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PeterToth,VicePresidentMarketingIronOreIronOreMarketUpdatePresentationtoAnalystsJune2005Page2Briefhighlightsoftheglobalsteelindustry0100200300400500600700800900100011001920193019401950196019701980199020002010ThegoldenageThegoldenage19451945––19736.2%pa19736.2%paOilShocksOilShocksFallofBerlinFallofBerlinWallWallTheefficiencyTheefficiencyageage19741974––199519950.2%pa0.2%paTheChinaTheChinaageage1996+4%pa1996+4%paTheemergingageTheemergingagepre19452.8%papre19452.8%paChinaIndia2004-overabilliontonnesofsteelproducedDoublingofsteelpricesin2004–trendcontinuinginto2005Industryprofitable,CorusEBITDAUS$1b,besthaveROCE’sof35-50%BFsteelmakingheretostay–China,BRICSPage3China’simpactonglobalsteelproductionSourceIISI-10%-5%0%5%10%15%20%DecemberMarchJuneSeptemberDecemberMarchJuneSeptemberDecemberMarchJuneSeptemberDecemberMarchJuneSeptemberDecemberMarchJuneSeptemberDecemberMarchWorldChangesYOYWorldChangesYOYex-ChinaTheChinaeffect２０００２００１２００２２００３２００４２００５Page410579659038508487897777508008509009501000105011001998199920002001200220032004(milliontonnes)Steelindustryhasexperiencedsustainedrapidgrowth6.2%6.9%8.8%CAGR7%WorldcrudesteelproductionSourceIISI11512412715118222027201002003001998199920002001200220032004MillionTonnesChinesecrudesteelproductionCAGR20%from2001Page5Globalsteeloutlook,crudesteelandpigironSource:IISIandBHPBillitonContinuedgrowthanticipated,withChina,India,BrazilandSEAmajordrivers900100011001200130014001500160020022004200620082010Actual60070080090010001100120020022004200620082010ActualCrudeSteelProductionPigIronProductionMillionTonnesMillionTonnes900100011001200130014001500160020022004200620082010ActualActual60070080090010001100120020022004200620082010ActualActualCrudeSteelProductionPigIronProductionMillionTonnesMillionTonnesPage6Theshorttermfundamentals-ChinaSTEEL•Jan-Apr‘05steelproduction106Mt,annualized317Mt•April’05steelproduction28Mt–annualized336Mt•Steelproduction‘toostrong’?Slowdownpositive.•Steelpricesforbars,platesincreasedinApril•Apparentsteelconsumptionupasexportsfallandimportsincrease–butnovisiblesignofinventorybuildupIRONORE•Jan–Apr’05imports87.5Mt–annualized260+Mt•Apr’05imports24.3Mt–annualized290Mt•Spotironorepricefallingdueto:–Handyfreightrate$10lower(IndianFOBstill$55-60/t)–Psychologicalfactors:governmentintervention,licensing,priceceilingrumors,buyerswaiting,distressedIndiancargoesPage7ChinaMonthlyNetImportofSteel(3,000)(2,000)(1,000)01,0002,0003,0004,0005,000Jan-97Mar-97May-97Jul-97Sep-97Nov-97Jan-98Mar-98May-98Jul-98Sep-98Nov-98Jan-99Mar-99May-99Jul-99Sep-99Nov-99Jan-00Mar-00May-00Jul-00Sep-00Nov-00Jan-01Mar-01May-01Jul-01Sep-01Nov-01Jan-02Mar-02May-02Jul-02Sep-02Nov-02Jan-03Mar-03May-03Jul-03Sep-03Nov-03Jan-04Mar-04May-04Jul-04Sep-04Nov-04Jan-05Mar-05NetImportImportExportKtFromSeptember2004Chinabecameanetsteelexporter,drivenbybilletandlongproductexports.Page8ChinaMonthlyNetImportofSteel&PigIron(2,500)(1,500)(500)5001,5002,5003,500Jan-03Mar-03May-03Jul-03Sep-03Nov-03Jan-04Mar-04May-04Jul-04Sep-04Nov-04Jan-05Mar-05FlatLongBilletPigIronTubularsKtFromSeptember2004Chinabecameanetsteelexporterbycrudesteelequivalent,drivenbybilletandlongproductsexport.Importsofflatproductsremainstrong.Page9Chinasteelindustrydrivers-noreasonstopanicPage10Seaborneironoredemand400500600700800900100011001200200220032004200520062007200820092010MillionTonnesActualDemandforseaborneironorewillfollowthepigironproductiontrend,growingstronglyinthemediumtermPage1102004006008001,000CY02CY03CY04CY05CY06CY07CY08CY09CY10EstimatedfuturesupplyincreasesFullannouncedseabornecapacity(mt)OthersS.AfricaIndiaAustraliaBrazilSourceBHPBilliton,PublicAnnouncementsTraditionalsourcesofAustraliaandBrazilwillcontinuetosupplythemajorityofseaborneironorePage12ChineseironoreimportsbycountryDataSource:TEXReport,ChinaCustoms,BHPBInternalResourcesPage13AustraliaandBrazilarethemajorsourceofseaborneironore20878419114650BahrainBelgiumCanadaChileIndonesiaIranItalyKazakstanKoreaDPRLiberiaMalaysiaMexicoMongoliaMozambiqueMyanmarNewZealandPhilippinesRussiaSaudiArabiaSwedenThailandTrinidad&TobagoUkraineUnitedStatesVenezuelaVietnamAustraliaPeruSAfricaIndiaBrazilOthersDataSource:ChinaCustomsStatistics•IndianironoreexporttoChinaupto50MtinCY04,from17MtinCY01.•Thefuture‘wildcards’–India,OthersanddomesticorePage14Chinadomesticironoreproductionhasbeenincreasingrapidlyinthecurrenttightmarket020406080100120140160180200CY1980CY1982CY1984CY1986CY1988CY1990CY1992CY1994CY1996CY1998CY2000CY2002CY2004CAGR6.1%CAGR1.0%CAGR10.5%DomesticReportedDomesticUnreportedSource:CMMA,NBS,BHPBilliton63.5%FeEquivalentUnit:MtManyhighcostoperationshaveemergedtofulfilltheironoredemandfromChina’ssteelsector.Domesticproducersarehighlyfragmented,nohighqualityreservesandincreasingenvironmentalissuesemerging.In200455%oftotaldomesticproductionwasbyTVEswhile45%bystateownedminesPage15Definingtheproblem-freight051015202530354045Aug-01Oct-01Dec-01Feb-02Apr-02Jun-02Aug-02Oct-02Dec-02Feb-03Apr-03Jun-03Aug-03Oct-03Dec-03Feb-04Apr-04Jun-04Aug-04Oct-04Dec-04Feb-05US$/(wetmetrictonneBCI5(Brazil-China)BCI3(W