident in the UK; or

they carry on a trade, profession or vocation in the UK through a branch or agency for the year in which the disposal occurs and the shares or ADSs have been used, held or acquired for the purposes of such trade (or profession or vocation), branch or agency. In the case of a trade, the term ‘branch’ includes a permanent establishment.

An individual who ceases to be a resident in the UK for tax purposes while owning shares or ADSs and then disposes of those shares or ADSs while not a UK resident may become subject to UK tax on capital gains if he/~~she~~ she:

had sole UK residence in the UK tax year preceding his/her departure from the UK;

had sole UK residence at any time during at least four of the seven UK tax years preceding his/her year of departure from the UK; and

subsequently becomes treated as ahaving sole UK ~~resident~~residence again before five complete UK tax years of non-UK residence have elapsed from the date he/she left the UK.

In this situation US holders will generally be entitled to claim US tax paid on such a disposition as a credit against any corresponding UK tax payable.

UK inheritance tax

Under the current ~~UK –~~ UK–US Inheritance and Gift Tax Treaty, ordinary shares or ADSs held by a US holder who is domiciled for the purposes of the ~~UK –~~ UK–US Inheritance and Gift Tax Treaty in the US, and is not for the purposes of the ~~UK –~~ UK–US Inheritance and Gift Tax Treaty a national of the UK, will generally not be subject to UK inheritance tax on the individual’s death or on a chargeable gift of the ordinary shares or ADSs during the individual’s lifetime, provided that any applicable US federal gift or estate tax liability is paid, unless the ordinary shares or ADSs are part of the business property of a permanent establishment of the individual in the UK or, in the case of a shareholder who performs independent personal services, pertain to a fixed base situated in the UK. Where the ordinary shares or ADSs have been placed in trust by a settlor who, at the time of settlement, was a US resident shareholder, the ordinary shares or ADSs will generally not be subject to UK inheritance tax unless the settlor, at the time of settlement, was not domiciled in the US and was a UK national. In the exceptional case where the ordinary shares or ADSs are subject to both UK inheritance tax and US federal

gift or estate tax, the ~~UK –~~ UK–US Inheritance and Gift Tax Treaty generally provides for double taxation to be relieved by means of credit relief.

UK stamp duty and stamp duty reserve tax

Under applicable legislation, UK stamp duty or stamp duty reserve tax (SDRT) is, subject to certain exemptions, payable on any issue or transfer of shares to the Depositary or their nominee where those shares are for inclusion in the ADR program at a rate of 1.5 per cent of their price (if issued), the amount of any consideration provided (if transferred on sale) or their value (if transferred for no consideration). However, from 1 October 2009, this 1.5 per cent charge has generally ceased to apply to issues of shares into EUEuropean Union (EU) depositary receipt systems and into EU clearance systems. Further, the First-tier Tribunal has ~~recently~~ held that the 1.5 per cent SDRT charge on a transfer of shares to an issuer of ~~American Depositary Receipts (ADRs)~~ADRs (as an integral part of a fresh capital raising) was incompatible with ~~European Union~~EU law. Her Majesty’s Revenue and Customs has confirmed that it will no longer seek to impose the 1.5 per cent SDRT charge on the issue of shares (or, where it is integral to the raising of new capital, the transfer of shares) to a depositary receipt issuer or a clearance service, ~~outside the European Union.~~wherever located. The law in this area may still be susceptible to change. We recommend advice should be sought in relation to paying the 1.5 per cent SDRT or stamp duty charge in any circumstances.

No SDRT would be payable on the transfer of an ADS. No UK stamp duty should be payable on the transfer of an ADS provided that the instrument of transfer is executed and remains at all times outside the UK. Transfers of ordinary shares to persons other than the Depositary or their nominee will give rise to stamp duty or SDRT at the time of transfer. The relevant rate is currently 0.5 per cent of the amount payable for the shares. The purchaser normally pays the stamp duty or SDRT.

Special rules apply to transactions involving intermediates and stock lending.

(b) US taxation

section does not apply to a holder of ordinary shares or ADSs that is a member of a special class of holders subject to special rules, including a dealer in securities, a trader in securities who elects to use a mark-to-market method of accounting for its securities holdings, a tax-exempt organisation, a life insurance company, a person liable for alternative minimum tax, a person who actually or constructively owns 10 per cent or more of the voting stock of BHP Billiton Plc, a person that holds ordinary shares or ADSs as part of a straddle or a hedging or conversion transaction, a person that purchases or sells ordinary shares or ADSs as part of a wash sale for tax purposes, or a person whose functional currency is not the US dollar.

Dividends

Under US federal income tax laws and subject to the PFIC rules discussed below, a US holder must include in its gross income the gross amount of any dividend paid by BHP Billiton Plc out of its current or accumulated earnings and profits (as determined for US federal income tax purposes). The dividend is taxable to the holder when the holder, in the case of ordinary shares, or the Depositary, in the case of ADSs, actually or constructively receives the dividend.

Dividends paid to a non-corporate US holder on shares or ADSs ~~in taxable years beginning before 1 January 2013~~ will be taxable at the ~~rate~~preferential rates applicable to long-term capital gains ~~(generally at a rate of 15 per cent)~~ provided that the US holder holds the shares or ADSs for more than 60 days during the 121-day period beginning 60 days before the ex-dividend date and does not enter into certain risk reduction transactions with respect to the shares or ADSs during the abovementioned holding period. ~~In addition,~~However, a non-corporate US holder that elects to treat the dividend income as ‘investment income’ pursuant to Section 163(d)(4) of the US Internal Revenue Code will not be eligible for ~~the reduced rate of taxation.~~such preferential rates. In the case of a corporate US holder, dividends on shares and ADSs are taxed as ordinary income and will not be eligible for the dividends received deduction generally allowed to US corporations in respect of dividends received from other US corporations.

Sale of ordinary shares and ADSs

loss on a subsequent conversion or other disposal of the foreign currency. This foreign currency gain or loss generally will be treated as US source ordinary income or ~~loss.~~loss for foreign tax credit limitation purposes.

Passive Foreign Investment Company ~~Rules~~rules

We do not believe that the BHP Billiton Plc ordinary shares or ADSs will be treated as stock of a PFIC for US federal income tax purposes, but this conclusion is a factual determination that is made annually at the end of the year and thus may be subject to change. If BHP Billiton Plc were treated as a PFIC, any gain realised on the sale or other disposition of ordinary shares or ADSs would in general not be treated as a capital gain. Instead, a US holder would be treated as if it had realised such gain and certain ‘excess distributions’ ratably over its holding period for the ordinary shares or ADSs and would be taxed at the highest tax rate in effect for each such year to which the gain was allocated, together with an interest charge in respect of the tax attributable to each such year. In addition, dividends received with respect to ordinary shares or ADSs would not be eligible for the special tax rates applicable to qualified dividend income if BHP Billiton Plc were a PFIC either in the taxable year of the distribution or the preceding taxable year, but instead would be taxable at rates applicable to ordinary income. Assuming the shares or ADSs are ‘marketable stock’, a US holder may mitigate the adverse tax consequences described above by electing to be taxed annually on a mark-to-market basis with respect to such shares or ADSs.

(c) South African ~~Taxation~~taxation

Dividends

As from 1 April 2012, it is possible that US holders of BHP Billiton Plc shares or ~~ADS~~ADSs that remain South African residents may be subject to South African ~~withholding tax~~Dividends Tax, at a maximum rate of 15 per cent, on any dividends received from shares listed on the JSE. The South African Dividends Tax will be withheld from the gross amount of the dividend paid to the shareholder.

No South African Dividends Tax is required to be withheld from cash dividends provided the dividends are paid to, inter alia, non-South African tax resident shareholders or South African tax resident corporate shareholders (including South African pension, provident, retirement annuity and benefit funds). ~~These~~However, these dividends will only be exempt from South African Dividends Tax if these types of shareholders ~~will generally be required to~~ provide the requisite exempt declarations to the regulated intermediaries making the cash dividend ~~payments to them to ensure no Dividend~~payments.

Dividends Tax is ~~withheld.~~

~~However, Dividend Tax is~~nevertheless required to be withheld on dividends paid on ordinary shares and ADSs of BHP Billiton Plc listed on the JSE, where such dividends are paid to South African tax resident shareholders who are natural persons (individuals) or trusts, other than closure rehabilitation trusts.

Except for certain exclusions, generally speaking such dividends paid to South African tax resident natural persons or trusts are ~~not taxable under the~~exempt from South African ~~law~~income tax and as such, the ~~withholding tax is~~Dividends Tax may be considered as a final and non-creditable levy.

Sale of ordinary shares and ADSs

A US holder who or which is tax resident in South Africa would be liable for income tax on any profit on disposal of ordinary shares or ADSs, or capital gains tax on any gain on disposal of ordinary shares or ADSs, depending on whether the shares and ADSs are held on revenue or capital account.

Income tax is payable on any profit on disposal of ordinary shares or ADSs held by a non-resident US holder where the profit is of a revenue nature and sourced in South Africa unless relief is afforded under the Double Tax Agreement concluded between South Africa and the US. In such a case, the profit would only be taxed in South Africa if it is attributable to a permanent establishment of that US holder in South Africa.

Where the ordinary shares or ADSs are not held on revenue account, non-resident US holders will not be liable for South African tax on capital gains realised on the disposal of ordinary shares or ADSs unless:

such US ~~Holders~~holders are tax resident in South Africa;

the shares or ADSs are held in a company, where 80 per cent or more of the market value of those shares or ADSs is attributable (at the time of disposal of those shares or ADSs) directly or indirectly to immovable property situated in South Africa, held otherwise than as trading stock; or

the US holder’s interest (the shares or ADSs in BHP Billiton Plc) is attributable to a permanent establishment which the US holder has in South Africa.

A US holder who holds ordinary shares or ADSs connected to a permanent establishment in South Africa will recognise a capital gain or loss for South African income tax purposes equal to the difference between the Rand value of the amount realised and the holder’s tax basis, determined in Rand, in those ordinary shares or ADSs.

The holder’s tax basis will generally be equal to the cost that was incurred to acquire the shares, if such shares were acquired after 1 October 2001. The capital gain of a non-resident’s permanent establishment in South Africa will be taxed at an effective rate of 18.6 per cent.

Securities Transfer Tax

South African Securities Transfer Tax is levied at 0.25 per cent in respect of the transfer of ordinary shares or ADSs. The tax is levied on the amount of consideration at which the ordinary share or ADS is transferred or, where no value is declared, the closing price of the ordinary shares or ADSs. The tax is ultimately borne by the person to whom that ordinary share or ADS is transferred.

~~11.7 Ancillary information for our shareholders~~

~~Information for~~Certain US federal income tax consequences of the demerger of South32 to US holders in BHP Billiton Limited and BHP Billiton Plc

This section describes certain US federal income tax consequences of the demerger of South32 (the ‘demerger’) to US beneficial owners of BHP Billiton Limited and BHP Billiton Plc shares or ADSs who hold their shares or ADSs as capital assets for US federal income tax purposes, and who have as their functional currency the US dollar. This section does not apply to a holder of shares or ADSs that is a member of a special class of holders subject to special rules, including a dealer in securities, a trader in securities that elects to use a mark-to-market

method of accounting for its securities holdings, a tax-exempt organisation, a life insurance company, a person liable for alternative minimum tax, a person who actually or constructively owns 10 per cent or more of the voting stock of BHP Billiton Limited or BHP Billiton Plc, a person that holds shares or ADSs as part of a straddle or a hedging or conversion transaction, or a person that purchases or sells shares or ADSs as part of a wash sale for tax purposes. For additional information on the demerger, refer to sections 1.3.7, 1.6.4, 2.1.7, and note 29 ‘Discontinued operations’ to the Financial Statements of this Annual Report.

A US beneficial owner of BHP Billiton Limited or BHP Billiton Plc shares or ADSs who received a distribution of shares or ADSs of South32 pursuant to the demerger (a ‘Participating US holder’) will be treated as receiving a taxable distribution for an amount equal to the US dollar fair market value at the time of the distribution of the South32 shares or South32 ADSs distributed as part of the demerger. The distribution by BHP Billiton Limited and BHP Billiton Plc will be treated as a dividend for US federal income tax purposes to the extent of current or accumulated earnings and profits (as determined for US federal income tax purposes) of BHP Billiton Limited (in the case of BHP Billiton Limited shareholders and BHP Billiton Limited ADS holders) or of BHP Billiton Plc (in the case of BHP Billiton Plc shareholders and BHP Billiton Plc ADS holders). Any excess will be treated as a non-taxable return of capital to the extent of the Participating US holder’s tax basis in BHP Billiton shares or BHP Billiton ADSs and thereafter as capital gain. BHP Billiton Limited and BHP Billiton Plc do not maintain calculations of their earnings and profits in accordance with US federal income tax principles; therefore, Participating US holders should assume that the entire distribution will be taxed as a dividend.

Subject to certain exceptions for short-term and hedged positions, a non-corporate Participating US holder of shares in BHP Billiton Limited or BHP Billiton Plc (or their ADSs) will generally be subject to tax on the distribution at the rate applicable to long-term capital gains, provided that BHP Billiton Limited and BHP Billiton Plc (as applicable) are not PFICs in their current taxable year and were not PFICs for their most recently ended taxable year. Based on their audited annual Financial Statements, BHP Billiton Limited and BHP Billiton Plc do not believe they are PFICs or were PFICs for their most recently ended taxable years. However, this is ~~provided~~a factual determination that is based upon regulations and guidance the interpretation of which is not entirely clear, and accordingly there can be no assurances in this regard.

In the case of a corporate Participating US holder, the distribution will not be eligible for the dividends received deduction generally available in receipt of dividends from US domestic corporations. If taxable as a dividend, the distribution will be income from sources outside the United States, and generally will be ‘passive category’ income under the rules for computing the foreign tax credit allowable to a Participating US holder.

A Participating US holder will have a tax basis in the South32 shares or South32 ADSs equal to the amount of dividend income recognised in respect of the distribution. The holding period for the South32 shares or South32 ADSs will begin on the day after the South32 shares or ADSs were distributed.

In general, dividends and payments of the proceeds from the sale, exchange or other disposition of shares, paid within the United States or through certain US-related financial intermediaries to a US person are subject to information reporting and may be subject to backup withholding unless the holder establishes that it is a corporation or other exempt recipient or, in the case of backup withholding, provides an accurate taxpayer identification number and certifies under penalty of perjury that it is a US person and that it is not subject to backup withholding. Backup withholding is not an additional tax. A holder generally may obtain a refund of any amounts withheld under the backup withholding rules in excess of such holder’s US federal income tax liability by filing a refund claim with the IRS.

9.11 Government regulations

Government regulations touch all aspects of our operations.

The ability to extract minerals, oil and natural gas is fundamental to BHP Billiton. In most jurisdictions, the rights to undeveloped mineral or petroleum deposits are owned by the state. In those jurisdictions, we rely upon

the rights granted to us by the government that owns the mineral, oil or natural gas. These rights usually take the form of a lease or licence, which gives us the right to access the land and extract the product. The terms of the lease or licence, including the time period for which it is effective, are specific to the laws of the relevant government. Generally, we own the product we extract and royalties or similar taxes are payable to the government. In certain jurisdictions in which we operate, such as Trinidad and Tobago, a production sharing contract (PSC) governs the relationship between the government and companies concerning how much of the oil and gas extracted from the country each will receive. In PSCs, the government awards rights for the execution of exploration, development and production activities to the company. The company bears the financial risk of the initiative and explores, develops and ultimately produces the field as required. When successful, the company is permitted to use the money from a certain set percentage of produced oil and gas to recover capital and operational expenditures, known as ‘cost oil’. The remaining production is known as ‘profit oil’ and is split between the government and the company at a rate determined by the government and set out in the PSC.

Underlying our business of extracting and processing natural resources is the ability to explore for those natural resources. Typically, the rights to explore for minerals, oil and natural gas are granted to us by the government that owns those natural resources that we wish to explore. Usually, the right to explore carries with it the obligation to spend a defined amount of money on the exploration or to undertake particular exploration activities.

Although onshore oil and gas rights in the United States can be derived from government (state and federal) mineral rights, they are primarily derived from private ownership of the rights, which is the case for our onshore oil and gas rights. Oil and gas rights primarily take the form of a lease, but also can be owned onshore outright in fee. If the rights granted are by lease, we are afforded the rights to access, explore, extract, produce and market the oil and gas for a period of years and then generally so long thereafter as there is oil or gas production or operations on the leased lands.

Governments also impose obligations on us in respect of environmental protection, land rehabilitation, occupational health and safety, and the rights and interests of Indigenous peoples with which we must comply in order to continue to enjoy the right to conduct our operations within that jurisdiction. These obligations often require us to make substantial expenditures to minimise or remediate the environmental impact of our operations, to ensure the safety of our employees and contractors and the like. Environmental protection, land rehabilitation and occupational health and safety onshore in the United States are principally regulated by the government and to a lesser degree, if applicable, by the lease contract with the landowner. For further information on these types of obligations, refer to section 1.14 of this Annual Report.

Of particular note are the following regulatory regimes:

9.11.1 Uranium production in Australia

To possess nuclear material, such as uranium, in Australia, a Permit to Possess Nuclear Materials (Possession Permit) must be held pursuant to the Australian Nuclear Non-Proliferation (Safeguards) Act 1987 (Non-Proliferation Act). A Possession Permit is issued by the Australian Safeguards and Non-Proliferation Office, an office established under the Non-Proliferation Act, which administers Australia’s domestic nuclear safeguards requirements and reports to the Australian Government.

A special permit to transport nuclear material is required under the Non-Proliferation Act by a party that transports nuclear material from one specified location to another specified location. As we engage service providers to transport uranium, each of those service providers is required to hold a permit to transport nuclear material issued by the Australian Safeguards and Non-Proliferation Office.

9.11.2 Exchange controls and shareholding limits

BHP Billiton Plc

There are no laws or regulations currently in force in the United Kingdom that restrict the export or import of capital or the remittance of dividends to non-resident holders of BHP Billiton Plc’s shares, although the Group does operate in some other jurisdictions where remittances of funds could be affected as they are subject to exchange control approvals. There are certain sanctions adopted by the UK Government that implement resolutions of the Security Council of the United Nations and sanctions imposed by the European Union (EU) against certain countries, entities and individuals and may restrict the export or import of capital or the remittance of dividends to certain non-resident holders of BHP Billiton Plc’s shares. Any enforcement of financial sanctions by the UK Government would be initiated by HM Treasury. Such sanctions may be in force from time to time and include those against: (i) certain entities and/or individuals associated with Afghanistan, Belarus, the Central African Republic, Cote d’Ivoire, the Democratic People’s Republic of Korea (North Korea), the Democratic Republic of Congo, Egypt, Eritrea, the Republic of Guinea, the Republic of Guinea-Bissau, Iran, Lebanon, Liberia, the Russian Federation, Somalia, South Sudan, Sudan, Syria, Tunisia, Ukraine, Yemen, Zimbabwe and the previous regimes of Iraq and Libya; (ii) entities and individuals linked with Al-Qaeda and other terrorist organisations.

There are certain restrictions on shareholding levels under BHP Billiton Plc’s Articles of Association described under the heading ‘BHP Billiton Limited’ below.

BHP Billiton Limited

From time to time, the United Nations Security Council and the Australian Government impose international sanctions on certain countries and organisations. The countries and organisations that are currently subject to United Nations sanctions are certain individuals or entities linked with the Taliban, Al-Qaeda and associated individuals and entities, other designated individuals and entities associated with terrorism, certain entities and individuals associated with the Central African Republic, the Democratic Republic of Congo, Cote d’Ivoire, the Democratic People’s Republic of Korea (North Korea), Eritrea, Guinea-Bissau, Iran, Iraq, Lebanon, Liberia, Libya, Sudan, Somalia and Yemen. The countries currently subject to the Australian Government’s autonomous sanctions are Myanmar, the Democratic People’s Republic of Korea (North Korea), the former Federal Republic of Yugoslavia, Iran, Libya, Syria, Russia, Crimea and Sevastopol, Ukraine and Zimbabwe. The controls impose certain approval and reporting requirements on transactions involving such countries, entities and individuals and/or assets controlled or owned by them. Certain transfers into or out of Australia of amounts greater than A$10,000 in any currency may also be subject to reporting requirements. In addition, under the Australian Banking (Foreign Exchange) Regulations 1959, the Reserve Bank of Australia may impose restrictions on certain financial transactions and require the consent of the Reserve Bank of Australia for the movement of funds into and out of Australia. No such restrictions are currently in place.

Remittances of any dividends, interest or other payments by BHP Billiton Limited to non-resident holders of BHP Billiton Limited’s securities are not restricted by exchange controls or other limitations, save that, in certain circumstances, BHP Billiton may be required to withhold Australian taxes.

20 per cent in relation to BHP Billiton Limited on a ‘stand-alone’ basis (i.e. calculated as if there were no Special Voting Share and only counting BHP Billiton Limited’s ordinary shares);

30 per cent in relation to BHP Billiton Plc on a ‘stand-alone’ basis (i.e. calculated as if there were no Special Voting Share and only counting BHP Billiton Plc’s ordinary shares);

20 per cent in relation to the BHP Billiton Group, ~~Annual Report 2012~~calculated having regard to all the voting power on a joint electorate basis (i.e. calculated on the aggregate of BHP Billiton Limited’s and BHP Billiton Plc’s ordinary shares).

Under BHP Billiton Limited’s Constitution and BHP Billiton Plc’s Articles of Association, sanctions for breach of any of these thresholds, other than by means of certain ‘permitted acquisitions’, include withholding of dividends, voting restrictions and compulsory divestment of shares to the ~~Summary Review 2012.~~extent a shareholder and its associates exceed the relevant threshold.

~~The~~9.12 Ancillary information for our shareholders

This Annual Report provides the detailed financial data and information on the BHP Billiton Group’s performance required to comply with the reporting regimes in Australia, the United Kingdom and the United States. ~~There are no specific disclosure requirements for the Summary Review, which is published as a communication for shareholders.~~

Shareholders of BHP Billiton Limited and BHP Billiton Plc will receive a copy of ~~the Annual Report or the Summary Review if they have requested a copy. Shareholders of BHP Billiton Plc will receive~~ the Annual Report if they have requested a copy. ADR holders may view all documents online atwww.bhpbilliton.com or opt to receive a hard copy by ~~application to~~accessinghttp://pir.orderannualreports.com/v5/index.asp?cp_code=A548 or calling Citibank Shareholder Services during normal business hours using the details as listed on the inside back cover of ~~the~~this Annual Report.

Change of shareholder details and enquiries

Shareholders wishing to contact BHP Billiton on any matter relating to their shares or ADR holdings are invited to telephone the appropriate office of the BHP Billiton Share Registrar or Transfer Office listed on the inside back cover of ~~the~~this Annual Report.

Any change in shareholding details should be notified by the shareholder to the relevant Registrar in a timely manner.

Shareholders can also access their current shareholding details and change many of those details online atwww.bhpbilliton.com. The website requires shareholders to quote their Shareholder Reference Number (SRN) or Holder Identification Number (HIN) in order to access this information.

Alternative access to the Annual Report ~~and Summary Review~~

We offer an alternative for all shareholders who wish to be advised of the availability of the Annual Report ~~and Summary Review~~ through our website via an email notification. By providing an email address through our website, shareholders will be notified by email when the Annual Report ~~and Summary Review have~~has been released. Shareholders will also receive notification of other major BHP Billiton announcements by email. Shareholders requiring further information or wishing to make use of this service should visit our websitewww.bhpbilliton.com.

ADR holders wishing to receive a hard copy of the Annual Report ~~2012~~2015 can do so by accessing~~citibank.ar.wilink.com~~http://pir.orderannualreports.com/v5/index.asp?cp_code=A548 or by calling Citibank Shareholder Services during normal business hours. ADR holders may also contact the adviser that administers their investments. Holders of BHP Billiton Plc shares dematerialised into ~~STRATE~~Strate should liaise directly with their Central Securities Depository Participant (CSDP) or broker.

Key dates for shareholders

The following table sets out future dates in the next financial and calendar year of interest to our shareholders. If there are any changes to these dates, all relevant stock exchanges (see section ~~11.1)~~9.2 of this Annual Report) will be notified.


Date		Event
2829 September ~~2012~~2015		Final Dividend Payment Date

2522 October ~~2012~~2015		BHP Billiton Plc Annual General Meeting in London ~~Venue~~:Venue: The Queen Elizabeth II Conference Centre Broad Sanctuary Westminster London SW1P ~~3EEUK~~3EE United Kingdom Time: 11.00am (local time) Details of the business of the meeting are contained in the separate Notice of Meeting

2919 November ~~2012~~2015		BHP Billiton Limited Annual General Meeting in ~~Sydney~~Perth ~~Venue~~:Venue: ~~Sydney~~Perth Convention and Exhibition Centre ~~Darling Harbour~~21 Mounts Bay Road ~~Sydney~~ Perth, Western Australia Time: ~~10.30am~~10.00am (local time) Details of the business of the meeting are contained in the separate Notice of Meeting

20Date
Event
23 February ~~2013~~2016
   Interim Results Announced
811 March ~~2013~~2016
   Interim Dividend Record Date
2831 March ~~2013~~2016
   Interim Dividend Payment Date
2116 August ~~2013~~2016
   Annual Results Announced

Corporate Directory

BHP Billiton Group Registered Offices

~~BHP Billiton Limited~~

~~Australia~~

BHP Billiton ~~Centre~~Limited

~~180 Lonsdale~~Australia

171 Collins Street

Melbourne VIC 3000

Telephone 1300 554 757 (within Australia)

+61 3 9609 3333 (outside Australia)

Facsimile +61 3 9609 3015

BHP Billiton Plc

United Kingdom

Neathouse Place

London SW1V ~~1BH~~1LH

Telephone +44 20 7802 4000

Facsimile +44 20 7802 4111

Group Company Secretary

~~Jane McAloon~~Margaret Taylor

BHP Billiton Corporate Centres

~~South Africa~~Chile

~~6 Hollard Street~~

~~Marshalltown~~

~~Johannesburg 2107~~

~~Telephone +27 11 376 9111~~

~~Facsimile +27 11 838 4716~~

~~Chile~~

~~Avenida Americo Vespucio Sur # 100~~Cerro El Plomo 6000

Piso 718

Las Condes ~~756999~~7560623

Santiago

Telephone +56 2 ~~330~~2579 5000

Facsimile +56 2 ~~207 6509~~2207 6517

United States

Our agent for service in the United States is Maria Isabel Reuter at:

1360 Post Oak Boulevard, Suite 150

Houston, TX 77056-3020

Telephone +1 713 961 8500

Facsimile +1 713 961 8400

Marketing Offices

Singapore

10 Marina Boulevard,#50-01

Marina Bay Financial Centre, Tower 2

Singapore 018983

Telephone +65 6421 6000

Facsimile +65 6421 7000

~~Belgium~~

~~BHP Billiton Diamonds (Belgium) N.V.~~

~~Hoveniersstraat 30~~

~~2018 Antwerp~~

~~Telephone +32 3 201 1090~~

~~Facsimile +32 3 213 0846~~

Share Registrars and Transfer Offices

Australia

BHP Billiton Limited Registrar

Computershare Investor Services Pty Limited

Yarra Falls, 452 Johnston Street

Abbotsford VIC 3067

Postal Address – GPO Box 2975

Melbourne VIC 3001

Telephone 1300 656 780 (within Australia)

+61 3 9415 4020 (outside Australia)

Facsimile +61 3 9473 2460

Email enquiries:

www.investorcentre.com/bhp

United Kingdom

BHP Billiton Plc Registrar

Computershare Investor Services PLC

The Pavilions, Bridgwater Road

Bristol BS13 8AE

Postal Address (for general enquiries) –

The Pavilions, Bridgwater Road

Bristol BS99 6ZZ

Telephone +44 844 472 7001

Facsimile +44 870 703 6101

Email enquiries:

www.investorcentre.co.uk/contactus

South Africa

BHP Billiton Plc Branch Register

and Transfer Secretary

Computershare Investor Services

(Pty) Limited

70 Marshall Street

Johannesburg 2001

Postal Address – PO Box 61051

Marshalltown 2107

Telephone +27 11 373 0033

Facsimile +27 11 688 ~~5218~~5217

Email enquiries:

web.queries@computershare.co.za

Holders of shares dematerialised

into ~~STRATE~~Strate should contact their

CSDP or stockbroker.

New Zealand

Computershare Investor Services Limited

Level 2/159 Hurstmere Road

Takapuna ~~North Shore City~~Auckland 0622

Postal Address – Private Bag 92119

Auckland 1142

Telephone +64 9 488 8777

Facsimile +64 9 488 8787

United States

Computershare Trust Company N.A.

250 Royall Street

Canton, MA 02021

Postal Address – PO Box 43078

Providence, RI 02940-3078

Telephone +1 888 404 6340

(toll-free within US)

Facsimile +1 312 601 4331

ADR Depositary, Transfer Agent and Registrar

Citibank Shareholder Services

PO Box 43077

Providence, RI 02940-3077

Telephone +1 781 575 4555 (outside of US) +1 877 248 4237(+1-877-CITIADR)

(toll-free within US)

Facsimile +1 201 324 3284

Email enquiries:

citibank@shareholders-online.com

Website: www.citi.com/dr

The headquarters of BHP Billiton Limited and the global headquarters of the combined BHP Billiton Group are located in Melbourne, Australia. BHP Billiton Plc is located in London, UK. Both companies have identical Boards of Directors and are run by a unified management team. Throughout this Report, the Boards are referred to collectively as the Board. Shareholders in each company have equivalent economic and voting rights in the BHP Billiton Group as a whole.

1210 Exhibits

Exhibits marked “*” have been filed as exhibits to this annual report on Form 20-F. Remaining exhibits have been incorporated by reference as indicated.

Exhibit 1 Constitution

1.1	Constitution of BHP Billiton Limited⁽¹⁾

1.2	Memorandum and Articles of Association of BHP Billiton ~~Plc.~~Plc⁽¹⁾

Exhibit 4 Material Contracts

4.1	DLC Structure Sharing Agreement, dated 29 June 2001, between BHP Limited and Billiton ~~Plc.~~Plc⁽²⁾

4.2	SVC Special Voting Shares Deed, dated 29 June 2001, among BHP Limited, BHP SVC Pty Limited, Billiton Plc, Billiton SVC Limited and The Law Debenture Trust Corporation p.l.c.⁽²⁾

4.3	SVC Special Voting Shares Amendment Deed, dated 13 August 2001, among BHP Limited, BHP SVC Pty Limited, Billiton Plc, Billiton SVC Limited and The Law Debenture Trust Corporation p.l.c.⁽²⁾

4.4	Deed Poll Guarantee, dated 29 June 2001, of BHP Limited⁽²⁾

4.5	Deed Poll Guarantee, dated 29 June 2001, of Billiton Plc⁽²⁾

4.6	Form of Service Agreement for Specified Executive (referred to in this Annual Report as the Key Management Personnel)⁽³⁾

4.7	BHP Billiton Ltd Group Incentive Scheme Rules 2004, dated August 2008⁽⁴⁾

4.8	BHP Billiton Ltd Long Term Incentive Plan Rules, dated November 2010⁽¹⁾

4.9	BHP Billiton Plc Group Incentive Scheme Rules 2004, dated August 2008⁽⁴⁾

4.10	BHP Billiton Plc Long Term Incentive Plan Rules, dated November 2010⁽¹⁾

4.11	Agreement and Plan of Merger by and among BHP Billiton Limited, BHP Billiton Petroleum (North America) Inc., North America Holdings II Inc. and Petrohawk Energy Corporation, dated 14 July ~~2011.~~2011 ⁽⁵⁾

*4.12

Implementation Deed entered into on 17 March 2015 between BHP Billiton Ltd, BHP Billiton Plc and South32 Limited

Exhibit 8 List of Subsidiaries

*8.1	List of subsidiaries of BHP Billiton Limited and BHP Billiton Plc

Exhibit 12 Certifications (section 302)

*12.1

Certification by Chief Executive Officer, Mr ~~Marius Kloppers,~~Andrew Mackenzie, dated 1823 September ~~2012~~2015

*12.2

Certification by Chief Financial Officer, Mr ~~Graham Kerr,~~Peter Beaven, dated 1823 September ~~2012~~2015

Exhibit 13 Certifications (section 906)

*13.1

Certification by Chief Executive Officer, Mr ~~Marius Kloppers,~~Andrew Mackenzie, dated 1823 September ~~2012~~2015

*13.2

Certification by Chief Financial Officer, Mr ~~Graham Kerr,~~Peter Beaven, dated 1823 September ~~2012~~2015

Exhibit 15 Consent of Independent Registered Public Accounting Firm

*15.1

Consent of Independent Registered Public Accounting Firms KPMG and KPMG Audit Plc for incorporation by reference of audit reports in registration statements on Form F-3 and Form S-8

Exhibit 95 Mine Safety Health Administration

*95.1

Disclosure of Mine Safety and Health Administration (“MSHA”) Safety ~~Data.~~Data

Footnotes

⁽¹⁾	Previously filed as an exhibit to BHP Billiton’s annual report on Form 20-F for the year ended 30 June 2011 on 21 September 2011.

⁽²⁾	Previously filed as an exhibit to BHP Billiton’s annual report on Form 20-F for the year ended 30 June 2001 on 19 November 2001.

⁽³⁾	Previously filed as an exhibit to BHP Billiton’s annual report on Form 20-F for the year ended 30 June ~~2005~~2013 on ~~3 October 2005.~~ 25 September 2013.

⁽⁴⁾	Previously filed as an exhibit to BHP Billiton’s annual report on Form 20-F for the year ended 30 June 2008 on 15 September 2008.

⁽⁵⁾	Previously filed as an exhibit to BHP Billiton Limited’s tender offer statement on schedule TO on 15 July 2011.

SIGNATURE

The registrants hereby certify that they meet all of the requirements for filing on Form 20-F and that they have duly caused and authorised the undersigned to sign this annual report on their behalf.

BHP Billiton Limited

BHP Billiton Plc

/s/ ~~Graham Kerr~~Peter Beaven

~~Graham Kerr~~Peter Beaven

Chief Financial Officer

Date: 1823 September ~~2012~~2015

97 Financial Statements


Contents of Financial Statements

7.1 Consolidated Financial Statements		F-1
~~9.1~~7.1.1 Consolidated ~~Financial Statements~~Income Statement		F-1
~~9.1.1 Consolidated Income Statement~~	~~F-1~~
~~9.1.2~~7.1.2 Consolidated Statement of Comprehensive Income		F-2
~~9.1.3~~7.1.3 Consolidated Balance Sheet		F-3
~~9.1.4~~7.1.4 Consolidated Cash Flow Statement		F-4
~~9.1.5~~7.1.5 Consolidated Statement of Changes in Equity		F-5

~~9.1.6~~7.1.6 Notes to Financial Statements		F-7

~~9.2~~ Performance
1.	Segment reporting	F-7
2.	Exceptional items	F-13
3.	Expenses	F-16
4.	Income tax expense	F-17
5.	Other income	F-19
6.	Earnings per share	F-20

Working capital
7.	Cash and cash equivalents	F-21
8.	Trade and other receivables	F-22
9.	Trade and other payables	F-23
10.	Inventories	F-23

Resource assets
11.	Property, plant and equipment	F-24
12.	Intangible assets	F-26
13.	Deferred tax balances	F-29
14.	Closure and rehabilitation provisions	F-31

Capital structure
15.	Interest bearing liabilities	F-32
16.	Net finance costs	F-33
17.	Share capital	F-34
18.	Other equity	F-36
19.	Dividends	F-39
20.	Provision for dividends and other liabilities	F-40

Financial risk management
21.	Other financial assets	F-41
22.	Other financial liabilities	F-42
23.	Financial risk management	F-42

Employee matters
24.	Key management personnel	F-56
25.	Employee share ownership plans	F-57
26.	Employee benefits, restructuring and post-retirement employee benefits provisions	F-69
27.	Pension and other post-retirement obligations	F-70
28.	Employees	F-71

Group and related party information
29.	Discontinued operations	F-72
30.	Subsidiaries	F-76


Group and related party information continued
31.	Investments accounted for using the equity method		F-78
32.	Interests in joint operations		F-82
33.	Related party transactions		F-83

Unrecognised items and uncertain events
34.	Commitments		F-85
35.	Contingent liabilities		F-86
36.	Subsequent events		F-87

Other items
37.	Notes to the consolidated cash flow statement		F-87
38.	Auditor’s remuneration		F-89
39.	Not required for US reporting		F-90

Presentation and policies		~~F-112~~
~~9.3 Directors’ declaration~~ 40.	~~F-112~~Reporting entity		F-90
41.	Basis of preparation and measurement		F-91
42.	Functional and presentation currency		F-92
43.	Significant accounting policies		F-93
44.	Application of accounting estimates, assumptions and judgements		F-105

7.2	Not required for US reporting		F-108
7.3	~~9.4~~ Directors’ declaration		F-108
7.4	Statement of Directors’ Responsibilities in respect of the Annual Report and the Financial Statements	~~F-113~~	F-109
7.5	~~9.5~~ Not required for US reporting	~~F-113~~	F-110
~~9.6 Independent auditors’ reports~~ 7.6	~~F-114~~Reports of Independent Registered Public Accounting Firms		F-111
7.7	~~9.7~~ Supplementary oil and gas information – unaudited	~~F-116~~


~~Notes to Financial Statements~~
	1	~~Accounting policies~~F-115	~~F-7~~
	2	~~Segment reporting~~	~~F-25~~
	3	~~Exceptional items~~	~~F-29~~
	4	~~Other income~~	~~F-33~~
	5	~~Expenses~~	~~F-34~~
	6	~~Net finance costs~~	~~F-35~~
	7	~~Income tax and deferred tax~~	~~F-35~~
	8	~~Earnings per share~~	~~F-39~~
	9	~~Dividends~~	~~F-40~~
	10	~~Trade and other receivables~~	~~F-41~~
	11	~~Other financial assets~~	~~F-42~~
	12	~~Inventories~~	~~F-43~~
	13	~~Property, plant and equipment~~	~~F-44~~
	14	~~Intangible assets~~	~~F-46~~
	15	~~Trade and other payables~~	~~F-48~~
	16	~~Interest bearing liabilities~~	~~F-49~~
	17	~~Other financial liabilities~~	~~F-50~~
	18	~~Provisions~~	~~F-50~~
	19	~~Share capital~~	~~F-52~~
	20	~~Other equity~~	~~F-55~~
	21	~~Contingent liabilities~~	~~F-57~~
	22	~~Commitments~~	~~F-58~~
	23	~~Notes to the consolidated cash flow statement~~	~~F-59~~
	24	~~Business combinations~~	~~F-61~~
	25	~~Subsidiaries~~	~~F-65~~
	26	~~Interests in jointly controlled entities~~	~~F-67~~
	27	~~Interests in jointly controlled assets~~	~~F-70~~
	28	~~Financial risk management~~	~~F-71~~
	29	~~Pension and other post-retirement obligations~~	~~F-86~~
	30	~~Key Management Personnel~~	~~F-91~~
	31	~~Related party transactions~~	~~F-97~~
	32	~~Employee share ownership plans~~	~~F-99~~
	33	~~Employees~~	~~F-110~~
	34	~~Auditor’s remuneration~~	~~F-110~~
	35	~~Subsequent events~~	~~F-111~~

~~9.1~~7.1 Consolidated Financial Statements

~~9.1.1~~7.1.1 Consolidated Income Statement for the year ended 30 June ~~2012~~2015


	Notes		2012			2011			2010			Notes		2015			2014			2013
			US$M			US$M			US$M					US$M			US$M Restated			US$M Restated
*Continuing operations*
Revenue
Group production				68,747			67,903			48,193					43,457			55,045			52,637
Third party products		2		3,479			3,836			4,605			1		1,179			1,717			1,223

Revenue		2		72,226			71,739			52,798			1		44,636			56,762			53,860
Other income		4		906			531			528			5		496			1,225			3,804
Expenses excluding net finance costs		5		(49,380	)		(40,454	)		(33,295	)		3		(37,010	)		(36,523	)		(36,829	)
Share of operating profit of equity accounted investments													31		548			1,185			1,142

Profit from operations				23,752			31,816			20,031					8,670			22,649			21,977

Comprising:
Group production				23,626			31,718			19,920					8,656			22,634			21,913
Third party products				126			98			111					14			15			64

				23,752			31,816			20,031					8,670			22,649			21,977

Financial expenses															(702	)		(995	)		(1,229	)
Financial income		6		225			245			215					88			81			80
Financial expenses		6		(955	)		(806	)		(674	)

Net finance costs		6		(730	)		(561	)		(459	)		16		(614	)		(914	)		(1,149	)

Profit before taxation				23,022			31,255			19,572					8,056			21,735			20,828

Income tax expense		7		(7,238	)		(6,481	)		(6,112	)				(2,762	)		(6,266	)		(5,646	)
Royalty-related taxation (net of income tax benefit)		7		(252	)		(828	)		(451	)				(904	)		(514	)		(1,050	)

Total taxation expense		7		(7,490	)		(7,309	)		(6,563	)		4		(3,666	)		(6,780	)		(6,696	)

Profit after taxation				15,532			23,946			13,009
Profit after taxation from Continuing operations															4,390			14,955			14,132

*Discontinued operations*
(Loss)/profit after taxation from Discontinued operations													29		(1,512	)		269			(1,312	)

Profit after taxation from Continuing and Discontinued operations															2,878			15,224			12,820

Attributable to non-controlling interests				115			298			287					968			1,392			1,597
Attributable to members of BHP Billiton Group				15,417			23,648			12,722					1,910			13,832			11,223

Earnings per ordinary share (basic) (US cents)		8		289.6			429.1			228.6
Earnings per ordinary share (diluted) (US cents)		8		288.4			426.9			227.8
Basic earnings from Continuing and Discontinued operations per ordinary share (cents)													6		35.9			260.0			210.9
Diluted earnings from Continuing and Discontinued operations per ordinary share (cents)													6		35.8			259.1			210.2
Basic earnings from Continuing operations per ordinary share (cents)													6		65.5			256.5			238.6
Diluted earnings from Continuing operations per ordinary share (cents)													6		65.3			255.7			237.8

Dividends per ordinary share – paid during the period (US cents)		9		110.0			91.0			83.0
Dividends per ordinary share – declared in respect of the period (US cents)		9		112.0			101.0			87.0
Dividends per ordinary share – paid during the period (cents)													19		124.0			118.0			114.0
Dividends per ordinary share – determined in respect of the period (cents)													19		124.0			121.0			116.0

The accompanying notes form part of these financial statements.

~~9.1.2~~7.1.2 Consolidated Statement of Comprehensive Income for the year ended 30 June ~~2012~~2015

   Notes    2012 2011 2010
      US$M US$M US$M
Profit after taxation
      15,532    23,946    13,009
Other comprehensive income

Actuarial losses on pension and medical schemes
      (250 ) (113 ) (38 )
Available for sale investments:

Net valuation (losses)/gains taken to equity
      (32 ) (70 ) 167
Net valuation (gains)/losses transferred to the income statement
      (2 ) (47 ) 2
Cash flow hedges:

Losses taken to equity
      (320 ) –    (15 )
Realised losses transferred to the income statement
      –    –    2
Unrealised losses transferred to the income statement
      205    –    –
Exchange fluctuations on translation of foreign operations taken to equity
      19    19    1
Exchange fluctuations on translation of foreign operations transferred to the income statement
      –    –    (10 )
Tax recognised within other comprehensive income
   7       89    120    111


Total other comprehensive income
      (291 ) (91 ) 220


Total comprehensive income
      15,241    23,855    13,229


Attributable to non-controlling interests
      117    284    294
Attributable to members of BHP Billiton Group
      15,124    23,571    12,935


	Notes		2015			2014			2013
			US$M			US$M			US$M
Profit after taxation from Continuing and Discontinued operations				2,878			15,224			12,820
Other comprehensive income
Items that may be reclassified subsequently to the income statement:
Available for sale investments:
Net valuation losses taken to equity				(21	)		(15	)		(101	)
Net valuation gains transferred to the income statement				(115	)		(14	)		(1	)
Cash flow hedges:
(Losses)/gains taken to equity				(1,797	)		681			223
Losses/(gains) transferred to the income statement				1,815			(678	)		73
Exchange fluctuations on translation of foreign operations taken to equity				(2	)		(1	)		2
Tax recognised within other comprehensive income		4		29			3			(76	)

Total items that may be reclassified subsequently to the income statement				(91	)		(24	)		120

Items that will not be reclassified to the income statement:
Remeasurement (losses)/gains on pension and medical schemes				(28	)		57			61
Tax recognised within other comprehensive income		4		(17	)		12			(16	)

Total items that will not be reclassified to the income statement				(45	)		69			45

Total other comprehensive (loss)/income				(136	)		45			165

Total comprehensive income				2,742			15,269			12,985

Attributable to non-controlling interests				973			1,392			1,599
Attributable to members of BHP Billiton Group				1,769			13,877			11,386

The accompanying notes form part of these financial statements.

~~9.1.3~~7.1.3 Consolidated Balance Sheet as at 30 June ~~2012~~2015


	Notes		2012			2011			Notes		2015			2014
			US$M			US$M					US$M			US$M
ASSETS
Current assets
Cash and cash equivalents		23		4,781			10,084			7		6,753			8,803
Trade and other receivables		10		7,704			8,197			8		4,321			6,741
Other financial assets		11		282			264			21		83			87
Inventories		12		6,233			6,154			10		4,292			6,013
Assets held for sale		26		848			–
Current tax assets				137			273					658			318
Other				466			308					262			334

Total current assets				20,451			25,280					16,369			22,296

Non-current assets
Trade and other receivables		10		1,475			2,093			8		1,499			1,867
Other financial assets		11		1,881			1,602			21		1,159			2,349
Inventories		12		424			363			10		466			463
Property, plant and equipment		13		95,247			67,945			11		94,072			108,787
Intangible assets		14		5,112			1,456			12		4,292			5,439
Investments accounted for using the equity method										31		3,712			3,664
Deferred tax assets		7		4,525			3,993			13		2,861			6,396
Other				158			188					150			152

Total non-current assets				108,822			77,640					108,211			129,117

Total assets				129,273			102,920					124,580			151,413

LIABILITIES
Current liabilities
Trade and other payables		15		12,024			9,723			9		7,389			10,145
Interest bearing liabilities		16		3,531			3,519			15		3,201			4,262
Liabilities held for sale		26		433			–
Other financial liabilities		17		200			288			22		251			16
Current tax payable				2,811			3,693					207			919
Provisions		18		2,784			2,256			14, 20, 26		1,676			2,504
Deferred income				251			259					129			218

Total current liabilities				22,034			19,738					12,853			18,064

Non-current liabilities
Trade and other payables		15		509			555			9		29			113
Interest bearing liabilities		16		24,799			12,388			15		27,969			30,327
Other financial liabilities		17		317			79			22		1,031			303
Deferred tax liabilities		7		5,287			2,683			13		4,542			7,066
Provisions		18		8,914			9,293			14, 20, 26		7,306			9,891
Deferred income				328			429					305			267

Total non-current liabilities				40,154			25,427					41,182			47,967

Total liabilities				62,188			45,165					54,035			66,031

Net assets				67,085			57,755					70,545			85,382

EQUITY
Share capital – BHP Billiton Limited		19		1,186			1,183			17		1,186			1,186
Share capital – BHP Billiton Plc		19		1,069			1,070			17		1,057			1,069
Treasury shares		19		(533	)		(623	)		17		(76	)		(587	)
Reserves		20		1,912			2,001			18		2,557			2,927
Retained earnings		20		62,236			53,131			18		60,044			74,548

Total equity attributable to members of BHP Billiton Group				65,870			56,762					64,768			79,143
Non-controlling interests		20		1,215			993			18		5,777			6,239

Total equity				67,085			57,755					70,545			85,382

The accompanying notes form part of these financial statements.

The financial statements were approved by the Board of Directors on 1210 September ~~2012~~2015 and signed on its behalf by:


Jac Nasser AO		~~Marius Kloppers~~Andrew Mackenzie
Chairman		Chief Executive Officer

~~9.1.4~~7.1.4 Consolidated Cash Flow Statement for the year ended 30 June ~~2012~~2015


	Notes		2012			2011			2010			Notes		2015			2014			2013
			US$M			US$M			US$M					US$M			US$M Restated			US$M Restated
Operating activities
Profit before taxation				23,022			31,255			19,572
Profit before taxation from Continuing operations															8,056			21,735			20,828
Adjustments for:
Non-cash exceptional items				3,417			(150	)		(255	)
Non-cash or non-operating exceptional items															3,196			(551	)		(331	)
Depreciation and amortisation expense				6,408			5,039			4,759					9,158			7,716			6,067
Net gain on sale of non-current assets				(116	)		(41	)		(114	)				(9	)		(73	)		(17	)
Impairments of property, plant and equipment, financial assets and intangibles				100			74			35					828			478			344
Employee share awards expense				270			266			170					247			247			210
Financial income and expenses				730			561			459
Net finance costs															614			914			1,149
Share of operating profit of equity accounted investments															(548	)		(1,185	)		(1,142	)
Other				(481	)		(384	)		(265	)				265			(79	)		5
Changes in assets and liabilities:
Trade and other receivables				1,464			(1,960	)		(1,713	)				1,431			(349	)		904
Inventories				(208	)		(792	)		(571	)				151			(158	)		(276	)
Trade and other payables				(288	)		2,780			565					(990	)		238			(239	)
Net other financial assets and liabilities				(18	)		46			(90	)				(8	)		(90	)		89
Provisions and other liabilities				(1,026	)		387			(306	)				(771	)		475			(565	)

Cash generated from operations				33,274			37,081			22,246					21,620			29,318			27,026
Dividends received				25			12			20					17			14			6
Dividends received from equity accounted investments															723			1,250			710
Interest received				127			107			99					86			120			112
Interest paid				(715	)		(562	)		(520	)				(627	)		(915	)		(960	)
Income tax refunded				530			74			552					348			848			–
Income tax paid				(7,842	)		(6,025	)		(4,931	)				(3,225	)		(6,123	)		(6,921	)
Royalty related taxation paid				(1,015	)		(607	)		(576	)
Royalty-related taxation refunded															–			216			–
Royalty-related taxation paid															(1,148	)		(1,088	)		(956	)

Net operating cash flows from Continuing operations															17,794			23,640			19,017

Net operating cash flows from Discontinued operations															1,502			1,724			1,137

Net operating cash flows				24,384			30,080			16,890					19,296			25,364			20,154

Investing activities
Purchases of property, plant and equipment				(18,385	)		(11,147	)		(9,323	)				(11,947	)		(15,224	)		(21,104	)
Exploration expenditure				(2,452	)		(1,240	)		(1,333	)				(816	)		(986	)		(1,321	)
Exploration expenditure expensed and included in operating cash flows				1,602			981			1,030					670			698			1,026
Purchase of intangibles				(220	)		(211	)		(85	)				(98	)		(192	)		(380	)
Investment in financial assets				(341	)		(238	)		(152	)				(15	)		(1,168	)		(455	)
Investment in subsidiaries, operations and jointly controlled entities, net of their cash				(12,556	)		(4,807	)		(508	)
Payment on sale of operations				–			–			(156	)
Investment in equity accounted investments															(71	)		(44	)		(84	)

Cash outflows from investing activities				(32,352	)		(16,662	)		(10,527	)				(12,277	)		(16,916	)		(22,318	)
Proceeds from sale of property, plant and equipment				159			80			132					66			66			2,274
Proceeds from sale of intangibles															8			–			–
Proceeds from financial assets				151			118			34					445			904			221
Proceeds from sale or partial sale of subsidiaries, operations and jointly controlled entities, net of their cash				6			–			376
Proceeds from divestment of subsidiaries, operations and joint operations, net of their cash															256			812			502
Proceeds from sale or partial sale of equity accounted investments															–			–			1,700

Net investing cash flows from Continuing operations															(11,502	)		(15,134	)		(17,621	)

Net investing cash flows from Discontinued operations															(1,066	)		(700	)		(1,105	)

Cash disposed on demerger of South32															(586	)		–			–

Net investing cash flows				(32,036	)		(16,464	)		(9,985	)				(13,154	)		(15,834	)		(18,726	)

Financing activities
Proceeds from interest bearing liabilities				13,287			1,374			567					3,440			6,000			9,143
(Settlements)/Proceeds from debt related instruments				(180	)		222			103
(Settlements)/proceeds from debt related instruments															(33	)		37			14
Repayment of interest bearing liabilities				(4,280	)		(2,173	)		(1,155	)				(4,135	)		(7,048	)		(1,902	)
Proceeds from ordinary shares				21			32			12					9			14			12
Contributions from non-controlling interests				101			–			335					53			1,435			73
Purchase of shares by Employee Share Ownership Plan (ESOP) Trusts				(424	)		(469	)		(274	)				(355	)		(368	)		(445	)
Share buy-back – BHP Billiton Limited				–			(6,265	)		–
Share buy-back – BHP Billiton Plc				(83	)		(3,595	)		–
Dividends paid				(5,877	)		(5,054	)		(4,618	)				(6,498	)		(6,387	)		(6,167	)
Dividends paid to non-controlling interests				(56	)		(90	)		(277	)				(554	)		(119	)		(778	)

Net financing cash flows from Continuing operations															(8,073	)		(6,436	)		(50	)

Net financing cash flows from Discontinued operations															(203	)		(32	)		(148	)

Net financing cash flows				2,509			(16,018	)		(5,307	)				(8,276	)		(6,468	)		(198	)

Net (decrease)/increase in cash and cash equivalents				(5,143	)		(2,402	)		1,598
Net (decrease)/increase in cash and cash equivalents from Continuing operations															(1,781	)		2,070			1,346
Net increase/(decrease) in cash and cash equivalents from Discontinued operations															233			992			(116	)
Cash and cash equivalents, net of overdrafts, at the beginning of the financial year				10,080			12,455			10,831					8,752			5,667			4,454
Effect of foreign currency exchange rate changes on cash and cash equivalents				(56	)		27			26
Cash disposed on demerger of South32															(586	)		–			–
Foreign currency exchange rate changes on cash and cash equivalents															(5	)		23			(17	)

Cash and cash equivalents, net of overdrafts, at the end of the financial year		23		4,881			10,080			12,455			7		6,613			8,752			5,667

The accompanying notes form part of these financial statements.

~~9.1.5~~7.1.5 Consolidated Statement of Changes in Equity for the year ended 30 June ~~2012~~2015


	Attributable to members of the BHP Billiton Group																									Attributable to members of BHP Billiton Group
	Share capital – BHP Billiton Limited			Share capital – BHP Billiton Plc			Treasury shares				Reserves			Retained earnings			Total			Non controlling interests			Total equity			Share capital		Treasury shares		Reserves		Retained earnings		Total equity attributable to members of BHP Billiton Group		Non- controlling interests		Total equity
	US$M																																	Total equity attributable to members of BHP Billiton Group		Non- controlling interests		Total equity
Balance as at 1 July 2011		1,183			1,070			(623	)			2,001			53,131			56,762			993			57,755
US$M																										BHP Billiton Limited	BHP Billiton Plc	Treasury shares	Treasury shares	Reserves		Retained earnings	Reserves		Retained earnings		Total equity attributable to members of BHP Billiton Group		Non- controlling interests	Total equity
Balance as at 1 July 2014																										1,186	1,069						Reserves		Retained earnings		Total equity attributable to members of BHP Billiton Group		Non- controlling interests	Total equity
Total comprehensive income		–			–			–				(163	)		15,287			15,124			117			15,241		–	–	–	Treasury shares		(96)		1,865		1,769		973		2,742
Transactions with owners:
Proceeds from the issue of shares		3			–			–				–			–			3			–			3
BHP Billiton Plc shares cancelled		–			(1	)		83				1			(83	)		–			–			–
Shares cancelled																										–	(12)	501		12		(501)		–		–		–
Purchase of shares by ESOP Trusts		–			–			(424	)	��		–			–			(424	)		–			(424	)	–	–	(355)		–		–		(355)		–		(355)
Employee share awards exercised net of employee contributions		–			–			431				(189	)		(213	)		29			–			29
Employee share awards forfeited		–			–			–				(8	)		8			–			–			–
Accrued employee entitlement for unexercised awards		–			–			–				270			–			270			–			270
Dividends		–			–			–				–			(5,894	)		(5,894	)		(56	)		(5,950	)
Equity contributed		–			–			–				–			–			–			161			161

Balance as at 30 June 2012		1,186			1,069			(533	)			1,912			62,236			65,870			1,215			67,085

Balance as at 1 July 2010		1,227			1,116			(525	)			1,906			44,801			48,525			804			49,329
Total comprehensive income		–			–			–				(66	)		23,637			23,571			284			23,855
Transactions with owners:
BHP Billiton Limited shares bought back and cancelled		(44	)		–			–				–			(6,301	)		(6,345	)		–			(6,345	)
BHP Billiton Plc shares bought back		–			–			(3,678	)			–			–			(3,678	)		–			(3,678	)
BHP Billiton Plc shares cancelled		–			(46	)		3,595				46			(3,595	)		–			–			–
Purchase of shares by ESOP Trusts		–			–			(469	)			–			–			(469	)		–			(469	)
Employee share awards exercised net of employee contributions		–			–			454				(121	)		(294	)		39			–			39
Employee share awards exercised net of employee contributions and other adjustments																										–	–	363		(461)		101		3		–		3
Employee share awards forfeited		–			–			–				(9	)		9			–			–			–		–	–	–		(13)		13		–		–		–
Accrued employee entitlement for unexercised awards		–			–			–				266			–			266			–			266		–	–	–		247		–		247		–		247
Distribution to option holders		–			–			–				(21	)		–			(21	)		(17	)		(38	)	–	–	–		(1)		–		(1)		(1)		(2)
Dividends		–			–			–				–			(5,126	)		(5,126	)		(90	)		(5,216	)	–	–	–		–		(6,596)		(6,596)		(639)		(7,235)
In-specie dividend on demerger – refer to note 29 ‘Discontinued operations’																										–	–	–		–		(9,445)		(9,445)		–		(9,445)
Equity contributed		–			–			–				–			–			–			12			12		–	–	–		1		–		1		52		53
Transfers within equity on demerger																										–	–	–		(59)		59		–		–		–
Conversion of controlled entities to equity accounted investments																										–	–	2		–		–		2		(847)		(845)

Balance as at 30 June 2011		1,183			1,070			(623	)			2,001			53,131			56,762			993			57,755
Balance as at 30 June 2015																										1,186	1,057	(76)		2,557		60,044		64,768		5,777		70,545

   Attributable to members of the BHP Billiton Group
      Share
capital –
BHP
Billiton
Limited    Share
capital –
BHP
Billiton
Plc    Treasury
shares Reserves Retained
earnings Total Non
controlling
interests Total
equity
   US$M
Balance as at 1 July 2009
   1,227       1,116       (525 ) 1,305    36,831    39,954    757    40,711
Total comprehensive income
   –       –       –    197    12,738    12,935    294    13,229
Transactions with owners:

Purchase of shares by ESOP Trusts
   –       –       (274 ) –    –    (274 ) –    (274 )
Employee share awards exercised net of employee contributions
   –       –       274    (88 ) (178 ) 8    –    8
Employee share awards forfeited
   –       –       –    (28 ) 28    –    –    –
Accrued employee entitlement for unexercised awards
   –       –       –    170    –    170    –    170
Issue of share options to non-controlling interests
   –       –       –    43    –    43    16    59
Distribution to option holders
   –       –       –    (10 ) –    (10 ) (6 ) (16 )
Dividends
   –       –       –    –    (4,618 ) (4,618 ) (277 ) (4,895 )
Equity contributed
   –       –       –    317    –    317    20    337






Balance as at 30 June 2010
   1,227       1,116       (525 ) 1,906    44,801    48,525    804    49,329


	Attributable to members of BHP Billiton Group
	Share capital		Treasury shares	Reserves	Retained earnings	Total equity attributable to members of BHP Billiton Group	Non- controlling interests	Total equity
US$M	BHP Billiton Limited	BHP Billiton Plc	Treasury shares	Reserves	Retained earnings	Total equity attributable to members of BHP Billiton Group	Non- controlling interests	Total equity
Balance as at 1 July 2013	1,186	1,069	(540)	1,970	66,982	70,667	4,624	75,291
Total comprehensive income	–	–	–	(24)	13,901	13,877	1,392	15,269
Transactions with owners:
Purchase of shares by ESOP Trusts	–	–	(368)	–	–	(368)	–	(368)
Employee share awards exercised net of employee contributions	–	–	321	(221)	(91)	9	–	9
Employee share awards forfeited	–	–	–	(32)	32	–	–	–
Accrued employee entitlement for unexercised awards	–	–	–	247	–	247	–	247
Distribution to option holders	–	–	–	(2)	–	(2)	(2)	(4)
Dividends	–	–	–	–	(6,276)	(6,276)	(252)	(6,528)
Equity contributed	–	–	–	989	–	989	477	1,466

Balance as at 30 June 2014	1,186	1,069	(587)	2,927	74,548	79,143	6,239	85,382


Balance as at 1 July 2012	1,186	1,069	(533)	1,912	61,892	65,526	3,789	69,315
Total comprehensive income	–	–	–	77	11,309	11,386	1,599	12,985
Transactions with owners:
Purchase of shares by ESOP Trusts	–	–	(445)	–	–	(445)	–	(445)
Employee share awards exercised net of employee contributions	–	–	438	(243)	(178)	17	–	17
Employee share awards forfeited	–	–	–	(17)	17	–	–	–
Accrued employee entitlement for unexercised awards	–	–	–	210	–	210	–	210
Issue of share options to non-controlling interests	–	–	–	49	–	49	–	49
Dividends	–	–	–	–	(6,076)	(6,076)	(837)	(6,913)
Equity contributed	–	–	–	–	–	–	73	73
Divestment of equity accounted investment	–	–	–	(18)	18	–	–	–

Balance as at 30 June 2013	1,186	1,069	(540)	1,970	66,982	70,667	4,624	75,291

The accompanying notes form part of these financial statements.

~~9.1.6~~7.1.6 Notes to Financial Statements

Performance

1. Segment reporting

Business segments

The Group operates four Businesses aligned with the commodities which we extract and market, reflecting the structure used by the Group’s management to assess the performance of the Group.


Reportable segment		Principal activities

Petroleum and Potash		Exploration, development and production of oil and gas; Potashpre-development

Copper		Mining of copper, silver, lead, zinc, molybdenum, uranium and gold

Iron Ore		Mining of iron ore

Coal		Mining of metallurgical coal and thermal (energy) coal

Unless otherwise noted, the segment reporting information excludes Discontinued operations demerged with South32, being the Group’s former interests in its integrated Aluminium business, Energy Coal South Africa, Illawarra metallurgical coal, the Manganese business, the Cerro Matoso nickel operation and the Cannington silver-lead-zinc mine.

Group and unallocated items includes Group Functions, other unallocated operations including Nickel West (previously disclosed in the former Aluminium, Manganese and Nickel Business demerged with South32) and consolidation adjustments.

Exploration and technology activities are recognised within relevant segments.

It is the Group’s policy that inter-segment sales are made on a commercial basis.

   Petroleum
and Potash Copper Iron Ore Coal Group and
unallocated
items/
eliminations^(f) BHP
Billiton
Group
Year ended 30 June 2015

US$M

Revenue

Group production
   10,912    10,500    14,438    5,878    1,395    43,123
Third party products
   69    953    76    7    74    1,179
Rendering of services
   199    –    135    –    –    334
Inter-segment revenue
   267    –    104    –    (371 ) –


Total revenue^(a)
   11,447    11,453    14,753    5,885    1,098    44,636


Underlying EBITDA^(b)
   7,023    5,205    8,648    1,242    (266 ) 21,852


Depreciation and amortisation
   (4,744 ) (1,545 ) (1,698 ) (875 ) (296 ) (9,158 )
Impairment losses
   (477 ) (307 ) (18 ) (19 ) (7 ) (828 )


Underlying EBIT^(b)
   1,802    3,353    6,932    348    (569 ) 11,866


Comprising:

Group production
   1,801    3,155    6,571    347    (570 ) 11,304
Third party products
   1    23    (10 ) –    –    14
Share of operating profit of equity accounted investments
   –    175    371    1    1    548


Underlying EBIT^(b)
   1,802    3,353    6,932    348    (569 ) 11,866


Net finance costs^(c)
   (614 )
Exceptional items^(d)
   (3,196 )


Profit before taxation
   8,056


Capital expenditure
   5,359    3,822    1,930    729    107    11,947


Investments accounted for using the equity method^(e)
   287    1,422    1,044    956    3    3,712


Total assets^(e)
   43,183    26,340    26,808    14,182    14,067    124,580


Total liabilities^(e)
   6,896    2,639    2,854    2,413    39,233    54,035

   Petroleum
and Potash Copper Iron Ore Coal Group and
unallocated
items/
eliminations^(f) BHP
Billiton
Group
Year ended 30 June 2014

US$M

Revenue

Group production
   14,022    11,759    20,883    6,536    1,603    54,803
Third party products
   437    1,030    130    27    93    1,717
Rendering of services
   112    –    130    –    –    242
Inter-segment revenue
   262    –    213    –    (475 ) –


Total revenue^(a)
   14,833    12,789    21,356    6,563    1,221    56,762


Underlying EBITDA^(b)
   9,615    6,127    13,531    1,258    (239 ) 30,292


Depreciation and amortisation
   (3,951 ) (1,371 ) (1,464 ) (683 ) (247 ) (7,716 )
Impairment (losses)/reversals
   (377 ) (88 ) 35    –    (48 ) (478 )


Underlying EBIT^(b)
   5,287    4,668    12,102    575    (534 ) 22,098


Comprising:

Group production
   5,288    4,222    11,498    435    (545 ) 20,898
Third party products
   3    8    (3)    –    7    15
Share of operating profit of equity accounted investments
   (4 ) 438    607    140    4    1,185


Underlying EBIT^(b)
   5,287    4,668    12,102    575    (534 ) 22,098


Net finance costs^(c)
   (914 )
Exceptional items^(d)
   551


Profit before taxation
   21,735


Capital expenditure
   6,423    3,697    2,949    1,971    184    15,224


Investments accounted for using the equity method^(e)
   115    1,386    1,069    1,079    15    3,664


Total assets^(e)
   47,046    24,255    27,412    14,919    37,781    151,413


Total liabilities^(e)
   7,532    2,258    4,022    3,010    49,209    66,031

   Petroleum
and Potash Copper Iron Ore Coal Group and
unallocated
items/
eliminations^(f) BHP
Billiton
Group
Year ended 30 June 2013

US$M

Revenue

Group production
   12,951    12,472    18,331    6,566    2,098    52,418
Third party products
   175    700    86    8    254    1,223
Rendering of services
   98    –    121    –    –    219
Inter-segment revenue
   –    –    55    –    (55 ) –


Total revenue^(a)
   13,224    13,172    18,593    6,574    2,297    53,860


Underlying EBITDA^(b)
   8,910    6,239    12,113    950    (103 ) 28,109


Depreciation and amortisation
   (3,068 ) (1,157 ) (917 ) (526 ) (399 ) (6,067 )
Impairment losses
   (206 ) (49 ) (87 ) –    (20 ) (362 )


Underlying EBIT^(b)
   5,636    5,033    11,109    424    (522 ) 21,680


Comprising:

Group production
   5,616    4,575    10,565    281    (563 ) 20,474
Third party products
   11    3    31    2    17    64
Share of operating profit of equity accounted investments
   9    455    513    141    24    1,142


Underlying EBIT^(b)
   5,636    5,033    11,109    424    (522 ) 21,680


Net finance costs^(c)
   (1,149 )
Exceptional items^(d)
   297


Profit before taxation
   20,828


Capital expenditure
   7,675    3,891    5,979    3,136    423    21,104


Investments accounted for using the equity method^(e)
   130    1,351    1,044    1,150    –    3,675


Total assets^(e)
   44,383    22,214    25,877    13,589    33,115    139,178


Total liabilities^(e)
   6,858    2,346    3,751    2,957    47,975    63,887

^(a)	Revenue not attributable to reportable segments comprises the sale of freight and fuel to third parties, as well as revenues from unallocated operations described in footnote (f).

^(b)

Underlying EBIT is earnings before net finance costs, taxation expense, Discontinued operations and any exceptional items. Underlying EBIT is reported net of the Group’s share of net finance costs and taxation expense of equity accounted investments. Underlying EBITDA is Underlying EBIT before depreciation, impairments and amortisation.

^(c) Refer to note 16 ‘Net finance costs’.

^(d)	Refer to note 2 ‘Exceptional items’.

^(e)

Total segment assets and liabilities of Businesses represents operating assets net of operating liabilities including the carrying amount of equity accounted investments and predominantly excludes cash balances, interest bearing liabilities and deferred tax balances. The carrying value of investments accounted for using the equity method represents the balance of the Group’s investment in equity accounted investments, with no adjustment for any cash balances, interest bearing liabilities and deferred tax balances of the equity accounted investment.

^(f)

Includes other unallocated operations including Nickel West (previously disclosed in the former Aluminium, Manganese and Nickel Business) and consolidation adjustments. Total assets, total liabilities and investments accounted for using the equity method include Discontinued operation’s balances for the year ended 30 June 2014 and for the year ended 30 June 2013.

Geographical information


	Revenue by location of customer
	2015		2014		2013
	US$M		US$M		US$M
Australia		2,205		3,106		3,556
United Kingdom		230		979		1,244
Rest of Europe		2,235		2,457		2,843
China		16,337		21,873		18,759
Japan		4,863		6,305		7,143
India		1,680		2,009		1,692
South Korea		2,688		4,104		3,751
Rest of Asia		4,734		3,816		4,343
North America		7,990		9,607		7,984
South America		1,342		1,994		1,791
Southern Africa		10		–		67
Rest of world		322		512		687

		44,636		56,762		53,860


	Non-current assets by location of assets
	2015		2014		2013
	US$M		US$M		US$M
Australia		52,109		60,408		56,173
United Kingdom		172		516		436
North America		33,091		35,845		33,844
South America		15,831		15,926		13,695
Southern Africa		11		4,570		5,081
Rest of world		2,977		3,107		3,208
Unallocated assets^(a)		4,020		8,745		7,788

		108,211		129,117		120,225

^(a)	Unallocated assets comprise deferred tax assets and other financial assets.

Refer to note 43 ‘Significant accounting policies’ (d), (e), (g), (r), (x) and (y).

2. Exceptional items

Exceptional items are those items where their nature and amount is considered material to the financial statements. Such items included within the Group’s profit for the year from Continuing operations are detailed below. Exceptional items attributable to Discontinued operations are detailed in note 29 ‘Discontinued operations’.


Year ended 30 June 2015	Gross			Tax			Net
	US$M			US$M			US$M
Exceptional items by category
Impairment of Onshore US assets		(2,787	)		829			(1,958	)
Impairment of Nickel West assets		(409	)		119			(290	)
Repeal of Minerals Resource Rent Tax legislation^(a)		–			(698	)		(698	)

		(3,196	)		250			(2,946	)

^(a)	Includes amounts attributable to non-controlling interests of US$(12) million.

Impairment of Onshore US assets

The Group recognised an impairment charge of US$1,958 million (after tax benefit) in relation to its Onshore US assets. The gas focused Hawkville field accounts for the substantial majority of this charge reflecting its geological complexity, product mix, acreage relinquishments and amended development plans. The remainder relates to the impairment of goodwill associated with the Petrohawk acquisition.

Impairment of Nickel West assets

Repeal of Minerals Resource Rent Tax legislation

The legislation to repeal the Minerals Resource Rent Tax (MRRT) in Australia took effect on 30 September 2014. As a result, the Group derecognised a MRRT deferred tax asset of US$809 million and corresponding taxation charges of US$698 million related to Continuing operations and US$111 million related to Discontinued operations were recognised in the year ended 30 June 2015.


Year ended 30 June 2014	Gross		Tax			Net
	US$M		US$M			US$M
Exceptional items by category
Sale of Pinto Valley		551		(166	)		385

		551		(166	)		385

Sale of Pinto Valley

Year ended 30 June 2013
   Gross Tax Net
   US$M US$M US$M
Exceptional items by category

Sale of Yeelirrie uranium deposit
   420    –    420
Sale of Richards Bay Minerals
   1,212    (183 ) 1,029
Sale of diamonds business
   (97 ) (42 ) (139 )
Sale of East and West Browse Joint Ventures
   1,539    (188 ) 1,351
Impairment of Nickel West assets
   (1,698 ) 454    (1,244 )
Impairment of Permian Basin assets
   (266 ) 99    (167 )
Other impairments arising from capital project review
   (971 ) 291    (680 )
Newcastle steelworks rehabilitation
   158    (47 ) 111


   297    384    681

Exceptional items are classified by nature as follows:


Year ended 30 June 2013 US$M	Sale of assets		Impairment of goodwill and other assets			Restructuring costs			Closure and rehabilitation provisions released		Gross
Sale of Yeelirrie uranium deposit		420		–			–			–		420
Sale of Richards Bay Minerals		1,212		–			–			–		1,212
Sale of diamonds business		–		(97	)		–			–		(97	)
Sale of East and West Browse Joint Ventures		1,539		–			–			–		1,539
Impairment of Nickel West assets		–		(1,698	)		–			–		(1,698	)
Impairment of Permian Basin assets		–		(266	)		–			–		(266	)
Other impairments arising from capital project review		–		(863	)		(108	)		–		(971	)
Newcastle steelworks rehabilitation		–		–			–			158		158

		3,171		(2,924	)		(108	)		158		297

Sale of Yeelirrie uranium deposit

On 27 August 2012, the Group announced the sale of its wholly owned Yeelirrie uranium deposit and the transaction was completed on 19 December 2012. A gain on sale of US$420 million was recognised in the year ended 30 June 2013, while the associated tax expense was offset by the recognition of deferred tax benefits on available tax losses of US$126 million.

Sale of Richards Bay Minerals

On 7 September 2012, the Group announced it had completed the sale of its 37.76 per cent effective interest in Richards Bay Minerals. A gain on sale of US$1,029 million (after tax expense) was recognised in the year ended 30 June 2013.

Sale of diamonds business

On 13 November 2012, the Group announced the sale of its diamonds business, comprising its interests in the EKATI Diamond Mine and Diamond Marketing operations. The transaction was completed on 10 April 2013 for an aggregate cash consideration of US$553 million (after adjustments). An impairment charge of US$139 million (after tax expense) was recognised based on the final consideration.

Sale of East and West Browse Joint Ventures

On 12 December 2012, the Group signed a definitive agreement to sell its 8.33 per cent interest in the East Browse Joint Venture and 20 per cent interest in the West Browse Joint Venture. A gain on sale of US$1,539 million was recognised in the year ended 30 June 2013. The associated tax expense of US$462 million was partly offset by the recognition of deferred tax benefits on available tax losses of US$241 million and the derecognition of deferred tax liabilities of US$33 million. The transaction was completed on 7 June 2013.

Impairment of Nickel West assets

As a result of expected continued strength in the Australian dollar and weak nickel prices, the Group recognised an impairment charge of US$1,244 million (after tax benefit) in the year ended 30 June 2013.

Impairment of Permian Basin assets

An impairment charge of US$167 million (after tax benefit) was recognised as the performance of specific evaluation wells in certain areas of the Permian Basin (US) do not support economic development.

Other impairments arising from capital project review

In the year ended 30 June 2013, Western Australia Iron Ore (WAIO) refocused its attention on the capital-efficient expansion opportunity that exists within the Port Hedland inner harbour and all early works associated with the outer harbour development option were suspended. This revision to the WAIO development sequence and the change in status of other minor capital projects across the Group has resulted in the recognition of impairment charges of US$604 million (after tax benefit) and other restructuring costs of US$76 million (after tax benefit) in the year ended 30 June 2013.

Newcastle steelworks rehabilitation

The Group recognised a decrease of US$158 million (before tax expense) to its rehabilitation obligations in respect of former operations at the Newcastle steelworks (Australia). This followed the completion of the Hunter River Remediation Project and reaching agreement with the Environment Protection Authority in March 2013 regarding the necessary scope of work to repeal the Environmental Classification at Steel River.

3. Expenses


	2015			2014			2013
	US$M			US$M			US$M
Changes in inventories of finished goods and work in progress		139			(134	)		(8	)
Raw materials and consumables used		4,667			5,540			5,407
Employee benefits expense		4,971			5,413			5,578
External services (including transportation)^(a)		8,928			9,899			10,202
Third party commodity purchases		1,165			1,702			1,158
Net foreign exchange (gains)/losses		(469	)		168			(187	)
Research and development costs before crediting related grants		13			27			46
Fair value change on derivatives^(b)		124			(122	)		63
Impairment of available for sale financial assets		15			6			1
Reversal of previously impaired financial assets		(6	)		–			–
Government royalties paid and payable		1,708			2,412			2,179
Depreciation and amortisation expense		9,158			7,716			6,067
Exploration and evaluation expenditure incurred and expensed in the current period		670			698			1,026
Exploration and evaluation expenditure previously capitalised, written off as unsuccessful or abandoned^(c)		48			167			1,099
Reversal of previously written off capitalised exploration and evaluation expenditure		(20	)		(56	)		–
Impairment of property, plant and equipment^(d)		3,449			344			2,246
Reversal of previously impaired property, plant and equipment		(4	)		–			(67	)
Impairment of goodwill and other intangible assets^(e)		542			17			7
Operating lease rentals		636			665			679
All other operating expenses^(f)		1,276			2,061			1,333

Total expenses		37,010			36,523			36,829


	2015			2014			2013
	US$M			US$M			US$M
Aggregate employee benefits expense
Wages, salaries and redundancies		4,537			4,799			5,195
Employee share awards^(g)		203			214			188
Social security costs		2			3			2

Pension and other post-retirement obligations		358			529			377

		5,100			5,545			5,762
Less employee benefits expense classified as exploration and evaluation expenditure above		(129	)		(132	)		(184	)

Employee benefits expense		4,971			5,413			5,578

^(a)	Includes exceptional items of US$ nil (2014: US$ nil; 2013: US$96 million). Refer to note 2 ‘Exceptional items’.

^(b)	Fair value change on derivatives include realised losses of US$107 million (2014: US$31 million realised gains; 2013: US$28 million realised gains) and unrealised losses of US$17 million (2014: US$92 million unrealised gain; 2013: US$92 million unrealised losses).

^(c) Includes exceptional items of US$ nil (2014: US$ nil; 2013: US$797 million). Refer to note 2 ‘Exceptional items’.

^(d)	Includes exceptional items of US$2,696 million (2014: US$ nil; 2013: US$2,120 million). Refer to note 2 ‘Exceptional items’.

^(e)	Includes exceptional items of US$500 million (2014: US$ nil; 2013: US$7 million). Refer to note 2 ‘Exceptional items’.

^(f)	Includes exceptional items of US$ nil (2014: US$ nil; 2013: decrease of US$158 million). Refer to note 2 ‘Exceptional items’.

^(g)	Employee share awards expense is US$202.955 million (2014: US$213.841 million; 2013: US$188.413 million).

Refer to notes 42 ‘Functional and presentation currency’ and 43 ‘Significant accounting policies’ (e), (f), (g), (h), (s), (t) and (v).

4. Income tax expense


	2015			2014			2013
	US$M			US$M			US$M
Total taxation expense comprises:
Current tax expense		3,168			6,353			6,816
Deferred tax expense/(benefit)		498			427			(120	)

		3,666			6,780			6,696

Total taxation (benefit)/expense attributed to geographical jurisdictions:
United Kingdom		(38	)		(43	)		83
Australia		3,548			4,712			4,394
Rest of world		156			2,111			2,219

		3,666			6,780			6,696

   2015 2014 2013
   % US$M % US$M % US$M
Factors affecting income tax expense for the period

Income tax expense differs to the standard rate of corporation tax as follows:

Profit before taxation
   8,056    21,735    20,828


Tax on profit at standard rate of 30 per cent
   30.0    2,417    30.0    6,521    30.0    6,248


Tax on remitted and unremitted foreign earnings
   0.7    58    0.8    169    0.5    102
Non-deductible depreciation, amortisation and exploration expenditure^(a)
   0.4    34    0.1    46    0.6    117
Non-tax-effected operating losses and capital gains
   1.8    143    0.1    11    (1.1 ) (221 )
Tax rate changes
   1.7    137    0.1    20    0.4    90
Tax rate differential on foreign income
   (3.7 ) (301 ) 0.2    49    (0.3 ) (56 )
Exchange variations and other translation adjustments
   4.2    339    (0.2 ) (34 ) 0.6    134
Initial recognition of tax assets^(b)
   (2.6 ) (212 ) (0.2 ) (45 ) (1.7 ) (370 )
Amounts under/(over) provided in prior years
   1.7    138    (0.7 ) (147 ) (0.1 ) (11 )
Investment and development allowance
   (2.4 ) (190 ) (1.0 ) (223 ) (1.2 ) (257 )
Tax effect of share of profits of equity accounted investments ^(c)
   (2.0 ) (164 ) (1.6 ) (356 ) (1.6 ) (342 )
Other
   4.5    363    1.2    255    1.0    212


Income tax expense
   34.3    2,762    28.8    6,266    27.1    5,646


Royalty-related taxation (net of income tax benefit)^(d)
   11.2    904    2.4    514    5.0    1,050


Total taxation expense
   45.5    3,666    31.2    6,780    32.1    6,696

^(a)	Includes exceptional expense of US$ nil (2014: US$ nil; 2013: US$55 million). Refer to note 2 ‘Exceptional items’.

^(b)	Includes exceptional benefit of US$ nil (2014: US$ nil; 2013: US$367 million). Refer to note 2 ‘Exceptional items’.

^(c)	The share of profits of equity accounted investments is net of income tax. This item removes the prima facie tax effect on such profits.

^(d)	Includes exceptional expense of US$698 million (2014: US$ nil; 2013: benefit of US$33 million). Refer to note 2 ‘Exceptional items’.

Income tax recognised in other comprehensive income is as follows:


	2015			2014			2013
	US$M			US$M			US$M
Income tax effect of:
Items that may be reclassified subsequently to the income statement:
Available for sale investments:
Net valuation losses taken to equity		1			2			13
Net valuation gains transferred to the income statement		34			2			–
Cash flow hedges:
Losses/gains taken to equity		539			(204	)		(67	)
Losses/gains transferred to the income statement		(545	)		203			(22	)

Income tax credit/(charge) relating to items that may be reclassified subsequently to the income statement		29			3			(76	)

Items that will not be reclassified to the income statement:
Remeasurement losses/gains on pension and medical schemes		14			(6	)		(23	)
Employee share awards transferred to retained earnings on exercise		(31	)		18			49
Net accrued employee entitlement for share awards		–			–			(42	)

Income tax (charge)/credit relating to items that will not be reclassified to the income statement		(17	)		12			(16	)

Total income tax credit/(charge) relating to components of other comprehensive income^(a)		12			15			(92	)

^(a)

Included within total income tax relating to components of other comprehensive income is US$43 million relating to deferred taxes, of which US$9 million relates to Continuing operations and US$34 million relates to Discontinued operations, and US$(31) million relating to current taxes of Continuing operations (2014: US$(1) million and US$16 million; 2013: US$(139) million and US$47 million).

Refer to note 43 ‘Significant accounting policies’ (i).

5. Other income


	2015			2014			2013
	US$M			US$M			US$M
Dividend income		17			14			4
Royalties		13			18			35
(Losses)/gains on sale of property, plant and equipment^(a)		(7	)		(55	)		1,952
Gains on sale of investments		1			6			12
Gains on divestment of equity accounted investments^(b)		–			–			1,212
Gains on divestment of subsidiaries and operations^(c)		15			673			–
Commission income		54			85			93
Insurance recoveries		–			41			16
Other income^(d)		403			443			480

Total other income		496			1,225			3,804

^(a)	Includes exceptional items of US$ nil (2014: US$ nil; 2013: US$1,947 million). Refer to note 2 ‘Exceptional items’.

^(b) Includes exceptional items of US$ nil (2014: US$ nil; 2013: US$1,212 million). Refer to note 2 ‘Exceptional items’.

^(c)	Includes exceptional items of US$ nil (2014: US$551 million; 2013: US$ nil). Refer to note 2 ‘Exceptional items’.

^(d)	Other income is derived from transactions outside the course of the Group’s ordinary activities, such as management fees from non-controlling interests and joint venture arrangements.

6. Earnings per share


	2015
	Continuing operations		Discontinued operations			Total
Basic earnings/(losses) per ordinary share (US cents)		65.5		(29.6	)		35.9
Diluted earnings/(losses) per ordinary share (US cents)		65.3		(29.5	)		35.8
Basic earnings/(losses) per American Depositary Share (US cents)^(a)		131.0		(59.2	)		71.8
Diluted earnings/(losses) per American Depositary Share (US cents)^(a)		130.6		(59.0	)		71.6
Basic earnings/(losses) (US$M)		3,483		(1,573	)		1,910
Diluted earnings/(losses) (US$M)		3,483		(1,573	)		1,910


	2014
	Continuing operations		Discontinued operations		Total
Basic earnings per ordinary share (US cents)		256.5		3.5		260.0
Diluted earnings per ordinary share (US cents)		255.7		3.4		259.1
Basic earnings per American Depositary Share (US cents)^(a)		513.0		7.0		520.0
Diluted earnings per American Depositary Share (US cents)^(a)		511.4		6.8		518.2
Basic earnings (US$M)		13,648		184		13,832
Diluted earnings (US$M)		13,648		184		13,832


	2013
	Continuing operations		Discontinued operations			Total
Basic earnings/(losses) per ordinary share (US cents)		238.6		(27.7	)		210.9
Diluted earnings/(losses) per ordinary share (US cents)		237.8		(27.6	)		210.2
Basic earnings/(losses) per American Depositary Share (US cents) ^(a)		477.2		(55.4	)		421.8
Diluted earnings/(losses) per American Depositary Share (US cents) ^(a)		475.6		(55.2	)		420.4
Basic earnings/(losses) (US$M)		12,698		(1,475	)		11,223
Diluted earnings/(losses) (US$M)		12,698		(1,475	)		11,223

The weighted average number of shares used for the purposes of calculating diluted earnings per share reconciles to the number used to calculate basic earnings per share as follows:


Weighted average number of shares	2015		2014		2013
	Million		Million		Million
Basic earnings per ordinary share denominator ^(b)		5,318		5,321		5,322
Shares and options contingently issuable under employee share ownership plans ^(c)		15		17		18

Diluted earnings per ordinary share denominator^(d)		5,333		5,338		5,340

^(a)	Each American Depositary Share represents two ordinary shares.

^(b)

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 of BHP Billiton Limited and BHP Billiton Plc outstanding during the period after deduction of the number of shares held by the Billiton Employee Share Ownership Plan Trust and the BHP Billiton Limited Employee Equity Trust.

^(c)	Included in the calculation of fully diluted earnings per share are shares subject to certain conditions issuable under Employee Share Ownership Plans.

^(d)	Diluted earnings per share calculation excludes 160,116 of instruments (2014: 183,181; 2013: 357,498) which are considered antidilutive.

Working capital

7. Cash and cash equivalents

For the purpose of the consolidated cash flow statement, cash equivalents include highly liquid investments that are readily convertible to cash and with a maturity of less than 90 days, bank overdrafts and interest bearing liabilities at call.


	2015			2014			2013
	US$M			US$M			US$M
Cash and cash equivalents comprise:
Cash		931			1,726			2,521
Short-term deposits		5,822			7,077			3,156

Total cash and cash equivalents ^{(a) (b) (c)}		6,753			8,803			5,677
Bank overdrafts and short-term borrowings – refer to note 15 ‘Interest bearing liabilities’		(140	)		(51	)		(10	)

Total cash and cash equivalents, net of overdrafts		6,613			8,752			5,667

^(a)	Cash and cash equivalents include US$493 million (2014: US$738 million; 2013: US$674 million) which is restricted by legal or contractual arrangements.

^(b)	Cash and cash equivalents include US$50 million (2014: US$600 million; 2013: US$794 million), which is subject to restrictions imposed by governments where approval is required to repatriate cash out of a country.

^(c)

Cash and cash equivalents include US$6,553 million denominated in USD, US$58 million denominated in CAD, US$33 million denominated in GBP, US$17 million denominated in AUD and US$92 million denominated in other currencies (2014: US$8,360 million denominated in USD, US$48 million denominated in CAD, US$26 million denominated in GBP, US$100 million denominated in AUD and US$269 million denominated in other currencies; 2013: US$5,205 million denominated in USD, US$71 million denominated in CAD, US$18 million denominated in GBP, US$125 million denominated in AUD and US$258 million denominated in other currencies).

8. Trade and other receivables


	2015			2014
	US$M			US$M
Current
Trade receivables		2,988			4,735
Provision for doubtful debts		(6	)		(115	)

Total trade receivables		2,982			4,620
Employee Share Plan loans^(a)		–			4
Loans to equity accounted investments		104			284
Interest bearing loans receivable		–			3
Other receivables		1,235			1,830

Total current receivables^(b)		4,321			6,741

Non-current
Employee Share Plan loans^(a)		1			2
Loans to equity accounted investments		891			921
Interest bearing loans receivable		–			334
Other receivables		607			610

Total non-current receivables^(b)		1,499			1,867


	2015			2014
	US$M			US$M
Movement in provision for doubtful debts
At the beginning of the financial year		115			116
Credit for the year:
Released to the income statement		–			(1	)
Utilisation		(109	)		–

At the end of the financial year		6			115

^(a)

Under the terms of the BHP Billiton Limited Employee Share Plan, shares have been issued to employees for subscription at the weighted average market price less a discount not exceeding five per cent. Interest free employee loans are full recourse and are available to fund the purchase of such shares for a period of up to 20 years, repayable by application of dividends or an equivalent amount. Refer to note 25 ‘Employee share ownership plans’.

^(b)	Disclosures relating to receivables from related parties are set out in note 33 ‘Related party transactions’.

9. Trade and other payables


	2015		2014
	US$M		US$M
Current
Trade creditors		4,857		6,973
Other creditors		2,532		3,172

Total current payables		7,389		10,145

Non-current
Other creditors		29		113

Total non-current payables		29		113

10. Inventories


		2015		2014
		US$M		US$M
Current
Raw materials and consumables	– at net realisable value^(a)		–		39
	– at cost		1,453		2,161

			1,453		2,200

Work in progress	– at net realisable value^(a)		260		185
	– at cost		1,913		2,269

			2,173		2,454

Finished goods	– at net realisable value^(a)		29		239
	– at cost		637		1,120

			666		1,359

Total current inventories			4,292		6,013

Non-current
Raw materials and consumables	– at net realisable value^(a)		–		–
	– at cost		230		225

			230		225

Work in progress	– at net realisable value^(a)		6		4
	– at cost		118		130

			124		134

Finished goods	– at net realisable value^(a)		33		–
	– at cost		79		104

			112		104

Total non-current inventories			466		463

^(a)	US$182 million of inventory write-downs were recognised during the year (2014: US$95 million; 2013: US$62 million). Inventory write-downs of US$42 million made in previous periods were reversed during the year (2014: US$69 million; 2013: US$18 million).

Refer to note 43 ‘Significant accounting policies’ (j).

Resource assets

11. Property, plant and equipment


Year ended 30 June 2015	Land and buildings			Plant and equipment			Other mineral assets			Assets under construction			Exploration and evaluation			Total
	US$M			US$M			US$M			US$M			US$M			US$M
Cost
At the beginning of the financial year		13,660			100,291			32,822			15,326			2,819			164,918
Additions^(a)		–			(563	)		921			10,788			215			11,361
Disposals		(136	)		(1,520	)		(85	)		–			(145	)		(1,886	)
Divestment and demerger of subsidiaries and operations		(2,811	)		(17,104	)		(3,172	)		(1,001	)		(40	)		(24,128	)
Exchange variations taken to reserve		–			(66	)		–			–			–			(66	)
Transfers and other movements		976			9,533			328			(10,611	)		(219	)		7

At the end of the financial year		11,689			90,571			30,814			14,502			2,630			150,206

Accumulated depreciation and impairments
At the beginning of the financial year		3,679			42,865			8,112			15			1,460			56,131
Charge for the year		659			7,443			1,607			–			1			9,710
Impairments for the year		76			2,636			1,328			–			20			4,060
Reversal of impairments		–			(4	)		–			–			(20	)		(24	)
Disposals		(126	)		(1,440	)		(85	)		–			(144	)		(1,795	)
Divestment and demerger of subsidiaries and operations		(1,352	)		(9,401	)		(1,608	)		–			–			(12,361	)
Exchange variations taken to reserve		–			(58	)		–			–			–			(58	)
Transfers and other movements		(9	)		169			391			(15	)		(65	)		471

At the end of the financial year		2,927			42,210			9,745			–			1,252			56,134

Total property, plant and equipment		8,762			48,361			21,069			14,502			1,378			94,072

Year ended 30 June 2014
Land and
buildings Plant and
equipment Other
mineral
assets Assets
under
construction Exploration
and
evaluation Total
US$M US$M US$M US$M US$M US$M
Cost

At the beginning of the financial year
10,446    81,304    32,117    23,560    2,823    150,250
Additions^(a)
5    2,564    1,424    14,028    99    18,120
Disposals
(78 ) (521 ) (253 ) –    (80 ) (932 )
Divestment of subsidiaries and operations
(9 ) (1,882 ) (247 ) –    –    (2,138 )
Transferred to assets held for sale
(2 ) (27 ) –    24    –    (5 )
Exchange variations taken to reserve
–    4    –    2    –    6
Transfers and other movements
3,298    18,849    (219 ) (22,288 ) (23 ) (383 )

At the end of the financial year
13,660    100,291    32,822    15,326    2,819    164,918

Accumulated depreciation and impairments
At the beginning of the financial year
2,950    37,138    8,171    –    1,426    49,685
Charge for the year
584    6,653    1,203    –    3    8,443
Impairments for the year
153    397    73    –    167    790
Reversal of impairments
–    –    –    –    (56 ) (56 )
Disposals
(14 ) (459 ) (230 ) –    (80 ) (783 )
Divestment of subsidiaries and operations
–    (1,699 ) �� (215 ) –    –    (1,914 )
Exchange variations taken to reserve
–    7    –    –    –    7
Transfers and other movements
6    828    (890 ) 15    –    (41 )

At the end of the financial year
3,679    42,865    8,112    15    1,460    56,131

Total property, plant and equipment
9,981    57,426    24,710    15,311    1,359    108,787

^(a)	Includes net foreign exchange gains/losses related to the closure and rehabilitation provisions. Refer to note 14 ‘Closure and rehabilitation provisions’.

Refer to note 43 ‘Significant accounting policies’ (e), (f), (g), (h), (k), (l), (m) and (n).

12. Intangible assets


	2015									2014
	Goodwill			Other intangibles			Total			Goodwill			Other intangibles			Total
	US$M			US$M			US$M			US$M			US$M			US$M
Cost
At the beginning of the financial year		4,034			2,517			6,551			4,105			2,246			6,351
Additions		–			82			82			–			291			291
Disposals		–			(123	)		(123	)		–			(3	)		(3	)
Divestment and demerger of subsidiaries and operations		(218	)		(312	)		(530	)		(23	)		–			(23	)
Impairments for the year		(542	)		–			(542	)		(48	)		–			(48	)
Transfers and other movements		–			98			98			–			(17	)		(17	)

At the end of the financial year		3,274			2,262			5,536			4,034			2,517			6,551

Accumulated amortisation and impairments
At the beginning of the financial year		–			1,112			1,112			–			855			855
Disposals		–			(115	)		(115	)		–			(3	)		(3	)
Divestment and demerger of subsidiaries and operations		–			(122	)		(122	)		–			–			–
Charge for the year		–			243			243			–			258			258
Impairments for the year		–			28			28			–			17			17
Transfers and other movements		–			98			98			–			(15	)		(15	)

At the end of the financial year		–			1,244			1,244			–			1,112			1,112

Total intangible assets		3,274			1,018			4,292			4,034			1,405			5,439

The carrying amount of goodwill has been allocated to the cash-generating units (CGUs), or groups of CGUs, as follows:


Cash-generating units	2015		2014
	US$M		US$M
Onshore US		3,026		3,568
Other		248		466

		3,274		4,034

Impairment testing of goodwill

For the purpose of impairment testing, goodwill has been allocated to CGUs, or groups of CGUs, that are expected to benefit from the synergies of previous business combinations and which represent the level at which management will monitor and manage the goodwill.

Onshore US

The Onshore US group of CGUs (Onshore US) comprises the Permian, Haynesville, Fayetteville, Black Hawk and Hawkville CGUs. Onshore US comprises the natural gas and liquid reserves and resources, production wells and associated infrastructure including gathering systems and processing facilities in the Permian, Haynesville, Black Hawk and the Hawkville areas in Texas and Louisiana (US) and the Fayetteville area in Arkansas (US). Onshore US is part of the Petroleum and Potash reportable segment.

The recoverable amount of Onshore US was determined based on fair value less costs of disposal (FVLCD). FVLCD was determined as the present value of the estimated future cash flows (expressed in real terms) expected to arise from the continued use of the assets (life of asset), including any expansion prospects, and its eventual disposal, using assumptions that an independent market participant may take into account. These cash flows were discounted using a real post-tax discount rate that reflected current market assessments of the time value of money and the risks specific to Onshore US. The fair value measurement is categorised as a Level 3 fair value based on the inputs used in the valuation (refer to note 23 ‘Financial risk management’ for explanation of the valuation hierarchy).

The determination of FVLCD was most sensitive to the following assumptions:

Production volumes

Crude oil prices and natural gas prices

Discount rate

Production volumes – estimated production volumes were based on detailed data for the fields and took into account development plans for the fields established by management as part of the long-term planning process. Production volumes are dependent on variables, such as the recoverable quantities of hydrocarbons, the production profile of the hydrocarbons, the cost of the development of the infrastructure necessary to recover the hydrocarbons, the production costs and the contractual duration of the production leases. As each producing field has specific reservoir characteristics and economic circumstances, the cash flows of the fields were computed using appropriate individual economic models and key assumptions established by management. The production profiles used were consistent with the resource volumes approved as part of the Group’s process for the estimation of proved reserves and total resources.

Crude oil and natural gas prices – key assumptions for oil and gas prices were derived from forward price curves and long-term views of global supply and demand, building upon past experience of the industry and consistent with external sources. These prices were adjusted to arrive at appropriate consistent price assumptions for different qualities of oil and gas, or where appropriate, contracted oil and gas prices were applied.

The long-term crude oil and natural gas prices used in the FVLCD determinations were either lower or within the following range of prices published by market commentators:


	2015		2014
Crude oil price^(a) (US$/bbl)		57.00 – 86.00		88.00 – 107.79
Natural gas price (US$/MMBtu)		3.54 – 5.80		3.84 – 5.84

^(a)	West Texas Intermediate (WTI).

Discount rate – in arriving at the FVLCD, a real post-tax discount rate of 5.5 per cent (2014: 6.0 per cent) was applied to the post-tax cash flows expressed in real terms. This discount rate was derived from the Group’s post-tax weighted average cost of capital (WACC), with appropriate adjustments made to reflect the risks specific to the CGU.

Year ended 30 June 2015

During the period the Group disposed of its interest in conventional petroleum assets in North Louisiana and unconventional gas assets in the Pecos field in the Delaware Basin resulting in an impairment to Onshore US goodwill of US$42 million. At the time of the annual goodwill impairment test the Onshore US goodwill was US$3,526 million (2014: US$3,568 million).

Onshore US was tested for impairment after testing each of the individual CGUs that it comprises. With the exception of Hawkville, the impairment tests for the individual CGUs indicated that no impairments or reversal of prior impairments were required. In prior periods Black Hawk and Hawkville have been tested for impairment as a single CGU, Eagle Ford. As a result of structural, operational, and marketing changes completed in FY2015 management has determined that Black Hawk and Hawkville represent separate CGUs. An impairment of US$2,287 million has been recognised in relation to Hawkville and allocated to property, plant and equipment. Refer to note 2 ‘Exceptional items’ for further discussion.

The impairment test of Onshore US was performed after the Hawkville assets were written down to their recoverable amount. The recoverable amount of Onshore US was determined to be US$19,793 million and resulted in a goodwill impairment loss of US$500 million. Refer to note 2 ‘Exceptional items’ for further discussion.

Following the recognition of the goodwill impairment loss, the recoverable amount of Onshore US is equal to the carrying amount. Accordingly, any adverse movement in a key assumption would lead to further impairment.

Year ended 30 June 2014

At the time of the annual goodwill impairment test the Onshore US goodwill was US$3,568 million.

Onshore US was tested for impairment after testing each of the individual CGUs that it comprises. The impairment tests for individual CGUs indicated that no impairments or reversal of prior impairments were required. The impairment test of the Onshore US group of CGUs indicated that the recoverable amount of the Onshore US group of CGUs exceeded its carrying amount by US$598 million and no impairment was required.

Other

Goodwill held by other CGUs is US$248 million (2014: US$466 million). As a result of the South32 demerger US$218 million of goodwill relating to the South32 businesses was derecognised. The remaining goodwill represents less than one per cent of net assets at 30 June 2015 (2014: less than one per cent). The goodwill has been allocated across a number of CGUs in different reportable segments, with no CGU accounting for more than US$190 million of total goodwill.

Refer to note 43 ‘Significant accounting policies’ (e), (g), (o) and (p).

13. Deferred tax balances

The movement for the year in the Group’s net deferred tax position is as follows:


	2015			2014			2013
	US$M			US$M			US$M
Net deferred tax liability
At the beginning of the financial year		(670	)		(243	)		(611	)
Income tax (charge)/credit recorded in the income statement		(864	)		(426	)		493
Income tax credit/(charge) recorded directly in equity		9			(1	)		(139	)
Transferred to liabilities held for sale		–			–			60
Exchange variations and other movements^(a)		(156	)		–			(46	)

At the end of the financial year		(1,681	)		(670	)		(243	)

^(a)	Includes deferred tax assets divested as part of the demerger of South32. Refer to note 29 ‘Discontinued operations’.

The composition of the Group’s net deferred tax asset and liability recognised in the balance sheet and the deferred tax expense charged/(credited) to the income statement is as follows:


	Deferred tax assets						Deferred tax liabilities						Charged/(credited) to the income statement
	2015			2014			2015			2014			2015			2014			2013
	US$M			US$M			US$M			US$M			US$M			US$M			US$M
Type of temporary difference
Depreciation		(1,101	)		(514	)		5,689			6,375			204			495			532
Exploration expenditure		563			669			(91	)		(102	)		117			(4	)		(14	)
Employee benefits		279			389			(120	)		(173	)		58			(32	)		23
Closure and rehabilitation		1,383			1,658			(584	)		(794	)		41			(353	)		(72	)
Resource rent tax relating to MRRT and PRRT		679			1,580			1,931			1,907			925			(506	)		484
Other provisions		143			433			(12	)		(59	)		103			(411	)		34
Deferred income		(51	)		(32	)		(13	)		(11	)		17			12			(74	)
Deferred charges		(419	)		(575	)		362			307			66			226			302
Investments, including foreign tax credits		838			1,906			639			1,765			(58	)		298			133
Foreign exchange gains and losses		(383	)		(261	)		160			76			210			(158	)		(239	)
Non-tax-depreciable fair value adjustments, revaluations and mineral rights		(13	)		(5	)		4			89			277			8			(25	)
Tax-effected losses		1,069			1,159			(3,129	)		(2,192	)		(945	)		605			(1,588	)
Other		(126	)		(11	)		(294	)		(122	)		(151	)		246			11

Total		2,861			6,396			4,542			7,066			864			426			(493	)

The composition of the Group’s unrecognised deferred tax assets and liabilities is as follows:


	2015		2014
	US$M		US$M
Unrecognised deferred tax assets
Tax losses and tax credits		2,006		1,572
Investments in subsidiaries		1,130		–
Deductible temporary differences relating to MRRT and PRRT		2,014		19,528
Mineral rights		1,958		2,727
Other deductible temporary differences		373		668

Total unrecognised deferred tax assets		7,481		24,495

Unrecognised deferred tax liabilities
Taxable temporary differences relating to unrecognised deferred tax asset for MRRT and PRRT		604		5,858
Investments in subsidiaries		2,553		2,153

Total unrecognised deferred tax liabilities		3,157		8,011

Tax losses

At 30 June 2015, the Group had income and capital tax losses with a tax benefit of US$1,501 million (2014: US$1,053 million) which are not recognised as deferred tax assets. The Group recognises the benefit of tax losses only to the extent of anticipated future taxable income or gains in relevant jurisdictions. The gross amount of tax losses carried forward that have not been tax effected expire as follows:


Year of expiry	Australia		UK		Rest of world		Total
	US$M		US$M		US$M		US$M
Income tax losses
Later than one year and not later than two years		–		–		4		4
Later than two years and not later than five years		–		–		2,921		2,921
Later than five years and not later than ten years		–		–		20		20
Later than ten years and not later than twenty years		–		–		360		360
Unlimited		–		215		410		625

		–		215		3,715		3,930

Capital tax losses
Later than two years and not later than five years		–		–		246		246
Unlimited		3,211		26		22		3,259

Gross amount of tax losses not recognised		3,211		241		3,983		7,435

Tax effect of total losses not recognised		963		48		490		1,501

Tax credits

At 30 June 2015, the Group had US$505 million of tax credits that have not been recognised (2014: US$519 million). Of the US$505 million of tax credits, US$371 million expires later than five years and not later than ten years, US$39 million expires later than ten years and not later than twenty years. The remainder of the tax credits do not have an expiration date.

Temporary differences associated with investments in subsidiaries

At 30 June 2015, deferred tax assets of US$1,130 million (2014: US$ nil) and deferred tax liabilities of US$2,553 million (2014: US$2,153 million) associated with undistributed earnings of subsidiaries have not been recognised because the Group is able to control the timing of the reversal of the temporary differences and it is not probable that such differences will reverse in the foreseeable future.

Temporary differences relating to MRRT and PRRT

At 30 June 2015, the Group had US$2,014 million of unrecognised deferred tax assets relating to Australian PRRT (2014: US$19,528 million relating to Australian PRRT and MRRT), with a corresponding unrecognised deferred tax liability for income tax purposes of US$604 million (2014: US$5,858 million). Recognition of a deferred tax asset for PRRT depends on benefits expected to be obtained from the deduction against PRRT liabilities. The MRRT legislation in Australia was repealed in September 2014.

Mineral rights

At 30 June 2015, the Group had deductible temporary differences relating to Mineral rights for which deferred tax assets of US$1,958 million (2014: US$2,727 million) have not been recognised because it is not probable that future capital gains will be available, against which the Group can utilise the benefits. The deductible temporary differences do not expire under current tax legislation.

Other deductible temporary differences

At 30 June 2015, the Group had deductible temporary differences for which deferred tax assets of US$373 million (2014: US$668 million) have not been recognised because it is not probable that future taxable profits will be available against which the Group can utilise the benefits. The deductible temporary differences do not expire under current tax legislation.

Refer to note 43 ‘Significant accounting policies’ (i).

14. Closure and rehabilitation provisions


	2015		2014
	US$M		US$M
Current
Closure and rehabilitation^(a)		193		368

Total current provisions		193		368

Non-current
Closure and rehabilitation^(a)		6,508		8,927

Total non-current provisions		6,508		8,927

   2015 2014
   US$M US$M
Movement in closure and rehabilitation provisions

At the beginning of the financial year
   9,295    7,617
Amounts capitalised^(b)
   (733 ) 1,194
Charge/(credit) for the year:

Underlying
   74    413
Discounting
   442    465
Exchange variations
   (104 ) (17 )
Released during the year
   (93 ) (35 )
Exchange variations taken to reserve
   (7 ) 10
Utilisation
   (180 ) (219 )
Divestment and demerger of subsidiaries and operations
   (1,993 ) (145 )
Transferred to liabilities held for sale
   –    (2 )
Transfers and other movements
   –    14


At the end of the financial year
   6,701    9,295

^(a)	Total closure and rehabilitation provisions include provisions for closed sites of US$1,046 million (2014: US$1,514 million).

^(b)	Includes net foreign exchange gains of US$1,009 million (2014: net foreign exchange losses of US$38 million) capitalised to property, plant and equipment. Refer to note 11 ‘Property, plant and equipment’.

Refer to note 43 ‘Significant accounting policies’ (q).

Capital structure

15. Interest bearing liabilities


	2015		2014
	US$M		US$M
Current
Bank loans^(a)		664		81
Notes and debentures^(a)		2,205		4,002
Finance leases		94		93
Other		98		35
Bank overdrafts and short-term borrowings		140		51

Total current interest bearing liabilities^(b)		3,201		4,262

Non-current
Bank loans^(a)		931		1,381
Notes and debentures^(a)		26,520		27,245
Finance leases		344		1,291
Other^(a)		174		410

Total non-current interest bearing liabilities^(b)		27,969		30,327

^(a)

Balance for 2014 includes US$75 million share of bank loans and other borrowings arranged by joint operations to finance the joint operations. While the Group chose to finance the joint operations directly and not to participate in the external borrowing programs arranged by the joint operations, it recognises its share of those borrowings in accordance with the terms of each arrangement, which are usually in proportion to

the Group’s interest in the joint operation. A corresponding amount is recognised in interest bearing loans receivable. Refer to note 8 ‘Trade and other receivables’, reflecting the direct funding of the Group’s contribution to each joint operation. These arrangements were divested as part of the demerger of South32, hence there are no balances for 2015.

^(b)

Total interest bearing liabilities include US$16,563 million denominated in USD, US$8,926 million denominated in EUR, US$2,011 million denominated in AUD and US$3,670 million denominated in other currencies (2014: US$33,013 million denominated in USD, US$ nil denominated in EUR, US$1,336 million denominated in AUD and US$240 million denominated in other currencies). All interest bearing liabilities, excluding finance leases, are unsecured.

Refer to note 43 ‘Significant accounting policies’ (h) and (s).

16. Net finance costs


	2015			2014			2013
	US$M			US$M			US$M
Financial expenses
Interest on bank loans and overdrafts		9			11			12
Interest on all other borrowings^(a)		517			657			954
Finance lease and hire purchase interest		25			19			7
Discounting on provisions and other liabilities		333			338			335
Net interest expense on post-retirement employee benefits		15			11			7
Interest capitalised^(b)		(148	)		(182	)		(290	)
Fair value change on hedged loans		372			328			(505	)
Fair value change on hedging derivatives		(358	)		(292	)		489
Fair value change on non-hedging derivatives^(c)		–			101			183
Exchange variations on net debt^(d)		(63	)		4			37

		702			995			1,229

Financial income
Interest income		(88	)		(81	)		(80	)

		(88	)		(81	)		(80	)

Net finance costs		614			914			1,149

^(a)

Interest on all other borrowings includes net interest income of US$67 million (2014: expense of US$116 million; 2013: expense of US$172 million) with respect to Petrohawk Senior Notes, which included gains of US$80 million on the early redemption of notes in August 2014 (2014: gains of US$24 million on the early redemption of notes in February 2014; 2013: US$ nil).

^(b)

Interest has been capitalised at the rate of interest applicable to the specific borrowings financing the assets under construction or, where financed through general borrowings, at a capitalisation rate representing the average interest rate on such borrowings. For the year ended 30 June 2015, the capitalisation rate was 1.94 per cent (2014: 1.82 per cent; 2013: 2.24 per cent). Tax relief for capitalised interest is approximately US$42 million (2014: US$53 million; 2013: US$86 million).

^(c)	Fair value change on non-hedging derivatives in the year ended 30 June 2014 includes unrealised fair value changes of US$101 million on non-hedging derivatives used to manage interest rate risk (2013: US$183 million). No such derivatives existed in the current period.

^(d)	Exchange variations on net debt predominantly comprises revaluations of US$109 million on non-USD finance leases (2014: US$24 million; 2013: US$ nil).

Refer to note 43 ‘Significant accounting policies’ (r).

17. Share capital


	BHP Billiton Limited									BHP Billiton Plc
	2015			2014			2013			2015			2014			2013
	US$M			US$M			US$M			US$M			US$M			US$M
Share capital
At the beginning of the financial year		1,186			1,186			1,186			1,069			1,069			1,069
Shares cancelled^(a)		–			–			–			(12	)		–			–

At the end of the financial year		1,186			1,186			1,186			1,057			1,069			1,069

Treasury shares
At the beginning of the financial year		(51	)		(8	)		(8	)		(536	)		(532	)		(525	)
Purchase of shares by ESOP Trusts		(232	)		(290	)		(330	)		(123	)		(78	)		(115	)
Employee share awards exercised following vesting, net of employee contributions and other adjustments		264			247			330			99			74			108
Shares cancelled^(a)		–			–			–			501			–			–
Conversion of controlled entity to equity accounted investment^(b)		–			–			–			2			–			–

At the end of the financial year		(19	)		(51	)		(8	)		(57	)		(536	)		(532	)


	BHP Billiton Limited									BHP Billiton Plc^(c)
	2015 Shares^(d)			2014 Shares^(d)			2013 Shares ^(d)			2015 Shares^(d)			2014 Shares^(d)			2013 Shares ^(d)
Share capital issued
Ordinary shares fully paid		3,211,691,105			3,211,691,105			3,211,691,105			2,112,071,796			2,136,185,454			2,136,185,454
Comprising:
Shares held by the public		3,210,852,008			3,210,206,876			3,211,448,985			2,110,333,783			2,110,945,784			2,111,078,268
Treasury shares		839,097			1,484,229			242,120			1,738,013			25,239,670			25,107,186
Special Voting Share of no par value ^(e)		1			1			1			–			–			–
5.5% Preference shares of £1 each^(f)		–			–			–			50,000			50,000			50,000
Special Voting Share of US$0.50 par value^(e)		–			–			–			1			1			1

	BHP Billiton Limited									BHP Billiton Plc
	2015 Shares			2014 Shares			2013 Shares			2015 Shares			2014 Shares			2013 Shares
Movement in shares held by the public
Opening number of shares		3,210,206,876			3,211,448,985			3,211,448,985			2,110,945,784			2,111,078,268			2,111,273,967
Purchase of shares by ESOP Trusts		(6,798,803	)		(8,621,160	)		(9,545,296	)		(3,623,582	)		(2,563,735	)		(3,761,193	)
Employee share awards exercised following vesting		7,443,935			7,379,051			9,545,296			2,945,980			2,431,251			3,565,494
Conversion of controlled entity to equity accounted investment^(b)		–			–			–			65,601			–			–

Closing number of shares^(g)		3,210,852,008			3,210,206,876			3,211,448,985			2,110,333,783			2,110,945,784			2,111,078,268

BHP Billiton Limited BHP Billiton Plc
2015
Shares 2014
Shares 2013
Shares 2015
Shares 2014
Shares 2013
Shares
Movement in Treasury shares

Opening number of shares
1,484,229    242,120    242,120    25,239,670    25,107,186    24,911,487
Purchase of shares by ESOP Trusts
6,798,803    8,621,160    9,545,296    3,623,582    2,563,735    3,761,193
Employee share awards exercised following vesting
(7,443,935 ) (7,379,051 ) (9,545,296 ) (2,945,980 ) (2,431,251 ) (3,565,494 )
Shares cancelled^(a)
–    –    –    (24,113,658 ) –    –
Conversion of controlled entity to equity accounted investment^(b)
–    –    –    (65,601 ) –    –

Closing number of shares
839,097    1,484,229    242,120    1,738,013    25,239,670    25,107,186

^(a)	On 28 August 2014, BHP Billiton Plc cancelled 24,113,658 ordinary shares of US$0.50 each held as Treasury shares.

^(b)

During the year, subsidiaries holding treasury shares of US$ nil and US$2 million in respect of ESOP Trusts for BHP Billiton Limited and BHP Billiton Plc respectively were converted to equity accounted investments, resulting in a transfer of these shares from Treasury shares to shares held by the public.

^(c)

An Equalisation Share (US$0.50 par value) has been authorised to be issued to enable a distribution to be made by BHP Billiton Plc Group to the BHP Billiton Limited Group should this be required under the terms of the DLC merger. The Directors have the ability to issue the Equalisation Share if required under those terms. The Constitution of BHP Billiton Limited allows the Directors of that Company to issue a similar Equalisation Share. There has been no movement in this class of share.

^(d)

The total number of BHP Billiton Limited shares of all classes is 3,211,691,106 of which 99.99 per cent are ordinary shares fully paid (2014: 3,211,691,106, 99.99 per cent; 2013: 3,211,691,106, 99.99 per cent). The total number of BHP Billiton Plc shares of all classes is 2,112,121,797 of which 99.99 per cent are ordinary shares of US$0.50 par value (2014: 2,136,235,455, 99.99 per cent; 2013: 2,136,235,455, 99.99 per cent). Any profit remaining after payment of preferred distributions is available for distribution to the holders of BHP Billiton Limited and BHP Billiton Plc ordinary shares in equal amounts per share.

^(e)	Each of BHP Billiton Limited and BHP Billiton Plc issued one Special Voting Share to facilitate joint voting by shareholders of BHP Billiton Limited and BHP Billiton Plc on Joint Electorate Actions. There has been no movement in these shares.

^(f)

Preference shares have the right to repayment of the amount paid up on the nominal value and any unpaid dividends in priority to the holders of any other class of shares in BHP Billiton Plc on a return of capital or winding up. The holders of preference shares have limited voting rights if payment of the preference dividends are six months or more in arrears or a resolution is passed changing the rights of the preference shareholders. There has been no movement in these shares, all of which are held by JP Morgan Limited.

^(g)	During the period 1 July 2015 to 10 September 2015, no fully paid ordinary shares in BHP Billiton were issued on the exercise of Group Incentive Scheme awards.

18. Other equity


	2015			2014			2013
	US$M			US$M			US$M
Reserves
Share premium account^(a)
At the beginning of the financial year		518			518			518

At the end of the financial year		518			518			518

Foreign currency translation reserve^(b)
At the beginning of the financial year		54			55			53
Exchange fluctuations on translation of foreign operations taken to equity		(2	)		(1	)		2

Total other comprehensive income		(2	)		(1	)		2

At the end of the financial year		52			54			55

Employee share awards reserve^(c)
At the beginning of the financial year		599			605			697
Net deferred tax arising on accrued employee entitlement for share awards		–			–			(42	)

Total other comprehensive income		–			–			(42	)
Employee share awards exercised net of employee contributions and other adjustments		(461	)		(221	)		(243	)
Employee share awards forfeited		(13	)		(32	)		(17	)
Accrued employee entitlement for unexercised awards		247			247			210

At the end of the financial year		372			599			605

Hedging reserve – cash flow hedges^(d)
At the beginning of the financial year		129			127			(80	)
(Losses)/gains taken to equity		(1,797	)		681			223
Losses/(gains) transferred to the income statement		1,815			(678	)		73
Deferred tax relating to cash flow hedges		(6	)		(1	)		(89	)

Total other comprehensive income		12			2			207

At the end of the financial year		141			129			127

Financial assets reserve^(e)
At the beginning of the financial year		115			140			230
Net valuation losses on available for sale investments taken to equity		(27	)		(15	)		(103	)
Net valuation gains on available for sale investments transferred to the income statement		(115	)		(14	)		(1	)
Deferred tax relating to revaluation gains and losses		36			4			14

Total other comprehensive income		(106	)		(25	)		(90	)

At the end of the financial year		9			115			140

Share buy-back reserve^(f)
At the beginning of the financial year		165			165			165
BHP Billiton Plc shares cancelled		12			–			–

At the end of the financial year		177			165			165

Non-controlling interest contribution reserve^(g)
At the beginning of the financial year		1,347			360			329
Issue of share options to non-controlling interests		–			–			49
Distribution to option holders		(1	)		(2	)		–
Equity contributed		1			989			–
Divestment of equity accounted investments		–			–			(18	)
Transfers within equity on demerger		(59	)		–			–

At the end of the financial year		1,288			1,347			360

Total reserves		2,557			2,927			1,970

   2015 2014 2013
   US$M US$M US$M
Retained earnings

At the beginning of the financial year
   74,548    66,982    61,892
Profit after taxation
   1,910    13,832    11,223
Remeasurement (losses)/gains on pension and medical schemes
   (28 ) 57    60
Tax recognised within other comprehensive income
   (17 ) 12    26


Total comprehensive income
   1,865    13,901    11,309
BHP Billiton Plc shares cancelled – refer to note 17 ‘Share capital’
   (501 ) –    –
Employee share awards exercised, net of employee contributions, forfeitures and other adjustments
   114    (59 ) (161 )
Dividends
   (6,596 ) (6,276 ) (6,076 )
In-specie dividend on demerger – refer to note 29 ‘Discontinued operations’
   (9,445 ) –    –
Divestment of equity accounted investments
   –    –    18
Transfers within equity on demerger
   59    –    –


At the end of the financial year
   60,044    74,548    66,982


   2015 2014 2013
   US$M US$M US$M
Non-controlling interests

At the beginning of the financial year
   6,239    4,624    3,789
Profit after taxation
   968    1,392    1,597
Net valuation gains on available for sale investments taken to equity
   6    –    2
Remeasurement gains on pension and medical schemes
   –    –    1
Tax recognised within other comprehensive income
   (1 ) –    (1 )


Total comprehensive income
   973    1,392    1,599
Distribution to option holders
   (1 ) (2 ) –
Dividends
   (639 ) (252 ) (837 )
Equity contributed
   52    477    73
Conversion of controlled entities to equity accounted investments
   (847 ) –    –


At the end of the financial year
   5,777    6,239    4,624

^(a)	The share premium account represents the premium paid on the issue of BHP Billiton Plc shares recognised in accordance with the UK Companies Act 2006.

^(b)	The foreign currency translation reserve represents exchange differences arising on the translation of non-US dollar functional currency operations within the Group into US dollars.

^(c)	The employee share awards reserve represents the accrued employee entitlements to share awards that have been charged to the income statement and have not yet been exercised.

^(d)

The hedging reserve represents hedging gains and losses recognised on the effective portion of cash flow hedges. The cumulative deferred gain or loss on the hedge is recognised in the income statement when the hedged transaction impacts the income statement, or is recognised as an adjustment to the cost of non-financial hedged items.

^(e)

The financial assets reserve represents the revaluation of available for sale financial assets. Where a revalued financial asset is sold or impaired, the relevant portion of the reserve is transferred to the income statement. Net valuation gains transferred to the income statement in the current year of US$(115) million relate to Discontinued operations.

^(f) The share buy-back reserve represents the par value of BHP Billiton Plc shares which were purchased and subsequently cancelled. The cancellation of the shares creates a non-distributable reserve.

^(g)	The non-controlling interest contribution reserve represents the excess of consideration received over the book value of net assets attributable to the equity instruments when acquired by non-controlling interests.

Summarised financial information relating to each of the Group’s subsidiaries with non-controlling interests (NCI) that are material to the Group, before any intra-group eliminations is shown below:


2015 US$M	BHP Iron Ore (Jimblebar) Pty Ltd ^(a)			Minera Escondida Limitada			Other individually immaterial subsidiaries		Intra-group eliminations		Total
BHP Billiton share (per cent)		85.0			57.5

Current assets^(c)		319			2,542
Non-current assets^(c)		3,893			13,060
Current liabilities		(199	)		(1,973	)
Non-current liabilities		(1,316	)		(2,209	)

Net assets		2,697			11,420

Net assets attributable to NCI		403			4,854			520		–		5,777

Revenue		914			8,092
Profit after taxation		169			2,194
Other comprehensive income		–			–

Total comprehensive income		169			2,194

Profit after taxation attributable to NCI		19			932			17		–		968
Other comprehensive income attributable to NCI		–			–			5		–		5
Dividends paid to NCI		4			536			99		–		639


2014 US$M	BHP Iron Ore (Jimblebar) Pty Ltd ^(a)			Minera Escondida Limitada			Samancor Holdings (Proprietary) Limited^(b)			Groote Eylandt Mining Company Pty Ltd^(b)			Other individually immaterial subsidiaries			Intra-group eliminations			Total
BHP Billiton share (per cent)		85.0			57.5			60.0			60.0

Current assets^(c)		626			2,793			17			154
Non-current assets^(c)		4,006			10,803			1,175			1,178
Current liabilities		(495	)		(1,034	)		(7	)		(125	)
Non-current liabilities		(1,481	)		(2,075	)		–			(225	)

Net assets		2,656			10,487			1,185			982

Net assets attributable to NCI		388			4,457			474			393			529			(2	)		6,239

Revenue		994			8,706			–			990
Profit after taxation		204			3,007			(1	)		261
Other comprehensive income		–			–			–			–

Total comprehensive income		204			3,007			(1	)		261

Profit after taxation attributable to NCI		22			1,278			–			104			(9	)		(3	)		1,392
Other comprehensive income attributable to NCI		–			–			–			–			–			–			–
Dividends paid to NCI		–			74			–			120			58			–			252

2013
US$M
BHP Iron
Ore
(Jimblebar)
Pty Ltd ^(a) Minera
Escondida
Limitada Samancor
Holdings
(Proprietary)
Limited^(b) Groote
Eylandt
Mining
Company
Pty Ltd^(b) Other
individually
immaterial
subsidiaries Intra-group
eliminations Total
BHP Billiton share (per cent)
100.0    57.5    60.0    60.0

Revenue
–    8,826    –    935
Profit after taxation
–    3,309    (5 ) 349
Other comprehensive income
–    –    –    –

Total comprehensive income
–    3,309    (5 ) 349

Profit after taxation attributable to NCI
–    1,406    (2 ) 108    70    15    1,597
Other comprehensive income attributable to NCI
–    –    –    –    2    –    2
Dividends paid to NCI
–    782    –    32    23    –    837

^(a)

The Group has an effective interest of 92.5 per cent in BHP Iron Ore (Jimblebar) Pty Ltd, however by virtue of the shareholder agreement with ITOCHU Minerals & Energy of Australia Pty Ltd and Mitsui & Co. Iron Ore Exploration & Mining Pty Ltd, the Group’s interest in the Jimblebar mining operation is 85 per cent which is consistent with the other respective contractual arrangements at Western Australia Iron Ore.

^(b)

On 2 March 2015, BHP Billiton ceased consolidation of its 60 per cent interest in Samancor Holdings (Proprietary) Limited and Groote Eylandt Mining Company Pty Ltd and accounted for its 60 per cent interest in those entities as equity accounted joint ventures. Refer to note 29 ‘Discontinued operations’.

^(c)

While the Group controls these subsidiaries, the non-controlling interests hold certain protective rights which restrict the Group’s ability to sell assets held by these subsidiaries, or use the assets in other subsidiaries and operations owned by the Group. These subsidiaries are also restricted from paying dividends without the approval of the non-controlling interests.

Refer to note 42 ‘Functional and presentation currency’ and note 43 ‘Significant accounting policies’ (c), (s) and (t).

19. Dividends


	2015		2014		2013
	US$M		US$M		US$M
Dividends paid/payable during the period
BHP Billiton Limited		3,983		3,793		3,662
BHP Billiton Plc – Ordinary shares		2,613		2,483		2,404
– Preference shares^(a)		–		–		–

		6,596		6,276		6,066

Dividends determined in respect of the period
BHP Billiton Limited		3,982		3,887		3,721
BHP Billiton Plc – Ordinary shares		2,617		2,555		2,446
– Preference shares^(a)		–		–		–

		6,599		6,442		6,167

2015 2014 2013
US cents US cents US cents
Dividends paid during the period (per share)

Prior year final dividend
62.0    59.0    57.0
Interim dividend
62.0    59.0    57.0

124.0    118.0    114.0

Dividends determined in respect of the period (per share)

Interim dividend
62.0    59.0    57.0
Final dividend
62.0    62.0    59.0

124.0    121.0    116.0

Dividends are determined after period end in the announcement of the results for the period. Interim dividends are determined in February and paid in March. Final dividends are determined in August and paid in September. Dividends determined are not recorded as a liability at the end of the period to which they relate. Subsequent to year-end, on 25 August 2015, BHP Billiton determined a final dividend of 62.0 US cents per share (US$3,301 million), which will be paid on 29 September 2015 (30 June 2014: final dividend of 62.0 US cents per share – US$3,301 million; 30 June 2013: final dividend of 59.0 US cents per share – US$3,147 million).

Each American Depositary Share (ADS) represents two ordinary shares of BHP Billiton Limited or BHP Billiton Plc. Dividends determined on each ADS represent twice the dividend determined on BHP Billiton ordinary shares.

BHP Billiton Limited dividends for all periods presented are, or will be, fully franked based on a tax rate of 30 per cent.


	2015			2014			2013
	US$M			US$M			US$M
Franking credits as at 30 June		11,295			13,419			10,516
Franking (debits)/credits arising from the (refund)/payment of current tax		(428	)		(29	)		824

Total franking credits available^(b)		10,867			13,390			11,340

^(a)	5.5 per cent dividend on 50,000 preference shares of £1 each determined and paid annually (30 June 2014: 5.5 per cent; 30 June 2013: 5.5 per cent).

^(b)	The payment of the final 2015 dividend determined after 30 June 2015 will reduce the franking account balance by US$853 million.

20. Provision for dividends and other liabilities


	2015		2014
	US$M		US$M
Current
Dividends and other liabilities		159		360

Total current provision for dividends and other liabilities		159		360

Non-current
Other liabilities		205		198

Total non-current provision for dividends and other liabilities		205		198

   2015 2014
   US$M US$M
Movement in provision for dividends and other liabilities

At the beginning of the financial year
   558    451
Dividends determined during the year
   6,596    6,276
Charge/(credit) for the year:

Underlying
   400    388
Discounting
   1    –
Exchange variations
   (131 ) 77
Released during the year
   (138 ) (141 )
Utilisation
   (359 ) (85 )
Divestment and demerger of subsidiaries and operations
   (65 ) –
Dividends paid during the year
   (6,498 ) (6,387 )
Transfers and other movements
   –    (21 )


At the end of the financial year
   364    558

Financial risk management

21. Other financial assets


	2015		2014
	US$M		US$M
Current
At fair value
Cross currency and interest rate swaps		53		12
Forward exchange contracts		1		–
Commodity contracts		6		18
Other derivative contracts		23		57

Total current other financial assets		83		87

Non-current
At fair value
Cross currency and interest rate swaps		939		1,471
Commodity contracts		–		7
Other derivative contracts		198		214
Shares – available for sale		21		512
Other investments – available for sale^(a)		1		145

Total non-current other financial assets		1,159		2,349

^(a)

Includes investments held by BHP Billiton Energy Coal South Africa Rehabilitation Trust Fund as at 30 June 2014. The future realisation of this investment is intended to fund environmental obligations relating to the closure of the South African coal operations, and consequently this investment, while under the Group’s control, is not available for the general purposes of the Group. Any income from this investment was reinvested or applied to meet these obligations. These investments were divested as part of the demerger of South32. Refer to note 29 ‘Discontinued operations’.

Refer to note 43 ‘Significant accounting policies’ (s).

22. Other financial liabilities


	2015		2014
	US$M		US$M
Current
Cross currency and interest rate swaps		243		–
Commodity contracts		3		–
Other derivative contracts		5		16

Total current other financial liabilities		251		16

Non-current
Cross currency and interest rate swaps		1,024		273
Commodity contracts		1		9
Other derivative contracts		6		21

Total non-current other financial liabilities		1,031		303

Refer to note 43 ‘Significant accounting policies’ (s).

23. Financial risk management

Financial risk management strategy

The financial risks arising from the Group’s operations comprise market, liquidity and credit risk. These risks arise in the normal course of business, and the Group manages its exposure to them in accordance with the Group’s portfolio risk management strategy. The objective of the strategy is to support the delivery of the Group’s financial targets while protecting its future financial security and flexibility by taking advantage of the natural diversification provided by the scale, diversity and flexibility of the Group’s operations and activities.

A Cash Flow at Risk (CFaR) framework is used to measure the aggregate and diversified impact of financial risks upon the Group’s financial targets. The principal measurement of risk is CFaR measured on a portfolio basis, which is defined as the worst expected loss relative to projected business plan cash flows over a one-year horizon under normal market conditions at a confidence level of 90 per cent.

Market risk

The Group’s activities expose it to market risks associated with movements in interest rates, foreign currencies and commodity prices. Under the strategy outlined above, the Group seeks to achieve financing costs, currency impacts, input costs and commodity prices on a floating or index basis. This strategy gives rise to a risk of variability in earnings which is measured under the CFaR framework.

In executing the strategy, financial instruments are potentially employed in three distinct but related activities. The following table summarises these activities and the key risk management processes:


Activity	Key risk management processes

1 Risk mitigation

On an exception basis, hedging for the purposes of mitigating risk related to specific and significant expenditure on investments or capital projects will be executed if necessary to support the Group’s strategic objectives.	•	Execution of transactions within approved mandates.

2 Economic hedging of commodity sales, operating costs and debt instruments

Where Group commodity production is sold to customers on pricing terms that deviate from the relevant index target, and where a relevant derivatives market exists, financial instruments may be executed as an economic hedge to align the revenue price exposure with the index target. Where debt is issued in a currency other than the US dollar and/or at a fixed interest rate, fair value and cash flow hedges may be executed to align the debt exposure with the Group’s functional currency of US dollars and/or to swap to a floating interest rate.	• •	Measuring and reporting the exposure in customer commodity contracts and issued debt instruments. Executing hedging derivatives to align the total group exposure to the index target.
	• •


3 Strategic financial transactions

Opportunistic transactions may be executed with financial instruments to capture value from perceived market over/under valuations.	•	Exposures managed within value at risk and stop loss limits.
	•	Execution of transactions within approved mandates.

Primary responsibility for identification and control of financial risks, including authorising and monitoring the use of financial instruments for the above activities and stipulating policy thereon, rests with the Financial Risk Management Committee under authority delegated by the Group Management Committee.

Interest rate risk

The Group is exposed to interest rate risk on its outstanding borrowings and investments from the possibility that changes in interest rates will affect future cash flows or the fair value of fixed interest rate financial instruments. Interest rate risk is managed as part of the portfolio risk management strategy.

The majority of the Group’s debt is issued at fixed interest rates. The Group has entered into interest rate swaps and cross currency interest rate swaps to convert most of its fixed interest rate exposure to floating US dollar interest rate exposure. As at 30 June 2015, 89 per cent of Group borrowings were exposed to floating interest rates inclusive of the effect of swaps (2014: 84 per cent). The Group’s earnings are sensitive to changes in interest rates on the floating interest rate component of the Group’s net borrowings.

The fair value of interest rate swaps and cross currency interest rate swaps in hedge relationships used to hedge both interest rate and foreign currency risks are shown in the fair values section of this note.

Based on the net debt position as at 30 June 2015, taking into account interest rate swaps and cross currency interest rate swaps, it is estimated that a one percentage point increase in the US LIBOR interest rate will decrease the Group’s equity and profit after taxation by US$149 million (2014: decrease of US$126 million). This assumes that the change in interest rates is effective from the beginning of the financial year and the fixed/floating mix and balances are constant over the year. However, interest rates and the net debt profile of the Group may not remain constant over the coming financial year and therefore such sensitivity analysis should be used with care.

Currency risk

The US dollar is the functional currency of most operations within the Group and as a result currency exposures arise from transactions and balances in currencies other than the US dollar. The Group’s potential currency exposures comprise:

translational exposure in respect of non-functional currency monetary items; and

transactional exposure in respect of non-functional currency expenditure and revenues.

The Group’s foreign currency risk is managed as part of the portfolio risk management strategy.

Translational exposure in respect of non-functional currency monetary items

Monetary items, including financial assets and liabilities, denominated in currencies other than the functional currency of an operation are periodically restated to US dollar equivalents, and the associated gain or loss is taken to the income statement. The exception is foreign exchange gains or losses on foreign currency denominated provisions for closure and rehabilitation at operating sites, which are capitalised in property, plant and equipment.

The following table shows the foreign currency risk arising from financial assets and liabilities, which are denominated in currencies other than the US dollar:


Net financial (liabilities)/assets – by currency of denomination	2015			2014
	US$M			US$M
Australian dollars		(2,239	)		(4,684	)
Chilean peso		(665	)		(267	)
Other		(5	)		6

Total		(2,909	)		(4,945	)

The principal non-functional currencies to which the Group is exposed are the Australian dollar and Chilean peso. Based on the Group’s net financial assets and liabilities as at 30 June 2015, a weakening of the US dollar against these currencies as illustrated in the table below, with all other variables held constant, would (decrease)/increase profit after taxation and equity as follows:


	2015						2014
	US$M						US$M
Currency movement against US$	Profit after taxation			Equity			Profit after taxation			Equity
1 cent strengthening in Australian dollar		(12	)		(12	)		(31	)		(31	)
10 pesos strengthening in Chilean peso		(7	)		(7	)		(3	)		(3	)

The Group’s financial asset and liability profile may not remain constant and therefore these sensitivities should be used with care.

Transactional exposure in respect of non-functional currency expenditure and revenues

Certain operating and capital expenditure is incurred in currencies other than their functional currency. To a lesser extent, certain sales revenue is earned in currencies other than the functional currency of operations, and certain exchange control restrictions may require that funds be maintained in currencies other than the functional currency of the operation. These currency risks are managed as part of the portfolio risk management strategy. When required under this strategy the Group enters into forward exchange contracts.

The net fair value of forward exchange contracts outstanding to manage short-term foreign currency cash flows relating to operating activities is an asset of US$1 million and a liability of US$ nil (2014: an asset of US$ nil and a liability of US$ nil).

Commodity price risk

Contracts for the sale and physical delivery of commodities are executed whenever possible on a pricing basis intended to achieve a relevant index target. While the Group has succeeded in transitioning the majority of Group commodity production sales to market-based index pricing terms, derivative commodity contracts may from time-to-time be used to align realised prices with the relevant index. Contracts for the physical delivery of commodities are not typically financial instruments and are carried in the balance sheet at cost (typically at nil); they are therefore excluded from the fair value and sensitivity tables below. Accordingly, the financial instrument exposures set out in the tables below do not represent all of the commodity price risks managed according to the Group’s objectives. Movements in the fair value of contracts included in the tables below are offset by movements in the fair value of the physical contracts, however only the former movement is recognised in the Group’s income statement prior to settlement. The risk associated with commodity prices is managed as part of the portfolio risk management strategy.

Financial instruments with commodity price risk included in the following tables are primarily derivatives embedded in physical commodity purchase and sales contracts.

All such instruments are carried in the balance sheet at fair value.

Forward commodity and other derivative contracts


	2015				2014
	Fair value of asset		Fair value of liability		Fair value of asset		Fair value of liability
	US$M		US$M		US$M		US$M
Aluminium		–		–		54		7
Copper		22		6		7		16
Nickel		–		–		17		5
Coal		–		–		–		1
Petroleum		–		–		–		6
Gas		205		9		218		11

Total		227		15		296		46

Comprising:
Current		29		8		75		16
Non-current		198		7		221		30

Provisionally priced commodity sales and purchases contracts

Not included in the above table are provisionally priced sales or purchases volumes for which price finalisation, referenced to the relevant index, is outstanding at the reporting date. Provisional pricing mechanisms embedded

within these sales and purchases arrangements have the character of a commodity derivative and are carried at fair value through profit and loss as part of trade receivables or trade payables. The Group’s exposure at 30 June 2015 to the impact of movements in commodity prices upon provisionally invoiced sales and purchases volumes is set out in the following table:


		2015						2014
	Units of exposure	Net exposure (deliver)/ receive			Impact on equity and profit after taxation of 10% increase in market price US$M			Net exposure (deliver)/ receive			Impact on equity and profit after taxation of 10% increase in market price US$M
Provisionally priced commodity sales contracts
Copper	Tonnes (’000s)		(363	)		173			(350	)		246
Zinc	Tonnes (’000s)		(4	)		1			(11	)		2
Lead	Tonnes (’000s)		–			–			(29	)		6
Gold	Ounces		(23,975	)		2			(19,401	)		2
Silver	Ounces (’000s)		(1,231	)		2			(5,072	)		10
Nickel	Tonnes (’000s)		(4	)		4			(3	)		5
Iron Ore	Tonnes (’000s)		(2,876	)		14			(588	)		5

Provisionally priced commodity purchases contracts
Copper	Tonnes (’000s)		32			(18	)		24			(17	)
Zinc	Tonnes (’000s)		4			(1	)		4			(1	)
Silver	Ounces (’000s)		850			(1	)		526			(1	)

The sensitivities in the above tables have been determined as the absolute impact on fair value of a 10 per cent increase in commodity prices at each reporting date, while holding all other variables, including foreign currency and exchange rates, constant.

The relationship between commodity prices and foreign currencies is complex and movements in foreign exchange rates can impact commodity prices. The sensitivities should therefore be used with care.

Liquidity risk

The Group’s liquidity risk arises from the possibility that it may not be able to settle or meet its obligations as they fall due and is managed as part of the portfolio risk management strategy. Operational, capital and regulatory requirements are considered in the management of liquidity risk, in conjunction with short-term and long-term forecast information.

Additional liquidity risk arises on debt related derivatives due to the possibility that a market for derivatives might not exist in some circumstances. To counter this risk the Group only uses derivatives in highly liquid markets.

The Group’s strong credit profile, diversified funding sources and committed credit facilities ensure that sufficient liquid funds are maintained to meet its daily cash requirements. The Group’s policy on counterparty credit exposure ensures that only counterparties of an investment grade standing are used for the investment of any excess cash.

During the year ended 30 June 2015, Moody’s Investors Service made no change to the Group’s long-term credit rating of A1 (the short-term credit rating is P-1). Standard & Poor’s also affirmed the Group’s long-term credit rating of A+ (the short-term credit rating is A-1); however, revised their outlook from stable to negative.

There were no defaults on loans payable during the period.

Standby arrangements and unused credit facilities

Details of major standby and support arrangements are as follows:


	2015						2014
US$M	Facility available		Drawn		Undrawn		Facility available		Drawn		Undrawn
Revolving credit facility^(a)		6,000		–		6,000		6,000		–		6,000

Total financing facilities		6,000		–		6,000		6,000		–		6,000

^(a)

The Group’s committed US$6.0 billion revolving credit facility operates as a back-stop to the Group’s uncommitted commercial paper program. The combined amount drawn under the facility or as commercial paper will not exceed US$6.0 billion. As at 30 June 2015, US$ nil commercial paper was drawn (2014: US$ nil), therefore US$6.0 billion of committed facility was available to use (2014: US$6.0 billion). The revolving credit facility has a five-year maturity with one remaining one-year extension option. A commitment fee is payable on the undrawn balance and an interest rate comprising an interbank rate plus a margin applies to any drawn balance. The agreed margins are typical for a credit facility extended to a company with the Group’s credit rating.

Maturity profile of financial liabilities

The maturity profile of the Group’s financial liabilities based on the contractual amounts, taking into account the derivatives related to debt, is as follows:


2015 US$M	Bank loans, debentures and other loans		Expected future interest payments		Derivatives related to net debt		Other derivatives		Obligations under finance leases		Other		Total
Due for payment:
In one year or less or on demand		3,070		664		214		8		105		6,807		10,868
In more than one year but not more than two years		3,385		865		44		3		61		20		4,378
In more than two years but not more than three years		960		781		379		1		57		2		2,180
In more than three years but not more than four years		3,927		760		314		1		52		2		5,056
In more than four years but not more than five years		1,598		608		157		1		48		3		2,415
In more than five years		16,952		7,092		1,495		1		165		2		25,707

Total		29,892		10,770		2,603		15		488		6,836		50,604

Carrying amount		30,732		–		1,267		15		438		6,836		39,288

2014
US$M
Bank loans,
debentures
and
other loans Expected
future
interest
payments Derivatives
related to
net debt Other
derivatives Obligations
under
finance
leases Other Total
Due for payment:

In one year or less or on demand
4,165    665    (180 ) 16    167    9,747    14,580
In more than one year but not more than two years
3,107    1,034    (122 ) 9    164    94    4,286
In more than two years but not more than three years
3,390    897    (32 ) 1    164    3    4,423
In more than three years but not more than four years
1,066    807    128    6    151    3    2,161
In more than four years but not more than five years
4,169    784    70    11    152    3    5,189
In more than five years
16,857    7,949    485    3    1,708    10    27,012

Total
32,754    12,136    349    46    2,506    9,860    57,651

Carrying amount
33,205    –    273    46    1,384    9,860    44,768

The amounts presented in the tables above comprise the contractual undiscounted cash flows, and therefore will not always agree with the amounts presented in the balance sheet. The Group holds derivatives related to net debt, commodities and currencies that are classified as other financial assets when they are expected to generate cash inflows. Refer to note 21 ‘Other financial assets’.

Credit risk

Credit risk can arise from the non-performance by counterparties of their contractual financial obligations towards the Group. To manage credit risk, the Group maintains Group-wide procedures covering the application for credit approvals, granting and renewal of counterparty limits, proactive monitoring of exposures against these limits and requirements triggering secured payment terms. As part of these processes, the credit exposures to all counterparties are regularly monitored and assessed on a timely basis. The maximum exposure to credit risk is limited to the total carrying amount of relevant financial assets on the balance sheet, as at the reporting date.

The Group’s credit risk exposures are categorised under the following headings:

Counterparties

The Group conducts transactions with the following major types of counterparties:

•

Receivables counterparties

Approximately half of sales to the Group’s customers are made on open terms.

•

Secured payment counterparties

Approximately half of sales to the Group’s customers occur via secured payment mechanisms.

•

Derivative counterparties

Counterparties to derivative contracts consist of a diverse number of financial institutions and industrial counterparties in the relevant markets.

• Cash investment counterparties

As part of managing cash flow and liquidity, the Group holds short-term cash investments with a range of approved financial institutions.

The Group has no significant concentration of credit risk with any single counterparty.

Geographic

The Group trades in all major geographic regions. Countries in which the Group has significant revenue exposures include Australia, the United States, Europe, China, Japan, India and South Korea. Where appropriate, secured payment mechanisms and other risk mitigation instruments are used to protect revenues from credit risk losses.

Industry

In line with our asset portfolio, the Group sells into a diverse range of industries and customer sectors. This diversity means that the Group is not dominantly exposed to any individual industry or customer.

The following table shows the Group’s receivables at the reporting date that are exposed to credit risk and the ageing and impairment profile thereon:


2015 US$M	Gross amount		Receivables past due and impaired		Receivables neither past due nor impaired		Receivables past due but not impaired
2015 US$M	Gross amount		Receivables past due and impaired		Receivables neither past due nor impaired		Less than 30 days		31 to 60 days		61 to 90 days		Over 90 days
Trade receivables		2,988		6		2,972		8		2		–		–
Other receivables		2,849		11		2,653		66		11		30		78

Total		5,837		17		5,625		74		13		30		78


2014 US$M	Gross amount		Receivables past due and impaired		Receivables neither past due nor impaired		Receivables past due but not impaired
2014 US$M	Gross amount		Receivables past due and impaired		Receivables neither past due nor impaired		Less than 30 days		31 to 60 days		61 to 90 days		Over 90 days
Trade receivables		4,735		115		4,562		46		–		–		12
Other receivables		4,005		17		3,761		9		26		33		159

Total		8,740		132		8,323		55		26		33		171

Receivables are deemed to be past due or impaired with reference to the Group’s normal terms and conditions of business. These terms and conditions are determined on a case-by-case basis with reference to the customer’s credit quality and prevailing market conditions. Receivables that are classified as ‘past due’ in the above tables are those that have not been settled within the payments terms that have been agreed with that customer. For an analysis of movements in impaired trade receivables, refer to note 8 ‘Trade and other receivables’.

The credit quality of the Group’s customers is monitored on an ongoing basis and assessed for impairment where indicators of such impairment exist. The solvency of each debtor and their ability to repay the receivable is considered in assessing receivables for impairment. In certain circumstances the Group may seek collateral as security for the receivable. Where receivables have been impaired, the Group actively seeks to recover the amounts in question and enforce compliance with credit terms.

An impairment of US$15 million was recognised during the year ended 30 June 2015 (2014: US$ nil) relating to other financial assets, refer to note 3 ‘Expenses’.

Fair values

All financial assets and liabilities, other than derivatives, are initially recognised at the fair value of consideration paid or received, net of transaction costs as appropriate, and subsequently carried at fair value or amortised cost, as indicated in the tables below. Derivatives are initially recognised at fair value on the date the contract is entered into and are subsequently remeasured at their fair value.

The financial assets and liabilities are presented by class in the tables below at their carrying amounts, which generally approximate to fair value. In the case of US$3,321 million (2014: US$5,337 million) of fixed rate debt not swapped to floating rate, the fair value at 30 June 2015 was US$3,538 million (2014: US$5,665 million).

Financial assets and liabilities


2015 US$M	Notes		Loans and receivables		Available for sale securities		Held at fair value through profit or loss			Cash flow hedges		Other financial assets and liabilities at amortised cost		Total
Financial assets
Cash and cash equivalents		7		6,753		–		–			–		–		6,753
Trade and other receivables^(a)		8		3,534		–		952			–		–		4,486
Cross currency and interest rate swaps		21		–		–		858			134		–		992
Forward exchange contracts		21		–		–		1			–		–		1
Commodity contracts		21		–		–		6			–		–		6
Other derivative contracts		21		–		–		221			–		–		221
Loans to equity accounted investments		8		995		–		–			–		–		995
Shares		21		–		21		–			–		–		21
Other investments		21		–		1		–			–		–		1

Total financial assets				11,282		22		2,038			134		–		13,476

Non-financial assets															111,104

Total assets															124,580

Financial liabilities
Trade and other payables^(b)		9		–		–		176			–		6,660		6,836
Cross currency and interest rate swaps		22		–		–		(62	)		1,329		–		1,267
Commodity contracts		22		–		–		4			–		–		4
Other derivative contracts		22		–		–		11			–		–		11
Bank overdrafts and short-term borrowings^(c)		15		–		–		–			–		140		140
Bank loans^(c)		15		–		–		–			–		1,595		1,595
Notes and debentures^(c)		15		–		–		–			–		28,725		28,725
Finance leases^(c)		15		–		–		–			–		438		438
Other^(c)		15		–		–		–			–		272		272

Total financial liabilities				–		–		129			1,329		37,830		39,288

Non-financial liabilities															14,747

Total liabilities															54,035

2014
US$M
Notes Loans and
receivables Available
for sale
securities Held at
fair value
through
profit
or loss Cash
flow
hedges Other
financial
assets and
liabilities
at
amortised
cost Total
Financial assets

Cash and cash equivalents
7    8,803    –    –    –    –    8,803
Trade and other receivables ^(a)
8    5,431    –    1,071    –    –    6,502
Cross currency and interest rate swaps
21    –    –    846    637    –    1,483
Commodity contracts
21    –    –    25    –    –    25
Other derivative contracts
21    –    –    271    –    –    271
Loans to equity accounted investments
8    1,205    –    –    –    –    1,205
Interest bearing loans receivable
8    337    –    –    –    –    337
Shares
21    –    512    –    –    –    512
Other investments
21    –    145    –    –    –    145

Total financial assets
15,776    657    2,213    637    –    19,283

Non-financial assets
132,130

Total assets
151,413

Financial liabilities

Trade and other payables ^(b)
9    –    –    300    –    9,560    9,860
Cross currency and interest rate swaps
22    –    –    221    52    –    273
Commodity contracts
22    –    –    9    –    –    9
Other derivative contracts
22    –    –    37    –    –    37
Bank overdrafts and short-term borrowings ^(c)
15    –    –    –    –    51    51
Bank loans^(c)
15    –    –    –    –    1,462    1,462
Notes and debentures^(c)
15    –    –    –    –    31,247    31,247
Finance leases^(c)
15    –    –    –    –    1,384    1,384
Other^(c)
15    –    –    –    –    445    445

Total financial liabilities
–    –    567    52    44,149    44,768

Non-financial liabilities
21,263

Total liabilities
66,031

^(a)	Excludes input taxes of US$339 million (2014: US$564 million) included in other receivables. Refer to note 8 ‘Trade and other receivables’.

^(b)	Excludes input taxes of US$582 million (2014: US$398 million) included in other payables. Refer to note 9 ‘Trade and other payables’.

^(c)	All interest bearing liabilities, excluding finance leases are unsecured.

Valuation hierarchy

The carrying amount of financial assets and liabilities measured at fair value is principally calculated with reference to quoted prices in active markets for identical assets or liabilities. Where no price information is available from a quoted market source, alternative market mechanisms or recent comparable transactions, fair value is estimated based on the Group’s views on relevant future prices, net of valuation allowances to accommodate liquidity, modelling and other risks implicit in such estimates. The inputs used in fair value calculations are determined by the relevant Group Function. Our Group Functions support the Businesses and operate under a defined set of accountabilities authorised by the Group Management Committee. Movements in the fair value of financial assets and liabilities may be recognised through the income statement or in other comprehensive income. The following table shows the Group’s financial assets and liabilities carried at fair value with reference to the nature of valuation inputs used:


2015	Level 1 ^(a)		Level 2 ^(b)			Level 3 ^(c)		Total
	US$M		US$M			US$M		US$M
Financial assets and liabilities
Trade and other receivables		–		952			–		952
Trade and other payables		–		(176	)		–		(176	)
Cross currency and interest rate swaps		–		(275	)		–		(275	)
Forward exchange contracts		–		1			–		1
Commodity contracts		–		2			–		2
Other derivative contracts		–		12			198		210
Investments – available for sale		1		–			21		22

Total		1		516			219		736


2014	Level 1 ^(a)		Level 2 ^(b)			Level 3 ^(c)		Total
	US$M		US$M			US$M		US$M
Financial assets and liabilities
Trade and other receivables		–		1,071			–		1,071
Trade and other payables		–		(300	)		–		(300	)
Cross currency and interest rate swaps		–		1,210			–		1,210
Commodity contracts		–		16			–		16
Other derivative contracts		–		(13	)		247		234
Investments – available for sale		5		145			507		657

Total		5		2,129			754		2,888

^(a)	Valuation is based on unadjusted quoted prices in active markets for identical financial assets and liabilities.

^(b)	Valuation is based on inputs (other than quoted prices included in Level 1) that are observable for the financial asset or liability, either directly (i.e. as unquoted prices) or indirectly (i.e. derived from prices).

^(c)	Valuation is based on inputs that are not based on observable market data.

Level 3 financial assets and liabilities

The following table shows the movements in the Group’s level 3 financial assets and liabilities:


	2015			2014
	US$M			US$M
At the beginning of the financial year		754			690
Additions		16			66
Disposals		(407	)		(47	)
Realised gains recognised in the income statement^(a)		9			6
Unrealised gains recognised in the income statement^(a)		33			77
Unrealised losses recognised in other comprehensive income^(b)		(9	)		(19	)
Impairment		(15	)		–
Transfers^(c)		(162	)		(19	)

At the end of the financial year		219			754

^(a)	Realised and unrealised gains and losses recognised in the income statement are recorded in expenses. Refer to note 3 ‘Expenses’.

^(b)	Unrealised gains and losses recognised in other comprehensive income are recorded in the financial assets reserve. Refer to note 18 ‘Other equity’.

^(c)	Transfers comprise US$162 million relating to Marine Well Containment Company now classified as an equity accounted investment.

Sensitivity of Level 3 financial assets and liabilities

The carrying amount of financial assets and liabilities that are valued using inputs other than observable market data are calculated using appropriate valuation models, including discounted cash flow modelling, with inputs such as commodity prices, foreign exchange rates and inflation. The potential effect of using reasonably possible alternative assumptions in these models, based on a change in the most significant input by 10 per cent while holding all other variables constant, is shown in the following table. Significant inputs are assessed individually for each financial asset and liability.


			Profit after taxation					Equity
2015 US$M	Carrying amount		10% increase in input		10% decrease in input			10% increase in input		10% decrease in input
Financial assets and liabilities
Other derivative contracts		198		45		(45	)		45		(45	)
Investments – available for sale		21		–		–			2		(2	)

Total		219		45		(45	)		47		(47	)


			Profit after taxation					Equity
2014 US$M	Carrying amount		10% increase in input		10% decrease in input			10% increase in input		10% decrease in input
Financial assets and liabilities
Other derivative contracts		247		67		(67	)		67		(67	)
Investments – available for sale		507		–		–			72		(39	)

Total		754		67		(67	)		139		(106	)

Offsetting financial assets and liabilities

Financial assets and liabilities are offset and the net amount reported in the balance sheet where the Group currently has a legally enforceable right to offset the recognised amounts, and there is an intention to settle on a net basis or realise the asset and settle the liability simultaneously. The Group also entered into master netting arrangements that do not meet the criteria for offsetting but allow for the related amounts to be set-off in certain circumstances, such as the event of default.

The following table presents the recognised financial instruments that are offset, or subject to enforceable master netting arrangements but not offset, as at 30 June 2015 and 30 June 2014. The column ‘Net amount’ shows the impact on the Group’s balance sheet if all set-off rights were exercised.


			Effects of offsetting on the balance sheet							Related amounts not offset
2015 US$M	Notes		Gross amounts		Gross amounts set-off in the balance sheet			Net amounts presented in the balance sheet		Amounts subject to master netting arrangements			Net amount
Financial assets
Cash and cash equivalents ^(a)		7		6,753		–			6,753		(326	)		6,427
Trade receivables		8		2,949		33			2,982		–			2,982
Cross currency and interest rate swaps^(a)		21		992		–			992		(740	)		252

Total				10,694		33			10,727		(1,066	)		9,661

Financial liabilities
Trade creditors		9		4,890		(33	)		4,857		–			4,857
Cross currency and interest rate swaps^(a)		22		1,267		–			1,267		(1,066	)		201

Total				6,157		(33	)		6,124		(1,066	)		5,058


2014 US$M
Financial assets
Cash and cash equivalents ^(a)		7		8,803		–			8,803		(59	)		8,744
Trade receivables		8		4,639		(19	)		4,620		–			4,620
Cross currency and interest rate swaps^(a)		21		1,483		–			1,483		(214	)		1,269

Total				14,925		(19	)		14,906		(273	)		14,633

Financial liabilities
Trade creditors		9		6,992		(19	)		6,973		–			6,973
Cross currency and interest rate swaps^(a)		22		273		–			273		(273	)		–

Total				7,265		(19	)		7,246		(273	)		6,973

^(a)	The Group enters into money market deposits and derivative transactions under International Swaps and Derivatives Association (ISDA) master netting agreements. Under the terms of these arrangements, only

where certain events occur such as default, the net position owing/receivable to a single counterparty will be taken as owing and all the relevant arrangements terminated. As the Group does not presently have a legally enforceable right of set-off, these amounts have not been offset in the balance sheet, but have been presented separately in the table above.

Capital management

The Group’s long-term strategy is to own and operate large, long-life, low-cost, expandable, upstream assets diversified by commodity, geography and market. The Group will invest capital in assets where they fit its strategy. The Group’s priorities for cash flow are underpinned by:

reinvestment in projects that carry attractive rates of return regardless of the economic climate;

seeking to maintain a solid ‘A’ credit rating; and

returning excess capital to shareholders firstly with its progressive dividend policy and thereafter via capital management initiatives (for example share buy-backs).

Further information relevant to the actions and outcomes of the Group’s capital management strategy is contained in section 7.1.4 Consolidated Cash Flow Statement, note 17 ‘Share capital’, note 18 ‘Other equity’ and note 19 ‘Dividends’.

The Group monitors capital using a gearing ratio, being the ratio of net debt to net debt plus net assets. Our policy is for net gearing to be a maximum of 40 per cent.


	2015			2014
	US$M			US$M
Cash and cash equivalents		(6,753	)		(8,803	)
Current debt		3,201			4,262
Non-current debt		27,969			30,327

Net debt		24,417			25,786

Net assets		70,545			85,382

Gearing		25.7	%		23.2	%

Refer to note 43 ‘Significant accounting policies’ (s).

Employee matters

24. Key management personnel

Key management personnel compensation comprises:


	2015		2014		2013
	US$		US$		US$
Short-term employee benefits		26,663,069		29,302,029		24,959,049
Post-employment benefits		2,920,007		3,176,079		3,446,910
Share-based payments		20,783,959		21,300,632		26,297,032

Total		50,367,035		53,778,740		54,702,991

Transactions with key management personnel

During the financial year, there were no purchases by key management personnel from the Group (2014: US$ nil; 2013: US$ nil).

There are no amounts payable by key management personnel at 30 June 2015 (2014: US$ nil).

Loans with key management personnel

There are no loans receivable from or payable to key management personnel (2014: US$ nil).

Transactions with personally related entities

A number of Directors of the Group hold or have held positions in other companies, where it is considered they control or significantly influence the financial or operating policies of those entities. There have been no transactions with those entities and no amounts were owed by the Group to personally related entities (2014: US$ nil).

25. Employee share ownership plans

Awards were provided under the following employee share ownership plans for the year ended 30 June 2015: the Long Term Incentive Plan (LTIP), Short Term Incentive Plan (STIP), Management Award Plan (MAP), Group Short Term Incentive Plan (GSTIP), Transitional GMC awards and the all-employee share plan, Shareplus. In prior years, awards were also made under the Group Incentive Scheme (GIS) and the Kgatelo Pele Employee Share Ownership Plan.

These awards take the form of rights to receive ordinary shares in either BHP Billiton Limited or BHP Billiton Plc. Awards made are subject to performance conditions (LTIP and Transitional GMC) and service conditions (all plans). Subject to the performance conditions and service conditions being met and the extent to which they are met, the awards will vest and the participant will become entitled to the appropriate number of ordinary shares or, if relevant, entitled to exercise options over the relevant number of ordinary shares. Awards under the plans do not confer any rights to participate in a share issue; however, there is discretion under each of the plans to adjust the awards in response to a variation of BHP Billiton’s share capital.

As a result of the demerger of South32, adjustments were made to unvested awards to ensure that participants continue to be appropriately treated. At the time of the demerger, unvested awards under the LTIP, STIP, MAP, GSTIP, those provided as Transitional GMC awards and GIS were adjusted to reflect the reduction in the value of BHP Billiton after South32 demerged. During the year ended 30 June 2015, no new awards were granted under either of the GIS – deferred shares or Transitional GMC awards, except for the adjustments as described above. In relation to unvested awards under Shareplus, compensatory awards were granted to reflect the reduction in the value of BHP Billiton after South32 demerged. The new number of unvested awards for each participant (when taken together with the compensatory awards referred to above) equals the number of awards held before the demerger multiplied by ((BHP Billiton five-day volume weighted average price (VWAP) plus South32 five-day VWAP) divided by BHP Billiton five-day VWAP). Prices were based on the first five trading days following South32’s listing on the relevant exchanges on 18 May 2015.

All LTIP, STIP and GIS awards and all MAP and GSTIP awards granted prior to 1 July 2011 are eligible to receive a payment equal to the dividend amount that would have been earned on the underlying shares awarded to those participants (the Dividend Equivalent Payment or DEP). The DEP is provided to the participants once the underlying shares are allocated or transferred to them. No DEP is provided in respect of any awards that lapse. All Transitional GMC awards and awards granted after 1 July 2011 under GSTIP and MAP are not eligible for a DEP.

A description of these plans is as follows:

(i)	STIP, GIS and GSTIP

The STIP (which replaced GIS in FY2014) is a plan for the GMC and the GSTIP is a plan for senior management employees other than the GMC (being first introduced during the year ended 30 June 2009). The plans allow a portion of short-term incentive amounts (being a percentage of base salary) to be deferred. Half of the short-term incentive is paid in cash. The remaining half is provided in the form of STIP, GIS or GSTIP awards – being a grant of rights to receive BHP Billiton shares. The rights are subject to a two-year vesting period before they vest or can be exercised. If, during the vesting period, an individual resigns without the Remuneration Committee’s consent, or is dismissed for cause, their rights are forfeited. Awards in respect of the year ended 30 June 2015 will be granted during the year ending 30 June 2016.

(ii)	LTIP and MAP

The LTIP is a plan for the GMC, and awards are granted annually. The performance condition applicable to the awards requires the Group’s Total Shareholder Return (TSR) over a five-year performance period to be greater than the Peer Group TSR (being the weighted median TSR where the comparator group is a specified group of peer companies). For awards granted from December 2010 onwards, performance relative to this Peer Group TSR performance condition determines the vesting of 67 per cent of the LTIP awards, while performance relative to the Index TSR (being the index value where the comparator group is a market index such as the MSCI World) performance condition determines the vesting of 33 per cent of the LTIP awards. To the extent that the performance condition is not achieved, awards are forfeited. There is no retesting. For the awards to vest in full, the Group’s TSR must exceed the Peer Group TSR and Index TSR (if applicable) by a specified percentage per year, determined for each grant by the Remuneration Committee. Since the establishment of the LTIP in 2004, this percentage has been set at 5.5 per cent per year. The vesting scale is determined for each grant by the Committee. For awards granted prior to December 2013, vested awards were able to be exercised for up to five years following the date that vesting is determined, with an expiry date prior to the fifth anniversary of vesting. From December 2013 onwards, vested awards will be transferred to individuals as soon as practicable after the relevant vesting date.

The MAP is a plan for management employees other than the GMC. Under the MAP, participants receive an award of rights to receive BHP Billiton shares. The number of rights is determined by role, performance and organisational level. There are no performance conditions attached to the awards and awards will vest at the end of three years providing participants remain in employment over that time.

(iii)

Transitional GMC awards

The Remuneration Committee may determine that these awards are provided to new GMC members recruited from within BHP Billiton as a transitional measure to bridge the time-based gap between the vesting of MAP awards that were granted to these individuals in their non-GMC management positions (with a three-year service condition) and the LTIP awards provided to GMC members (with a five-year service and performance condition). Transitional GMC awards have two tranches. Tranche one has athree-year service and performance condition. Tranche two has a four-year service and performance condition. The Remuneration Committee has absolute discretion to determine if the performance condition has been met and whether any, all or part of the award will vest (or otherwise lapse), having regard to (but not limited to) BHP Billiton’s TSR over the three- or four-year performance period (respectively), the participant’s contribution to Group outcomes and the participant’s personal performance (with guidance on this assessment from the CEO).

(iv) Shareplus

Shareplus is an all-employee share purchase plan which commenced in April 2007. Employees may contribute up to US$5,000 to acquire shares (Acquired Shares) in any Plan year. On the third anniversary of the start of a Plan year, the Company will match the number of Acquired Shares held by the employee at that time with Matched Shares. The employees have no beneficial entitlement to the Matched Shares until they are awarded. Acquired Shares are purchased on a quarterly basis. Employees can sell their Acquired Shares at any time. If, prior to the third anniversary, an individual sells their Acquired Shares, resigns without the Remuneration Committee’s consent or is dismissed for cause, their entitlement to Matched Shares is forfeited.

(v)	Kgatelo Pele ESOP

The Kgatelo Pele ESOP commenced in June 2013 with a three-year vesting period. All eligible employees are entitled to awards to the value of ZAR8,667 each year. Beneficiaries must be permanently employed by Hotazel Manganese Mines (Pty) Ltd as at 1 May (effective date) of each year to qualify for the allocation for that particular year. Hotazel Manganese Mines (Pty) Ltd will contribute the necessary amount to the Kgatelo Pele Trust by way of donation to enable the purchase of shares, which will be held until the end of the vesting period. During this period, beneficiaries will be entitled to dividends declared by BHP Billiton. At the end of each vesting period, eligible employees will be given the opportunity to create a portfolio by having the shares transferred into their own names or to sell their entitlements and receive the cash benefit. In May 2015, BHP Billiton’s interest in Hotazel Manganese Mines (Pty) Ltd was divested as part of South32, and the Kgatelo Pele Trust is no longer part of the Group. The Group will not make future contributions to the Kgatelo Pele Trust.

Employee share awards – current plans


2015	Number of awards at the beginning of the financial year		Number of awards issued during the year		Number of awards vested and exercised		Number of awards lapsed		Number of awards at the end of the financial year		Number of awards vested and exercisable at the end of the financial year
BHP Billiton Limited
STIP awards		–		412,994		–		–		412,994		–
GIS awards – deferred shares		143,544		4,846		80,247		–		68,143		–
GSTIP awards – deferred shares		2,178,334		1,840,479		1,328,634		66,026		2,624,153		52,190
GSTIP awards – options		110,319		–		23,065		–		87,254		87,254
– weighted average exercise price – A$		41.08		–		38.41		–		41.78		41.78
– weighted average share price – A$						38.07
LTIP awards		4,346,180		1,271,634		1,131,593		719,790		3,766,431		707,600
Transitional GMC awards		271,194		15,636		–		66,850		219,980		–
MAP awards		7,706,995		3,230,752		2,885,862		325,246		7,726,639		228,827
Shareplus		3,460,805		2,888,178		1,997,843		322,748		4,028,392		–

BHP Billiton Plc
GIS awards – deferred shares		35,081		–		35,081		–		–		–
GIS awards – options		30,389		–		–		–		30,389		30,389
– weighted average exercise price – £		23.71		–		–		–		23.71		23.71
– weighted average share price – £						–
GSTIP awards – deferred shares		447,157		285,418		405,095		5,872		321,608		18,132
GSTIP awards – options		42,473		–		–		–		42,473		42,473
– weighted average exercise price – £		22.08		–		–		–		22.08		22.08
– weighted average share price – £						–
LTIP awards		1,435,123		42,454		375,983		97,380		1,004,214		281,857
Transitional GMC awards		39,860		3,206		–		–		43,066		–
MAP awards		2,263,206		671,375		1,222,078		140,420		1,572,083		162,851
Shareplus		757,466		485,747		929,771		68,648		244,794		–

Fair value and assumptions in the calculation of fair value for awards issued


2015	Weighted average fair value of awards granted during the year ^(a) US$		Risk-free interest rate ^(b)			Estimated life of awards		Share price at grant date		Estimated volatility of share price ^(c)			Dividend yield
BHP Billiton Limited
STIP awards		30.16		n/a			3 years		A$36.00		n/a			3.39	%
GSTIP awards – deferred shares		28.15		n/a			3 years		A$36.00		n/a			3.39	%
LTIP awards		15.67		1.70	%		5 years		A$36.00		27.0	%		3.39	%
MAP awards		27.20		n/a			3 years		A$36.00		n/a			3.39	%
Shareplus		20.22		2.27	%		3 years		A$30.27		n/a			3.36	%

BHP Billiton Plc
GSTIP awards – deferred shares		28.20		n/a			3 years		£19.45		n/a			4.00	%
LTIP awards		15.90		1.70	%		5 years		£19.45		27.0	%		4.00	%
MAP awards		27.07		n/a			3 years		£19.45		n/a			4.00	%
Shareplus		23.49		2.76	%		3 years		£15.00		n/a			3.90	%

Employee share awards – current plans


2014	Number of awards at the beginning of the financial year		Number of awards issued during the year		Number of awards vested and exercised		Number of awards lapsed		Number of awards at the end of the financial year		Number of awards vested and exercisable at the end of the financial year
BHP Billiton Limited
GIS awards – deferred shares		244,868		114,629		215,953		–		143,544		–
GIS awards – options		90,389		–		90,389		–		–		–
– weighted average exercise price – A$		29.15		–		29.15		–		–		–
– weighted average share price – A$						36.80
GSTIP awards – deferred shares		2,388,298		1,256,041		1,414,934		51,071		2,178,334		46,839
GSTIP awards – options		284,636		–		116,876		57,441		110,319		110,319
– weighted average exercise price – A$		39.44		–		38.41		38.41		41.08		41.08
– weighted average share price – A$						36.82
LTIP awards		6,066,035		1,298,015		1,688,386		1,329,484		4,346,180		1,512,567
Transitional GMC awards		35,834		235,360		–		–		271,194		–
MAP awards		7,981,682		2,921,588		2,481,689		714,586		7,706,995		486,850
Shareplus		3,092,062		2,010,066		1,339,097		302,226		3,460,805		–

BHP Billiton Plc
GIS awards – deferred shares		136,632		–		101,551		–		35,081		–
GIS awards – options		109,792		–		79,403		–		30,389		30,389
– weighted average exercise price – £		15.58		–		12.47		–		23.71		23.71
– weighted average share price – £						19.31
GSTIP awards – deferred shares		700,770		242,715		485,820		10,508		447,157		13,228
GSTIP awards – options		54,960		–		12,487		–		42,473		42,473
– weighted average exercise price – £		20.80		–		17.43		–		22.08		22.08
– weighted average share price – £						18.72
LTIP awards		2,638,166		–		726,863		476,180		1,435,123		541,220
Transitional GMC awards		39,860		–		–		–		39,860		–
MAP awards		2,418,076		724,685		728,298		151,257		2,263,206		231,746
Shareplus		702,203		434,461		296,186		83,012		757,466		–
Kgatelo Pele ESOP		–		66,064		–		–		66,064		–

Fair value and assumptions in the calculation of fair value for awards issued


2014	Weighted average fair value of awards granted during the year ^(a) US$		Risk-free interest rate^(b)			Estimated life of awards		Share price at grant date		Estimated volatility of share price ^(c)			Dividend yield
BHP Billiton Limited
GIS awards – deferred shares		29.24		n/a			3 years		A$30.94		n/a			3.17	%
GSTIP awards – deferred shares		26.62		n/a			3 years		A$30.94		n/a			3.17	%
LTIP awards		13.25		1.42	%		5 years		A$30.94		31.0	%		3.17	%
Transitional GMC awards		25.37		n/a			3-4 years		A$30.94		n/a			3.17	%
MAP awards		25.78		n/a			3 years		A$30.94		n/a			3.17	%
Shareplus		31.37		2.55	%		3 years		A$36.78		n/a			3.11	%

BHP Billiton Plc
GSTIP awards – deferred shares		24.24		n/a			3 years		£17.15		n/a			3.65	%
MAP awards		23.35		n/a			3 years		£17.15		n/a			3.65	%
Shareplus		28.61		2.05	%		3 years		£18.91		n/a			3.49	%
Kgatelo Pele ESOP		30.14		n/a			3 years		£18.91		n/a			n/a

Employee share awards – current plans


2013	Number of awards at the beginning of the financial year		Number of awards issued during the year		Number of awards vested and exercised		Number of awards lapsed		Number of awards at the end of the financial year		Number of awards vested and exercisable at the end of the financial year
BHP Billiton Limited
GIS awards – deferred shares		614,335		53,854		407,847		15,474		244,868		23,167
GIS awards – options		764,318		–		359,098		314,831		90,389		90,389
– weighted average exercise price – A$		34.44		–		29.15		41.99		29.15		29.15
– weighted average share price – A$						34.15
GSTIP awards – deferred shares		2,234,410		1,248,794		1,024,623		70,283		2,388,298		194,382
GSTIP awards – options		335,160		–		–		50,524		284,636		284,636
– weighted average exercise price – A$		39.29		–		–		38.41		39.44		39.44
– weighted average share price – A$						–
LTIP awards		10,047,354		693,628		4,621,864		53,083		6,066,035		2,367,453
Transitional GMC awards		–		35,834		–		–		35,834		–
MAP awards		7,841,674		3,142,398		2,196,959		805,431		7,981,682		687,175
Shareplus		2,436,201		1,966,016		1,015,575		294,580		3,092,062		–

BHP Billiton Plc
GIS awards – deferred shares		253,076		54,268		170,712		–		136,632		4,195
GIS awards – options		297,042		–		172,704		14,546		109,792		109,792
– weighted average exercise price – £		12.94		–		10.96		16.51		15.58		15.58
– weighted average share price – £						19.29
GSTIP awards – deferred shares		890,553		281,561		412,558		58,786		700,770		65,838
GSTIP awards – options		96,012		–		21,030		20,022		54,960		54,960
– weighted average exercise price – £		20.35		–		17.53		22.08		20.80		20.80
– weighted average share price – £						19.37
LTIP awards		3,941,270		401,831		1,684,852		20,083		2,638,166		912,476
Transitional GMC awards		–		39,860		–		–		39,860		–
MAP awards		2,837,040		797,840		860,119		356,685		2,418,076		250,305
Shareplus		588,356		439,800		241,642		84,311		702,203		–

Fair value and assumptions in the calculation of fair value for awards issued


2013	Weighted average fair value of awards granted during the year ^(a) US$		Risk-free interest rate ^(b)			Estimated life of awards		Share price at grant date		Estimated volatility of share price ^(c)			Dividend yield
BHP Billiton Limited
GIS awards – deferred shares		32.40		n/a			3 years		A$31.45		n/a			2.78	%
GSTIP awards – deferred shares		29.84		n/a			3 years		A$31.45		n/a			2.78	%
LTIP awards		16.41		0.73	%		5 years		A$31.45		35.0	%		2.78	%
Transitional GMC awards		28.61		n/a			3-4 years		A$31.45		n/a			2.78	%
MAP awards		29.01		n/a			3 years		A$31.45		n/a			2.78	%
Shareplus		32.55		3.34	%		3 years		A$33.74		n/a			2.50	%

BHP Billiton Plc
GIS awards – deferred shares		28.91		n/a			3 years		£18.06		n/a			3.31	%
GSTIP awards – deferred shares		26.22		n/a			3 years		£18.06		n/a			3.31	%
LTIP awards		14.59		0.73	%		5 years		£18.06		35.0	%		3.31	%
Transitional GMC awards		24.94		n/a			3-4 years		£18.06		n/a			3.31	%
MAP awards		25.37		n/a			3 years		£18.06		n/a			3.31	%
Shareplus		28.80		2.24	%		3 years		£19.49		n/a			2.89	%

Employee share awards – past plans

2015

Number
of awards
at the
beginning
of the
financial
year

Number
of
awards
issued

Number
of
awards
exercised

Number
of
awards
lapsed

Number of
awards
at the end
of the
financial
year

Number of
awards
exercisable
at the end
of the
financial
year

BHP Billiton Limited

Employee Share Plan shares

2,177,028

–

1,635,765

–

541,263

2014

Number
of awards
at the
beginning
of the
financial
year

Number
of
awards
issued

Number
of
awards
exercised

Number
of
awards
lapsed

Number of
awards
at the end
of the
financial
year

Number of
awards
exercisable
at the end
of the
financial
year

BHP Billiton Limited

Employee Share Plan shares

3,950,536

–

1,773,508

–

2,177,028

Employee share awards – past plans

2013

Number
of awards
at the
beginning
of the
financial
year

Number
of
awards
issued

Number
of
awards
exercised

Number
of
awards
lapsed

Number of
awards
at the end
of the
financial
year

Number of
awards
exercisable
at the end
of the
financial
year

BHP Billiton Limited

Employee Share Plan shares

5,447,321

–

1,496,785

–

3,950,536

Employee share awards – summary^{(e) (f)}

Awards outstanding at:

Month of issue

30 June 2015

10 September 2015

Exercise price ^(d)

Exercise period/release date

BHP Billiton Limited

Employee Share Plan shares

October 1997

541,263

–

Oct 1997 – Oct 2017

541,263

STIP awards

December 2014

412,994

–

Aug 2016

412,994

GIS awards

Deferred shares

December 2013

68,143

–

Aug 2015

68,143

–

GSTIP awards

Deferred shares

November 2014

1,594,188

1,512,185

–

Aug 2016

October 2013

1,029,965

–

Aug 2015

Options

October 2010

87,254

–

41.78

Aug 2012 – Aug 2015

2,711,407

1,512,185

LTIP awards

December 2014

1,195,389

–

Aug 2019

December 2013

1,096,117

–

Aug 2018

December 2012

154,433

–

Aug 2017 – Aug 2022

December 2011

255,721

–

Aug 2016 – Aug 2021

December 2010

357,171

–

Aug 2015 – Aug 2020

December 2009

4,137

–

Aug 2014 – Aug 2019

December 2007

396,227

–

Aug 2012 – Aug 2017

December 2006

288,027

282,127

–

Aug 2011 – Aug 2016

December 2005

19,209

–

Aug 2010 – Aug 2015

3,766,431

3,380,014

Awards outstanding at:
Month of issue
30 June 2015 10 September 2015 Exercise price ^(d) Exercise period/release date
Transitional GMC awards

December 2013
109,990    109,990    – �� Aug 2017
December 2013
109,990    109,990    –    Aug 2016

219,980    219,980

MAP awards

November 2014 and April 2015
2,853,667    2,743,310    –    Aug 2017
October 2013 and April 2014
2,600,096    2,467,410    –    Aug 2016
October 2012 and March 2013
2,141,153    –    –    Aug 2015
October 2011 and March 2012
2,423    –    –    Aug 2014 – Aug 2015
October 2010 and March 2011
124,300    108,900    –    Aug 2013 – Aug 2016
October 2009 and March 2010
5,000    –    –    Aug 2012 – Aug 2015

7,726,639    5,319,620

Shareplus

September 2014 to June 2015
2,587,969    2,480,019    –    Apr 2017
September 2013 to June 2014
1,440,423    1,392,343    –    Apr 2016

4,028,392    3,872,362

BHP Billiton Plc

GIS awards

Options

December 2010
30,389    30,389    £ 23.71    Aug 2012 – Oct 2015

30,389    30,389

GSTIP awards

Deferred shares

November 2014
227,687    210,952    –    Aug 2016
October 2013
93,921    –    –    Aug 2015
Options

October 2010
42,473    –    £ 22.08    Aug 2012 – Aug 2015

364,081    210,952

LTIP awards

December 2012
308,257    308,257    –    Aug 2017 – Aug 2022
December 2011
214,452    214,452    –    Aug 2016 – Aug 2021
December 2010
199,648    –    –    Aug 2015 – Aug 2020
December 2007
146,376    133,876    –    Aug 2012 – Aug 2017
December 2006
75,064    63,064    –    Aug 2011 – Aug 2016
December 2005
60,417    –    –    Aug 2010 – Aug 2015

1,004,214    719,649

Transitional GMC awards

December 2012
21,533    21,533    –    Aug 2016
December 2012
21,533    –    –    Aug 2015

43,066    21,533

MAP awards

November 2014 and April 2015
581,580    537,694    –    Aug 2017
October 2013 and April 2014
591,489    543,427    –    Aug 2016

Awards outstanding at:
Month of issue
30 June 2015 10 September 2015 Exercise price ^(d) Exercise period/release date
October 2012 and March 2013
317,914    –    –    Aug 2015
October 2010 and March 2011
68,100    55,450    –    Aug 2013 – Aug 2016
October 2009 and March 2010
13,000    –    –    Aug 2012 – Aug 2015

1,572,083    1,136,571

Shareplus

September 2014 to June 2015
153,098    146,998    –    Apr 2017
September 2013 to June 2014
91,696    88,749    –    Apr 2016

244,794    235,747

^(a)	The fair value of awards as presented in the tables above represents the fair value at grant date. The fair values of awards granted were estimated using a Monte Carlo simulation methodology, Black-Scholes option pricing technique and net present value technique.

^(b)	The risk-free interest rate used is an applicable government bond rate.

^(c)	Historical volatility has been used to estimate the volatility of the share price.

^(d)	Exercise price on awards issued is equal to the exercise price as per awards outstanding.

^(e)	Shares issued on exercise of BHP Billiton’s employee share ownership plans include shares purchased on-market.

^(f)	In respect of employee share awards, the Group utilises the following trusts:

⁽ⁱ⁾

The Billiton Employee Share Ownership Plan Trust is a discretionary trust for the benefit of all employees of BHP Billiton Plc and its subsidiaries. The trustee is an independent company, resident in Jersey. The Trust uses funds provided by BHP Billiton Plc and/or its subsidiaries as appropriate to acquire ordinary shares to enable awards to be made or satisfied under the LTIP, STIP, MAP, GIS, GSTIP, Shareplus and other employee share schemes operated by BHP Billiton Plc from time to time. The ordinary shares may be acquired by purchase in the market or by subscription at not less than nominal value. The Trust receives dividends on shares held to meet future awards under the plans.

⁽ⁱⁱ⁾

The BHP Billiton Employee Equity Trust is a discretionary trust for the benefit of all employees of BHP Billiton Limited and its subsidiaries. The trustee is an independent company, resident in Jersey. The Trust uses funds provided by BHP Billiton Limited and/or its subsidiaries as appropriate to acquire ordinary shares to enable awards to be made or satisfied under the LTIP, STIP, MAP, GIS, GSTIP, Shareplus and other employee share schemes operated by BHP Billiton Limited from time to time. The ordinary shares may be acquired by purchase in the market or by subscription at not less than nominal value. The Trust has waived its rights to dividends on shares held to meet future awards under the plans.

Refer to note 43 ‘Significant accounting policies’ (t).

26. Employee benefits, restructuring and post-retirement employee benefits provisions


	2015		2014
	US$M		US$M
Current
Employee benefits^(a)		1,185		1,727
Restructuring^(b)		104		26
Post-retirement employee benefits^(c)		35		23

Total current provisions		1,324		1,776

Non-current
Employee benefits^(a)		199		247
Post-retirement employee benefits^(c)		394		519

Total non-current provisions		593		766


	Employee benefits			Restructuring			Post- retirement employee benefits			Total
	US$M			US$M			US$M			US$M
At the beginning of the financial year		1,974			26			542			2,542
Charge/(credit) for the year:
Underlying		1,531			277			59			1,867
Discounting		7			–			–			7
Net interest expense		–			–			24			24
Exchange variations		(212	)		(2	)		(24	)		(238	)
Released during the year		(37	)		(17	)		–			(54	)
Remeasurement losses taken to retained earnings		–			–			28			28
Utilisation		(1,621	)		(174	)		(66	)		(1,861	)
Divestment and demerger of subsidiaries and operations		(241	)		(7	)		(146	)		(394	)
Transfers and other movements		(17	)		1			12			(4	)

At the end of the financial year		1,384			104			429			1,917

^(a)	The expenditure associated with total employee benefits will occur in a pattern consistent with when employees choose to exercise their entitlement to benefits.

^(b)	Total restructuring provisions include provisions for business terminations and office closures.

^(c)	The provision for post-retirement employee benefits includes pension liabilities of US$160 million (2014: US$117 million) and post-retirement medical benefit liabilities of US$269 million (2014: US$425 million). Refer to note 27 ‘Pension and other post-retirement obligations’.

Refer to note 43 ‘Significant accounting policies’ (u) and (v).

~~1 Accounting~~27. Pension and other post-retirement obligations

The Group operates the following pension and post-retirement medical schemes:

Defined contribution pension schemes and multi-employer pension schemes

The Group contributed US$462 million (2014: US$467 million; 2013: US$456 million) to defined contribution plans and multi-employer defined contribution plans. These contributions are expensed as incurred.

Defined benefit pension schemes

The Group has closed all defined benefit schemes to new entrants. Defined benefit pension schemes remain operating in Australia, the US, Canada and Europe for existing members. During the 2015 financial year, as part of the demerger of South32, the Group transferred its defined benefit pension schemes in South Africa, South America and some schemes in Australia to South32. Full actuarial valuations are prepared and updated annually to 30 June by local actuaries for all schemes. The Group operates final salary schemes that provide final salary benefits only, non-salary related schemes that provide flat dollar benefits and mixed benefit schemes that consist of a final salary defined benefit portion and a defined contribution portion.

Defined benefit post-retirement medical schemes

The Group operates a number of post-retirement medical schemes in the US, Canada and Europe. During the 2015 financial year, as part of the demerger of South32, the Group transferred its defined benefit medical schemes in South Africa to South32. Full actuarial valuations are prepared by local actuaries for all schemes. All of the post-retirement medical schemes in the Group are unfunded.

Risk

The Group’s defined benefit pension schemes and post-retirement medical schemes expose the Group to a number of risks including asset value volatility, interest rate and inflation risk.

Recognising this, the Group has adopted an approach of moving away from providing defined benefit pensions. The majority of Group sponsored defined benefit pension schemes have been closed to new entrants for many years. Existing benefit schemes, and the terms of employee participation in these schemes, are reviewed on a regular basis.

Fund Assets

The Group follows a coordinated strategy for the funding and investment of its defined benefit pension schemes (subject to meeting all local requirements). The Group’s aim is for the value of defined benefit scheme assets to be maintained at close to the value of the corresponding benefit obligations, allowing for some short-term volatility.

Scheme assets are invested in a diversified range of asset classes, predominantly comprising bonds and equities.

The Group’s aim is to progressively shift defined benefit pension scheme assets towards investments that match the anticipated profile of the benefit obligations, as funding levels improve, and as benefit obligations mature. Over time, this is expected to result in a further reduction in the total exposure of pension scheme assets to equity markets. For pension schemes that pay lifetime benefits, the Group may consider and support the purchase of annuities to back these benefit obligations if it is commercially sensible to do so.

Net Liability recognised in the Consolidated Balance Sheet

The net liability recognised in the Consolidated Balance Sheet is as follows:


	Defined benefit pension schemes						Post-retirement medical schemes
	2015			2014			2015		2014
	US$M			US$M			US$M		US$M
Present value of funded defined benefit obligation		868			1,297			–		–
Present value of unfunded defined benefit obligation		113			103			269		425
Fair value of defined benefit scheme assets		(822	)		(1,319	)		–		–

Scheme deficit		159			81			269		425

Unrecognised surplus		–			33			–		–
Unrecognised past service credits		–			–			–		–
Adjustment for employer contributions tax		1			3			–		–

Net liability recognised in the Consolidated Balance Sheet		160			117			269		425

The Group has no legal obligation to settle these liabilities with any immediate contributions or additional one-off contributions. The Group intends to continue to contribute to each defined benefit pension and post-retirement medical scheme in accordance with the latest recommendations of each scheme actuary.

Refer to note 43 ‘Significant accounting policies’ (v).

28. Employees


	2015		2014		2013
Average number of employees^(a)
Petroleum and Potash		4,224		4,207		4,449
Copper		9,138		9,414		9,765
Iron Ore		7,483		8,035		6,883
Coal		5,579		6,160		6,006
Group and unallocated		3,246		3,687		4,054

Total average number of employees from Continuing operations		29,670		31,503		31,157

Total average number of employees from Discontinued operations		13,159		15,541		15,735

Total average number of employees		42,829		47,044		46,892

^(a)

Average employee numbers include the Executive Director, 100 per cent of employees of subsidiary companies and our share of employees of joint operations. Employees of equity accounted investments are not included. Part-time employees are included on a full-time equivalent basis. Employees of businesses acquired or disposed of during the year are included for the period of ownership. Contractors are not included.

Group and related party information

29. Discontinued operations

On 25 May 2015, the Group announced that it completed the demerger of a selection of its aluminium, coal, manganese, nickel and silver-lead-zinc assets to create an independent metals and mining company, South32. This included the Group’s interests in its integrated Aluminium business, Energy Coal South Africa, Illawarra metallurgical coal, the Manganese business, the Cerro Matoso nickel operation and the Cannington silver-lead-zinc mine.

Significant subsidiaries, joint operations, equity accounted investments and investments that were divested as part of the demerger of South32 are listed below:


		Effective interest
Significant subsidiaries, joint operations, equity accounted investments and investments	Country of incorporation	At date of demerger %
Alumar (aluminium refining)	Brazil		36
Alumar (aluminium smelting)	Brazil		40
BHP Billiton Aluminium (RAA) Pty Ltd	Australia		100
BHP Billiton Aluminium (Worsley) Pty Ltd	Australia		100
BHP Billiton Cannington Pty Ltd	Australia		100
BHP Billiton Energy Coal South Africa (Pty) Ltd	South Africa		100
BHP Billiton Energy Coal South Africa Rehabilitation Trust	South Africa		N/A
BHP Billiton Metais SA	Brazil		100
BHP Billiton SA Investments Ltd	United Kingdom		100
BHP Billiton SA Ltd	South Africa		100
Billiton Aluminium SA (Pty) Ltd	South Africa		100
Billiton Investment 12 BV	The Netherlands		100
Cerro Matoso SA	Colombia		99.9
Dendrobium Coal Pty Ltd	Australia		100
Endeavour Coal Pty Ltd	Australia		100
Groote Eylandt Mining Company Pty Ltd	Australia		60
Hillside Aluminium (Pty) Ltd	South Africa		100
Hotazel Manganese Mines (Pty) Ltd	South Africa		54.6
Illawarra Coal Holdings Pty Ltd	Australia		100
Illawarra Services Pty Ltd	Australia		100
Mozal SARL	Mozambique		47.1
Phola Coal Processing Plant (Pty) Ltd	South Africa		50
Samancor AG	Switzerland		60
Samancor Manganese (Pty) Ltd	South Africa		60
South32 Limited	Australia		100
Tasmanian Electro Metallurgical Company Pty Ltd	Australia		60
Worsley	Australia		86

The contribution of Discontinued operations included within the Group’s profit until the loss of control is detailed below:

Income statement – Discontinued operations


	2015			2014			2013
	US$M			US$M			US$M
Revenue
Group production		7,007			9,182			10,430
Third party products		624			1,262			1,663

Revenue		7,631			10,444			12,093
Other income		225			299			143
Expenses excluding net finance costs		(6,582	)		(9,990	)		(13,211	)
Share of operating profit of equity accounted investments		(24	)		10			–

Profit/(loss) from operations		1,250			763			(975	)

Comprising:
Group production		1,213			734			(1,038	)
Third party products		37			29			63

		1,250			763			(975	)

Financial expenses		(74	)		(278	)		(155	)
Financial income		26			16			28

Net finance costs		(48	)		(262	)		(127	)

Profit/(loss) before taxation		1,202			501			(1,102	)

Income tax expense		(464	)		(272	)		(68	)
Royalty-related taxation (net of income tax benefit)		(96	)		40			(142	)

Total taxation expense		(560	)		(232	)		(210	)

Profit/(loss) after taxation from operating activities		642			269			(1,312	)

Net loss on demerger of South32 after taxation		(2,154	)		–			–

(Loss)/profit after taxation		(1,512	)		269			(1,312	)

Attributable to non-controlling interests		61			85			163
Attributable to members of BHP Billiton Group		(1,573	)		184			(1,475	)

Basic (losses)/earnings per ordinary share (cents)		(29.6	)		3.5			(27.7	)
Diluted (losses)/earnings per ordinary share (cents)		(29.5	)		3.4			(27.6	)

The total comprehensive income attributable to members of BHP Billiton Group from Discontinued operations was a loss of US$1,685 million (2014: profit of US$164 million; 2013: loss of US$1,569 million).

Cash flows from Discontinued operations


	2015			2014			2013
	US$M			US$M			US$M
Net operating cash flows		1,502			1,724			1,137
Net investing cash flows		(1,066	)		(700	)		(1,105	)
Net financing cash flows		(203	)		(32	)		(148	)

Net increase/(decrease) in cash and cash equivalents from Discontinued operations		233			992			(116	)

Cash disposed on demerger of South32		(586	)		–			–

Net (decrease)/increase in cash and cash equivalents from Discontinued operations		(353	)		992			(116	)

Loss on demerger of Discontinued operations

Details of the net loss on demerger are described below:


	2015
	US$M
Assets
Cash and cash equivalents		586
Trade and other receivables		1,198
Other financial assets		470
Investments accounted for using the equity method		1,643
Inventories		1,073
Property, plant and equipment		9,622
Intangible assets		328
Deferred tax assets		142
Other		66

Total assets		15,128

Liabilities
Trade and other payables		811
Interest bearing liabilities		1,085
Provisions		1,916
Other		6

Total liabilities		3,818

Net assets demerged		11,310

Less non-controlling interest share of net liabilities disposed		1

BHP Billiton share of net assets demerged		11,311


Fair value of South32 shares – in-specie dividend		9,445
Reclassification of financial asset and foreign currency translation reserves of South32 to the income statement		71

Loss on demerger		(1,795	)
Transaction costs		(586	)

Loss on demerger net of transaction costs before taxation		(2,381	)
Income tax benefit on transaction costs		62

Loss on demerger net of transaction costs after taxation		(2,319	)
Gain on loss of control of Manganese business		2,146
Impairment of South32 assets upon classification as held for distribution (after tax benefit)		(1,749	)
Derecognition of deferred tax assets		(232	)

Net loss on demerger of South32		(2,154	)

Exceptional items – Discontinued operations

Exceptional items are those items where their nature and amount is considered material to the financial statements. Items related to Discontinued operations included within the Group’s profit are detailed below:


Year ended 30 June 2015	Gross			Tax			Net
	US$M			US$M			US$M
Gain on loss of control of Manganese business		2,146			–			2,146
Impairment of South32 assets upon classification as held for distribution		(1,897	)		148			(1,749	)
Loss on demerger net of transaction costs		(2,381	)		62			(2,319	)
Derecognition of deferred tax assets		–			(232	)		(232	)
Repeal of Minerals Resource Rent Tax legislation		–			(111	)		(111	)

		(2,132	)		(133	)		(2,265	)

Gain on loss of control of Manganese business

In contemplation of the demerger, the Group and Anglo American agreed to make certain changes to the agreement which governs their interests in the Manganese business. The changes resulted in the Group and Anglo American agreeing to share joint control of the Manganese business. On 2 March 2015, the Group ceased consolidation of the Manganese business and accounted for its 60 per cent interest as an equity accounted joint venture. The remeasurement to fair value at that date gave rise to a gain of US$2,146 million. There were no tax consequences arising from the remeasurement of the Manganese business.

Impairment of South32 assets upon classification as held for distribution

As the fair value of South32 shares, determined by reference to the Australian Securities Exchange volume weighted average price over the first five days of trading, was less than the book value of the assets distributed, the Group considered whether any of the assets within South32 were impaired at the time they became held for distribution. The Group recognised an impairment of US$1,358 million (after tax benefit) for its Manganese business due to the fall in the price of manganese and an impairment of US$391 million (after tax benefit) at the Wolvekrans Middelburg complex within Energy Coal South Africa due to a decline in export prices and a new rail agreement negatively impacting volumes.

Loss on demerger net of transaction costs

The Group recognised the demerger in the financial statements as a dividend, reducing retained earnings by the fair value of South32’s shares. The US$1,795 million loss on demerger is the difference between the fair value of South32’s shares and the book value of the assets distributed and the reclassification of reserves relating to South32 to the income statement. Transaction costs of US$524 million (after tax benefit) comprised stamp duty, professional fees and separation and establishment costs.

Derecognition of deferred tax assets

The Group derecognised deferred tax assets as a result of internal structuring transactions of South32 assets into the demerged entity.

Repeal of Minerals Resource Rent Tax legislation

The legislation to repeal the Minerals Resource Rent Tax (MRRT) in Australia took effect on 30 September 2014. As a result, the Group derecognised an MRRT deferred tax asset (net of income tax consequences) of which US$111 million related to South32 assets. A corresponding taxation charge of US$111 million was recognised in the period.

There were no exceptional items related to Discontinued operations for the year ended 30 June 2014.

Items related to Discontinued operations included within the Group’s profit for the year ended 30 June 2013 are detailed below:


Year ended 30 June 2013	Gross			Tax		Net
	US$M			US$M		US$M
Impairment of Worsley assets		(2,190	)		559		(1,631	)
Other impairments		(35	)		–		(35	)

		(2,225	)		559		(1,666	)

Impairment of Worsley assets

The Group recognised an impairment of assets at Worsley as a result of expected continued strength in the Australian dollar and weak alumina prices. A total impairment charge of US$1,631 million (after tax benefit) was recognised in the year ended 30 June 2013.

Other impairments

The Group reviewed the status of a minor capital project at the Cerro Matoso nickel operation, which resulted in the recognition of impairment charges of US$35 million (after tax benefit) in the year ended 30 June 2013.

30. Subsidiaries

Significant subsidiaries of the Group, which are those with the most significant contribution to the Group’s net profit or net assets, are listed in the table below. Significant subsidiaries that were divested as part of the demerger of South32 are listed in note 29 ‘Discontinued operations’.

Effective
interest

Significant subsidiaries^(a)

Country of
incorporation

Principal activity

2015
%

2014
%

BHP Billiton Canada Inc.

Canada

Potash development

100

BHP Billiton Finance BV

The
Netherlands

Finance

100

BHP Billiton Finance Limited

Australia

Finance

100

BHP Billiton Finance (USA) Ltd^(b)

Australia

Finance

100

BHP Billiton Freight Singapore Pte Limited

Singapore

Freight Services

100

BHP Billiton Group Operations Pty Ltd

Australia

Administrative services

100

BHP Billiton Innovation Pty Ltd

Australia

Service company

100

BHP Billiton International Services Ltd

Service company

100

BHP Billiton International Trading (Shanghai) Co. Ltd

China

Marketing and logistic services

100

BHP Billiton Iron Ore Pty Ltd

Australia

Service company

100

BHP Billiton Marketing AG

Switzerland

Marketing and trading

100

BHP Billiton Marketing Asia Pte. Ltd

Singapore

Marketing support and services

100

BHP Billiton Marketing Inc.

Marketing and trading

100

BHP Billiton MetCoal Holdings Pty Ltd

Australia

Holding company

100

BHP Billiton Minerals Pty Ltd

Australia

Iron ore, coal, silver, lead and zinc mining

100

BHP Billiton Mitsui Coal Pty Ltd

Australia

Coal mining

BHP Billiton New Mexico Coal Inc.

Holding company

100

BHP Billiton Nickel West Pty Ltd

Australia

Nickel mining, smelting, refining and administrative services

100

BHP Billiton Olympic Dam Corporation Pty Ltd

Australia

Copper and uranium mining

100

Effective
interest
Significant subsidiaries^(a)
Country of
incorporation
Principal activity
2015
% 2014
%
BHP Billiton Petroleum (Americas) Inc.
US Hydrocarbons exploration and production 100    100
BHP Billiton Petroleum (Arkansas) Inc.
US Hydrocarbons production 100    100
BHP Billiton Petroleum (Australia) Pty Ltd
Australia Hydrocarbons production 100    100
BHP Billiton Petroleum (Bass Strait) Pty Ltd
Australia Hydrocarbons production 100    100
BHP Billiton Petroleum (Deepwater) Inc.
US Hydrocarbons exploration, development and production 100    100
BHP Billiton Petroleum (Eagle Ford Gathering) LLC
US Hydrocarbons exploration and production 75    75
BHP Billiton Petroleum (Fayetteville) LLC
US Hydrocarbons exploration and production 100    100
BHP Billiton Petroleum (International Exploration) Pty Ltd
Australia Hydrocarbons development and production 100    100
BHP Billiton Petroleum (KCS Resources) LLC
US Hydrocarbons exploration and production 100    100
BHP Billiton Petroleum (New Ventures) Corporation
Canada Hydrocarbons exploration and production 100    100
BHP Billiton Petroleum (North West Shelf) Pty Ltd
Australia Hydrocarbons production 100    100
BHP Billiton Petroleum (Sabah) Corporation
Canada Hydrocarbons exploration and production 100    100
BHP Billiton Petroleum (Tx Gathering) LLC
US Hydrocarbons exploration and production 100    100
BHP Billiton Petroleum (Victoria) Pty Ltd
Australia Hydrocarbons development 100    100
BHP Billiton Petroleum Great Britain Limited
UK Hydrocarbons production 100    100
BHP Billiton Petroleum Properties (N.A.) LP
US Hydrocarbons exploration and production 100    100
BHP Billiton Petroleum Pty Ltd
Australia Hydrocarbons exploration and production 100    100
BHP Billiton Shared Services Malaysia Sdn Bhd
Malaysia Service company 100    100
BHP Billiton SSM Development Pty Ltd
Australia Holding company 100    100
BHP Billiton (Trinidad-2C) Ltd
Canada Hydrocarbons development 100    100
BHP Chile Inc.
US Service company 100    100
BHP Coal Pty Ltd
Australia Holding company and coal mining 100    100
BHP Copper Inc.
US Copper mining, development and reclamation 100    100
BHP Escondida Inc.
US Holding company 100    100
BHP Iron Ore (Jimblebar) Pty Ltd^(c)
Australia Iron ore mining 85    85
BHP Navajo Coal Company^(d)
US Coal mining –    –
BHP Petroleum (Pakistan) Pty Ltd
Australia Hydrocarbons production 100    100
BHP Queensland Coal Investments Pty Ltd
Australia Holding company and coal mining 100    100
Broken Hill Proprietary (USA) Inc.
US Service company 100    100
Compania Minera Cerro Colorado Limitada
Chile Copper mining 100    100
Hunter Valley Energy Coal Pty Ltd
Australia Coal mining 100    100
Minera Escondida Limitada^(e)
Chile Copper mining 57.5    57.5
Minera Spence SA
Chile Copper mining 100    100
Petrohawk Energy Corporation
US Hydrocarbons exploration and production 100    100
PT Lahai Coal
Indonesia Coal exploration 75    75
Rio Algom Limited
Canada Holding Company 100    100
San Juan Coal Company
US Coal mining 100    100
UMAL Consolidated Pty Ltd
Australia Holding company and coal mining 100    100
WMC Finance (USA) Limited
Australia Finance 100    100

^(a)	For a complete list of the Group’s subsidiaries refer to Exhibit 8 List of Subsidiaries.

^(b)	BHP Billiton Finance (USA) Ltd is 100 per cent owned by BHP Billiton Limited. BHP Billiton Limited and BHP Billiton Plc have each fully and unconditionally guaranteed BHP Billiton Finance (USA) Ltd’s debt securities.

^(c) The Group has an effective interest of 92.5 per cent in BHP Iron Ore (Jimblebar) Pty Ltd, however by virtue of the shareholder agreement with ITOCHU Minerals & Energy of Australia Pty Ltd and Mitsui & Co. Iron Ore Exploration & Mining Pty Ltd, our interest in the Jimblebar mining operation is 85 per cent which is consistent with the other respective contractual arrangements at Western Australia Iron Ore.

^(d)

The Group divested its 100 per cent effective interest in BHP Navajo Coal Company in October 2013 but will remain as the manager and operator of Navajo Mine through to 2016. As BHP Billiton will retain control of the mine until full consideration is received from the buyer, the financial results of the Navajo mine will continue to be consolidated by the Group.

^(e)

As the Group has the ability to direct the relevant activities at Minera Escondida Limitada, it has control over the entity. The assessment of the most relevant activity in this contractual arrangement is subject to judgement. The Group establishes the mine plan and the operating budget and has the ability to appoint the key management personnel, demonstrating that the Group has the existing rights to direct the relevant activities of Minera Escondida Limitada.

Refer to note 43 ‘Significant accounting policies’ (c).

31. Investments accounted for using the equity method

The Group’s interests in equity accounted investments with the most significant contribution to the Group’s net profit or net assets are listed below:

Shareholdings in
associates and joint
ventures^(a) (b)

Country of
incorporation /
principal place
of business

Associate or

joint venture

Principal activity

Reporting
date^(c)

Ownership
interest^(c)

2015
%

2014
%

Caesar Oil Pipeline Company LLC (Caesar) ^(d)

Associate

Hydrocarbons transportation

31 May

Cleopatra Gas Gathering Company LLC (Cleopatra) ^(d)

Associate

Hydrocarbons transportation

31 May

Compañía Minera Antamina SA (Antamina)^(d)

Peru

Associate

Copper and zinc mining

31 December

33.75

Samarco Mineração SA (Samarco)

Brazil

Joint venture

Iron ore mining

31 December

Carbones del Cerrejón LLC (Cerrejón)^(d)

Anguilla/ Colombia

Associate

Coal mining in Colombia

31 December

33.33

NCIG Holdings Pty Ltd^(d)

Australia

Associate

Coal export terminal

30 June

35.5

^(a)	For a complete list of the Group’s interests in equity accounted investments refer to Exhibit 8 List of Subsidiaries.

^(b)	The Group is restricted in its ability to make dividend payments from its investments in associates and joint ventures as any such payments require the approval of all investors in the associates and joint ventures.

^(c)

The ownership interest at the Group’s and the associates’ or joint ventures’ reporting dates are the same. When the annual financial reporting date is different to the Group’s, financial information is obtained as at 30 June in order to report on an annual basis consistent with the Group’s reporting date.

^(d)

Voting in relation to relevant activities, determined to be the approval of the operating and capital budgets, does not require unanimous consent of all participants to the arrangement, therefore joint control does not exist. Instead, because the Group has the power to participate in the financial and operating policies of the investee, these investments are accounted for as associates.

Year ended 30 June 2015
US$M
Investment in
associates Investment in joint
ventures Total equity accounted
investments
At the beginning of the financial year
2,595    1,069    3,664
Share of operating profit of equity accounted investments^(a)
179    345    524
Investment in equity accounted investments^(b)
71    3,357    3,428
Dividends received from equity accounted investments^(c)
(327 ) (738 ) (1,065 )
Impairments^(d)
–    (1,358 ) (1,358 )
Divestment and demerger of equity accounted investments^(e)
(12 ) (1,631 ) (1,643 )
Other^(f)
162    –    162

At the end of the financial year
2,668    1,044    3,712


Year ended 30 June 2014 US$M	Investment in associates			Investment in joint ventures			Total equity accounted investments
At the beginning of the financial year		2,631			1,044			3,675
Share of operating profit of equity accounted investments^(a)		588			607			1,195
Investment in equity accounted investments		44			–			44
Dividends received from equity accounted investments^(c)		(669	)		(581	)		(1,250	)
Other		1			(1	)		–

At the end of the financial year		2,595			1,069			3,664

^(a)	Includes share of operating losses of equity accounted investments from Discontinued operations of US$24 million (2014: operating profit of US$10 million; 2013 US$ nil). Refer to note 29 ‘Discontinued operations’.

^(b)	Investment in joint ventures mainly relates to initial recognition at fair value of the Manganese business as an equity accounted investment upon loss of control. Refer to note 29 ‘Discontinued operations’.

^(c)	Includes dividends received from equity accounted investments from Discontinued operations of US$342 million (2014: US$ nil).

^(d)	Relates to impairment of the Manganese business upon classification of South32 as held for distribution. Refer to note 29 ‘Discontinued operations’.

^(e)	Includes divestment of South32 assets as part of the South32 demerger. Refer to note 29 ‘Discontinued operations’.

^(f)	Related to the reclassification of an investment which was previously accounted as an available for sale investment.

The following table summarises the financial information relating to each of the Group’s significant equity accounted investments:


	Associates									Joint ventures						Total
2015 US$M	Antamina			Cerrejón			Individually immaterial			Samarco			Individually immaterial			Total
Current assets		958			907						1,256	^(a)
Non-current assets		4,245			2,933						6,102
Current liabilities		(278	)		(192	)					(2,006	)^(b)
Non-current liabilities		(846	)		(1,082	)					(4,090	)^(c)

Net assets – 100%		4,079			2,566						1,262

Net assets – BHP Billiton share		1,377			855						631
Adjustments to net assets related to accounting policy adjustments		2			91						413

Carrying amount of investments accounted for using the equity method^(e)		1,379			946			343			1,044			–			3,712

Revenue – 100%		2,530			2,156						2,810
Profit/(loss) from operations – 100%		765			(62	)					1,283	^(d)

Share of operating profit/(loss) of equity accounted investments^(e)		229			(20	)		(30	)		371			(26	)		524

Comprehensive income – 100%		765			(62	)					1,283

Share of comprehensive income/(loss) – BHP Billiton share in equity accounted investments		229			(20	)		(30	)		371			(26	)		524

Dividends received from equity accounted investments		191			99			37			396			342			1,065

Associates Joint ventures
2014
US$M
Antamina Cerrejón Individually
immaterial Samarco Individually
immaterial Total
Current assets
953    1,030    1,216 ^(a)
Non-current assets
4,060    2,992    5,937
Current liabilities
(465 ) (268 ) (1,637 )^(b)
Non-current liabilities
(668 ) (812 ) (4,310 )^(c)

Net assets – 100%
3,880    2,942    1,206

Net assets – BHP Billiton share
1,309    981    603
Adjustments to net assets related to accounting policy adjustments
32    84    466

Carrying amount of investments accounted for using the equity method
1,341 1,065    189    1,069    –    3,664

Revenue – 100%
3,736 2,444    3,269
Profit from operations – 100%
1,414 373    1,337 ^(d)

Share of operating profit/(loss) of equity accounted investments^(e)
476 115    (3 ) 607 – 1,195

Comprehensive income – 100%
1,414 373    1,337

Share of comprehensive income/(loss) – BHP Billiton share in equity accounted investments
476 115    (3 ) 607 – 1,195

Dividends received from equity accounted investments
446 187    36 581 – 1,250

Associates Joint ventures
2013
US$M
Antamina Cerrejón Individually
immaterial Samarco Individually
immaterial Total
Revenue – 100%
3,836 2,482    3,219
Profit after tax from Continuing operations – 100%
1,490    378    1,365 ^(d)

Share of operating profit/(loss) of equity accounted investments^(e)
531    117    (32 ) 513    13    1,142

Comprehensive income – 100%
1,490    378    1,365

Share of comprehensive income/(loss) – BHP Billiton share in equity accounted investments
531    117    (32 ) 513    13    1,142

Dividends received from equity accounted investments
261    69    33    345    2    710

^(a)	Includes cash and cash equivalents of US$711 million (2014: US$571 million).

^(b)	Includes current financial liabilities (excluding trade and other payables and provisions) of US$993 million (2014: US$369 million).

^(c)	Includes non-current financial liabilities (excluding trade and other payables and provisions) of US$3,844 million (2014: US$3,961 million).

^(d) Includes depreciation and amortisation of US$236 million (2014: US$113 million; 2013: US$121 million), interest income of US$86 million (2014: US$6 million; 2013: US$3 million), interest expense of US$227 million (2014: US$181 million; 2013: US$54 million) and income tax expense of US$275 million (2014: US$207 million; 2013: US$317 million).

^(e)	The unrecognised share of profit for the period was US$5 million (2014: loss of US$66 million; 2013: profit of US$52 million) which decreased the cumulative losses to US$194 million (2014: increase to US$199 million; 2013: decrease to US$133 million).


	Group share
	2015		2014
	US$M		US$M
Share of commitments relating to joint ventures		1,272		2,024
Share of contingent liabilities relating to joint ventures		1,201		1,547

Refer to note 43 ‘Significant accounting policies’ (x) and (y).

32. Interests in joint operations

Significant joint operations of the Group, which are those with the most significant contributions to the Group’s net profit or net assets, are listed in the below table. Significant joint operations that were divested as part of the South32 demerger are listed in note 29 ‘Discontinued operations’.

Effective interest

Significant joint
operations^(a)

Country of
operation

Principal activity

2015
%

2014
%

Bass Strait

Australia

Hydrocarbons production

Greater Angostura

Trinidad and Tobago

Hydrocarbons production

Eagle Ford^(b)