18th Dec 2008 07:00
18 December 2008
Chairman's Office
Dear Shareholder
Update
In my last letter to you of 8 September I undertook to write to you to inform you of material developments in relation to BHP Billiton, particularly in relation to our offer to acquire Rio Tinto.
You will no doubt by now have heard or read in the media that on 25 November 2008, your Board decided not to proceed with the Rio Tinto transaction and subsequently the Offers have lapsed. This was a difficult decision but one we believe is right for BHP Billiton shareholders. Over the last 14 months we have actively engaged with many of our shareholders and we have sincerely appreciated your support over this period. If you wish to read more about our decision, you can find information on our website at www.bhpbilliton.com.
A strong future
As to the future, I want to be very clear that BHP Billiton, as a standalone company, is in a strong financial and operating position. We believe we are better placed than our competitors in these challenging times to respond to the fluctuating demand for our products. We have:
These two elements give us the flexibility in these volatile times to respond to any changes in business activity as considered necessary by your management team and Board, and we can continue to invest for future growth in shareholder value. For now, in developing our projects, our emphasis is on lower risk brown-field expansions in areas we know, rather than start up projects in new geographies. Our recent announcement of an investment of US$4.8 billion in Western Australian Iron Ore to increase our tonnes to 205 million per annum by 2011 is evidence of this confidence in the future and our on-going investment in brown-field sites in known geographies.
Having said that, there is no doubt that these are challenging times for all of us. Uncertainty in the world's commodity markets remains particularly high in the short-term, and we do not expect to be immune from these changes. However, we have excellent customer relationships and so far we have been able to substantially maintain our sales volumes through a combination of our normal long term contract and spot business. If these uncertain conditions persist and significant production cuts become necessary, or any of our operations are cash negative and are set to remain so, we will respond accordingly and advise shareholders and the market.
Conclusion
Your Board and management team believe that BHP Billiton is very well placed for the current environment. Our priorities for cash flows remain to invest in core businesses, manage our balance sheet to a solid single A credit rating, maintain our progressive dividend policy and return any surplus cash to shareholders. You have a first class senior management team led by our Chief Executive Officer Marius Kloppers. They are disciplined and focussed on the pursuit of shareholder value and on your behalf I thank them for their leadership and excellent stewardship of BHP Billiton over the past year.
Again thank you for your support and on behalf of my Board colleagues and the senior management team I wish you a safe and happy festive season.
Yours sincerely
Don Argus
Chairman
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BHP Billiton Limited ABN 49 004 028 077 Registered in Australia Registered Office: 180 Lonsdale Street Melbourne Victoria 3000 |
BHP Billiton Plc Registration number 3196209 Registered in England and Wales Registered Office: Neathouse Place London SW1V 1BH United Kingdom |
The BHP Billiton Group is headquartered in Australia
Related Shares:
BHP GroupRio Tinto