Operational Review-Half Year Ended 31 Dec 2013

BHP BILLITON OPERATIONAL REVIEW FOR THE HALF YEAR ENDED 31 DECEMBER 2013

· Strong operating performance in the December 2013 half year with production records achieved across 10 operations and three commodities. Full year production guidance maintained for our Petroleum, Copper, Iron Ore and Coal businesses.

· Western Australia Iron Ore achieved record production of 108 million tonnes (100% basis) for the December 2013 half year as the operation benefited from the early delivery of first production from the Jimblebar mine.

· Queensland Coal achieved record production for the December 2013 half year as several productivity initiatives increased annualised production to 68 million tonnes (100% basis) in the December 2013 quarter.

· Petroleum liquids production increased by 9% to 50 million barrels of oil equivalent in the December 2013 half year, underpinned by a 72% increase at Onshore US.

· Another two major projects delivered first production in the December 2013 quarter and all remaining projects are on schedule and budget.

· BHP Billiton's share of capital and exploration expenditure for the 2014 financial year is expected to be US$16.1 billion(i), as planned.

BHP Billiton Chief Executive Officer, Andrew Mackenzie, said: "Strong operating performance across our diversified portfolio in the December 2013 half year delivered a 10 per cent(ii) increase in production and volumes are expected to grow by 16 per cent(ii) over the two years to the end of the 2015 financial year. Iron ore and metallurgical coal were particularly strong and are very well positioned to achieve guidance, notwithstanding the general uncertainty that exists as we enter the wet season.

"Our productivity continues to improve and this was most clearly demonstrated by our Queensland Coal business which ran at an annualised rate of 68 million tonnes in the December 2013 quarter. Our productivity agenda is in full swing and we expect to carry strong momentum into the second half of the financial year.

"During the period, six of our major projects delivered first production and our 10 remaining projects, which are largely low risk, brownfield expansions, are tracking to plan. By maintaining strict financial discipline and increasing internal competition for capital we intend to further differentiate ourselves by achieving a superior rate of return on incremental investment. We also remain committed to actively managing our portfolio for value. This strategy leaves us well positioned to deliver a substantial increase in free cash flow and higher returns to shareholders."

Note: Unless specified otherwise: variance analysis relates to the relative performance of BHP Billiton and/or its operations during the December 2013 half year compared with the December 2012 half year; production and sales volumes from subsidiaries (which include Escondida, Jimblebar, BHP Billiton Mitsui Coal and our manganese operations) are reported on a 100 per cent basis; volumes from equity accounted investments (which include Antamina, Samarco and Cerrejon Coal) and other operations are reported on a proportionate consolidation basis.

Summary

BHP Billiton maintained strong momentum in the December 2013 half year as production increased by 10 per cent(ii). Full year production guidance is retained for our Petroleum, Copper, Iron Ore and Coal businesses.

The Cerrejon P40 (Colombia) and Western Australia Iron Ore (WAIO) Port Blending and Rail Yard Facilities projects achieved first production during the December 2013 quarter, as planned. These projects will not be reported in future Operational Reviews. Our 10 remaining major projects are on schedule and budget.

During the December 2013 quarter, BHP Billiton approved an investment of US$301 million (BHP Billiton share) to replace two shiploaders at WAIO's Nelson Point operations in Port Hedland. The two new shiploaders will increase the reliability of our inner harbour port facilities and create additional port capacity that will be utilised as a series of debottlenecking initiatives increase the capacity of our supply chain to approximately 260 million tonnes per annum (mtpa) to 270 mtpa (100 per cent basis), at a low capital cost. Commissioning of the two replacement shiploaders is scheduled for the second half of the 2014 calendar year.

BHP Billiton's active program of portfolio simplification delivered proceeds of US$2.2 billion in the December 2013 half year following the completion of the Jimblebar (Australia) and Pinto Valley (US) transactions. The sale of the Navajo mine (US) was also completed during the period.

On 2 January 2014, the Group also announced the redemption of Petrohawk Energy Corporation's 10.5% Senior Notes due 2014 and 7.875% Senior Notes due 2015. The total aggregate principal value of the notes to be redeemed is approximately US$1.4 billion and the redemption will be completed on 3 February 2014.

The new International Financial Reporting Standard (IFRS) 10 came into effect on 1 July 2013. The adoption of this accounting standard requires the full consolidation of Escondida (Chile), as compared to the proportionate consolidation of our 57.5 per cent equity interest which was applied in prior periods. This report has been prepared on the basis of this new accounting standard and includes 100 per cent of Escondida, unless otherwise noted.

In addition, IFRS 11 and International Financial Reporting Interpretations Committee (IFRIC) 20 came into effect on 1 July 2013. The adoption of IFRS 11 requires entities that no longer meet the definition of joint control (such as Antamina and Cerrejon Coal) or are classified as joint ventures (such as Samarco) to be equity accounted, whereas they were proportionately consolidated in prior periods. IFRIC 20 affects the accounting treatment for production stripping.

Although the adoption of IFRS 10, IFRS 11 and IFRIC 20 does not impact the Company's share of production or sales volumes, it does impact the Group's consolidated financial accounts. We have therefore republished 2013 interim and full year financial information to reflect these and other accounting policy changes.

As a consequence of these new accounting standards and interpretations, our taxation expense, including royalty-related taxation, as a proportion of pre-tax profit is now expected to be in the range of 31 per cent to 34 per cent in the 2014 financial year. This excludes the influence of exchange rate movements, adjustments to deferred tax balances associated with the Minerals Resource Rent Tax and the impact of exceptional items.

Following the adoption of the new accounting standards, our guidance for capital and exploration expenditure will now refer to BHP Billiton share. On this basis, the Company's share of capital and exploration expenditure is expected to be US$16.1 billion(i) in the 2014 financial year.

The relative change in the price achieved for our major commodities in the December 2013 half year is summarised in the table below.

Petroleum and Potash

Production

Total petroleum production -Total petroleum production for the December 2013 half year was 120.4 million barrels of oil equivalent. Guidance for the 2014 financial year remains unchanged at approximately 250 million barrels of oil equivalent.

Crude oil, condensate and natural gas liquids - A nine per cent increase in liquids production for the December 2013 half year was underpinned by a 72 per cent increase at Onshore US. This was supported by an 80 per cent increase at Atlantis (US) as volumes benefited from the start-up of a new production well in the September 2013 quarter. Atlantis production is expected to remain strong in the second half of the 2014 financial year with an additional well scheduled for completion.

The significant increase in liquids production at Onshore US and Atlantis during the period was partially offset by expected natural field decline across the broader Conventional business and scheduled downtime at Pyrenees (Australia). The one month maintenance outage of the floating production storage and off-take (FPSO) facility at Pyrenees was completed ahead of plan and the field had returned to full production of 34 thousand barrels per day (100 per cent basis) at the end of the period.

Onshore US liquids production for the December 2013 quarter was constrained by scheduled downtime across the Eagle Ford. This primarily reflected facility tie-ins in the Black Hawk to support significant growth in liquids production and the installation of additional production tubing for a number of wells at Hawkville to ensure their integrity over the long term. Guidance for the 2014 financial year remains unchanged with an anticipated 75 per cent increase in Onshore US liquids production.

Natural gas - Natural gas production declined by seven per cent in the December 2013 half year. The successful delivery of first gas from the Macedon project partially offset lower seasonal Bass Strait (both Australia) demand, as well as natural field decline at Haynesville (US), which followed our decision to prioritise Onshore US development drilling in the liquids rich Black Hawk region of the Eagle Ford.

Projects

Onshore US drilling and development expenditure totalled US$2.4 billion in the December 2013 half year. Approximately 75 per cent of drilling activity occurred in the Eagle Ford, with the majority focused on our Black Hawk acreage. The rate of expenditure is expected to slow in the second half of the 2014 financial year following a 35 per cent reduction in the Company's active rig count to 26 during the period. Our high return development plans are underpinned by annual investment of approximately US$4.0 billion, subject to market conditions.

As highlighted at the recent Petroleum briefing, the optimisation of our dry gas program will result in a series of charges in the 2014 financial year including rig termination costs of approximately US$100 million (with the majority booked in the first half) and underutilised legacy gas pipeline commitment charges of approximately US$170 million. Following a successful evaluation program we will also incur approximately US$600 million in depreciation charges related to Permian production in the 2014 financial year.

Exploration and appraisal wells drilled during the quarter or in the process of drilling as at 31 December 2013.

Petroleum exploration expenditure for the December 2013 half year was US$285 million, of which US$147 million was expensed. BHP Billiton also signed a Production Sharing Contract for Block 23b in Trinidad and Tobago, where the Group now has a 60 per cent interest and is the operator. A US$600 million exploration program, largely focused on the Gulf of Mexico (US) and Western Australia, is planned for the 2014 financial year.

Potash

Excavation of the production and service shafts paused in the December 2013 quarter to enable a thorough review of the activities completed to date and to ensure all learnings are captured and adopted in future works. Excavation is expected to resume in February 2014. The staggered manner in which we are progressing the production and service shafts allows us to mitigate risk and optimise their development. The project remains on schedule and budget.

Copper

Production

Copper - Total copper production increased by six per cent in the December 2013 half year to 843 thousand tonnes.

The adoption of IFRS 10 requires the full consolidation of Escondida, as compared to the proportionate consolidation of our 57.5 per cent equity interest which has been applied in prior periods. This report has been prepared on the basis of this new accounting standard and includes 100 per cent of Escondida.

BHP Billiton's copper production guidance for the 2014 financial year remains unchanged at 1.7 million tonnes, although the Group's equity interest is 1.2 million tonnes. Production in the second half is expected to be weighted towards the June 2014 quarter.

Escondida copper production increased by seven per cent in the December 2013 half year to 564 thousand tonnes as ongoing productivity initiatives supported increased mill throughput and recoveries, which more than offset lower ore grades. Escondida remains on track to produce approximately 1.1 million tonnes of copper in the 2014 financial year before increasing to approximately 1.3 million tonnes in the 2015 financial year.

Pampa Norte (Chile) copper production increased by 37 per cent from the September 2013 quarter as recoveries at Spence improved during the period. Spence achieved record mill throughput in the December 2013 half year, which will underpin a strong increase in production through the second half of the 2014 financial year. Full year volumes at Spence are expected to be in line with the prior corresponding period.

Antamina (Peru) achieved record copper production for the December 2013 half year. This was underpinned by record mining and milling throughput, together with higher average ore grades, as mining progressed through a copper rich ore zone. Full year copper production at Antamina is expected to remain at a similar level to the 2013 financial year given a projected decline in copper ore grades, consistent with the mine plan.

Olympic Dam (Australia) copper production benefited from improved smelter reliability during the December 2013 quarter, although planned maintenance is expected to impact the smelter over a 20 day period in the second half of the 2014 financial year. The operation achieved record material mined for the December 2013 half year. Copper production at Olympic Dam for the 2014 financial year is expected to be in line with the prior period.

At 31 December 2013, the Group had 437,749 tonnes of outstanding copper sales that were revalued at a weighted average price of US$3.33 per pound. The final price of these sales will be determined over the remainder of the 2014 financial year. In addition, 385,721 tonnes of copper sales from the 2013 financial year were subject to a finalisation adjustment in the current period. Provisional pricing and finalisation adjustments will increase earnings before interest and tax by US$196 million in the December 2013 half year (December 2012 half year: US$67 million increase).(xii)

On 11 October 2013, BHP Billiton completed the sale of its Pinto Valley (US) mining operation and the associated San Manuel Arizona Railroad Company to Capstone Mining Corp. for US$653 million, after working capital adjustments.

Lead/silver - Lead and silver production increased by three and two per cent, respectively, from the September 2013 quarter. Antamina achieved record silver production for the December 2013 half year. In addition, Cannington (Australia) delivered record material mined over the same period, however lead and silver production was affected by lower average ore grades, consistent with the mine plan.

Zinc - Total zinc production increased by 18 per cent in the December 2013 half year, supported by higher average zinc grades at Cannington.

Uranium - Uranium production decreased by three per cent in the December 2013 half year as a result of planned maintenance at Olympic Dam.

Projects

Iron Ore

Production

Iron ore - Iron ore production increased by 19 per cent in the December 2013 half year to a record 98 million tonnes.

WAIO achieved record production of 108 million tonnes (100 per cent basis) for the December 2013 half year, despite weather related downtime and an increase in planned maintenance during the December 2013 quarter. This record result reflected strong operating performance, the early delivery of production from Jimblebar and a series of volume enhancing productivity initiatives, which included increased utilisation rates for several relocatable crushers installed at our operating mines. While these crushers have increased the capacity of our supply chain at a low capital cost and contributed to a significant rise in profitability, the previously signalled increase in the strip ratio at WAIO has more than offset the unit cost savings achieved across the broader supply chain.

Our WAIO business continues to perform strongly, however we have maintained production guidance of 212 million tonnes (100 per cent basis) for the 2014 financial year given the general uncertainty that exists as we enter the wet season.

The ramp up of phase one capacity at Jimblebar to 35 mtpa (100 per cent basis) is expected to be completed by the end of the 2015 financial year. Longer term, a low cost option to expand Jimblebar to 55 mtpa (100 per cent basis) and the broader debottlenecking of the supply chain are expected to underpin further capital efficient growth in capacity to approximately 260 mtpa to 270 mtpa (100 per cent basis).

Samarco's (Brazil) three pellet plants continued to operate at capacity during the period.

Total iron ore production guidance for the 2014 financial year remains unchanged at 192 million tonnes.

Projects

On 25 November 2013, BHP Billiton approved an investment of US$301 million (BHP Billiton share) to replace two shiploaders at WAIO's Nelson Point operations in Port Hedland. The two new shiploaders will increase the reliability of our inner harbour port facilities and create additional port capacity that will be utilised as a series of debottlenecking initiatives increase the capacity of our supply chain. Commissioning of the two replacement shiploaders is scheduled for the second half of the 2014 calendar year.

Coal

Production

Metallurgical coal - Metallurgical coal production increased by 22 per cent in the December 2013 half year to a record 22 million tonnes.

Queensland Coal (Australia) delivered record production and sales volumes for the December 2013 half year, underpinned by strong performance across all operations. This included record production at South Walker Creek, Saraji and Poitrel. The business continued to benefit from our productivity initiatives, achieving annualised production of 68 million tonnes (100 per cent basis) in the December 2013 quarter.

Illawarra Coal (Australia) production declined by 13 per cent in the December 2013 half year, due to an extended outage at Dendrobium and a scheduled longwall move at West Cliff in the September 2013 quarter. Operations are expected to return to normal production levels by the end of the March 2014 quarter.

Our Queensland Coal business continues to perform strongly, however we have retained total metallurgical coal production guidance of 41 million tonnes for the 2014 financial year given the general uncertainty that exists as we enter the wet season.

Energy coal - Energy coal production of 37 million tonnes was in line with the December 2012 half year. Record production at both New South Wales Energy Coal (Australia) and Cerrejon Coal (Colombia) offset the impact of industrial action, lower yields and adverse weather conditions at BECSA (South Africa).

Total energy coal production guidance for the 2014 financial year remains unchanged at 73 million tonnes.

BHP Billiton completed the sale of the Navajo mine to the Navajo Transitional Energy Company effective 30 December 2013. As BHP Billiton will remain the mine manager and operator until 2016, production and financial results for Navajo Mine will continue to be reported by the Group.

Projects

Aluminium, Manganese and Nickel

Production

Alumina - Alumina production increased by eight per cent in the December 2013 half year to a record 2.6 million tonnes. The Efficiency and Growth project at Worsley (Australia) reached nameplate capacity and the Alumar refinery (Brazil) achieved record production.

Aluminium- Aluminium production increased by eight per cent in the December 2013 half year to 612 thousand tonnes. Production benefited from strong operating performance at our Southern African smelters which included a half year production record at Hillside (South Africa).

Manganese ore - Manganese ore production was in line with the December 2012 half year as improved performance at Hotazel (South Africa) was offset by lower recoveries at GEMCO (Australia).

Manganese alloy - Manganese alloy volumes increased by seven per cent from the December 2012 half year which was affected by the temporary suspension of operations at TEMCO (Australia).

Nickel - Nickel production increased by nine per cent from the December 2012 half year which was affected by planned maintenance at the Nickel West Kalgoorlie smelter and Kwinana refinery (both Australia).

On 31 October 2013, production at 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. Mining at Rocky's Reward open cut mine, near Leinster, will provide an alternative ore supply to our integrated business. Total saleable nickel production at Nickel West in the 2014 financial year is expected to be in line with the prior year, although the impact on production for the 2015 financial year continues to be assessed.

Minerals exploration

Greenfield minerals exploration is focused on advancing copper targets within Chile and Peru. Minerals exploration expenditure in the December 2013 half year was US$219 million, of which US$195 million was expensed.

(i) Represents the share of capital and exploration expenditure (on an accruals basis) attributable to BHP Billiton shareholders. Includes BHP Billiton proportionate share of equity accounted investments; excludes non-controlling interests and deferred stripping.

(ii) Refers to copper equivalent production based on average realised product prices for the 2013 financial year.

(iii) Excludes deferred stripping.

(iv) Includes adjustment for IFRS 10 and IFRS 11.

(v) Primarily includes Escondida, Jimblebar, BHP Billiton Mitsui Coal (BMC) and our manganese operations.

(vi) Primarily includes Antamina, Samarco and Cerrejon Coal.

(vii) Excludes third party product.

(viii) Excludes Antamina.

(ix) Excludes freight revenue.

(x) Export sales only, excludes Cerrejon Coal. Includes thermal coal sales from metallurgical coal mines.

(xi) Excludes internal sales.

(xii) Includes third party product.

(xiii) Excludes announced pre-commitment funding.

Further information on BHP Billiton can be found at: www.bhpbilliton.com

Throughout this report figures in italics indicate that this figure has been adjusted since it was previously reported.

(a) LPG and ethane are reported as Natural Gas Liquid (NGL). Product-specific conversions are made and NGL is reported in barrels of oil equivalent (boe).

(b) Metal production is reported on the basis of payable metal.

(c) Shown on 100% basis following the application of the new IFRS 10 which came into effect from 1 July 2013. BHP Billiton interest in saleable production is 57.5%.

(d) Includes Cerro Colorado and Spence.

(e) Iron ore production is reported on a wet tonnes basis.

(f) Newman includes Mt Newman Joint Venture and Wheelarra.

(g) Shown 100% basis. BHP Billiton interest in saleable product is 85%.

(h) Metallurgical coal production is reported on the basis of saleable product. Production figures include some thermal coal.

(i) Shown on 100% basis. BHP Billiton interest in saleable production is 80%.

(j) Shown on 100% basis. BHP Billiton interest in saleable production is 90%.

(k) Shown on 100% basis. BHP Billiton interest in saleable production is 60%, except Hotazel Manganese Mines which is 44.4%.

(l) Production includes Medium Carbon Ferro Manganese.

(a) Other Australia includes Minerva and Macedon. Macedon achieved first production in August 2013.

(b) Gulf of Mexico volumes are net of royalties.

(c) Onshore US volumes are net of mineral holder royalties.

(d) Other Americas includes Neptune, Genesis and Overriding Royalty Interest.

(e) An agreement to sell Liverpool Bay was reached in October 2013 and the transaction is expected to close before the end of the 2014 financial year.

(f) Total barrels of oil equivalent (boe) conversions are based on 6,000 scf of natural gas equals 1 boe.