Operational Review Nine Months Ended 31 March 2015

BHP BILLITON OPERATIONAL REVIEW

 FOR THE NINE MONTHS ENDED 31 MARCH 2015

BHP Billiton Chief Executive Officer, Andrew Mackenzie, said: "Our teams continue to exceed expectations and deliver strong operating performance. Our commitment to sustainably improve productivity and lower costs is helping mitigate the impact of subdued commodity prices and supporting returns for our shareholders.

"In Iron Ore, our focus remains on producing at the lowest possible cost with Western Australia Iron Ore unit costs now below US$20 per tonne(3) as we continue to improve productivity. Over the last decade, China's unprecedented demand growth provided Australia and BHP Billiton with a unique opportunity. We acted swiftly to bring on new iron ore capacity at some of the lowest costs globally, generating long-term value for shareholders, the government and communities which would otherwise have been lost to overseas competitors. Despite the subsequent increase in supply-side competition, these low-cost expansions continue to deliver attractive margins and returns through the cycle.

"In Petroleum, we have responded quickly to current market conditions by reducing the number of rigs operated in our Onshore US business by 35 per cent over the March 2015 quarter. We continue to review our drilling and development program as we seek to maximise the value of our resource base. With higher oil prices expected over the medium term, we believe deferring development will create more value than producing today. Our high-quality acreage and excellent operating performance, with industry-leading drilling costs, gives us a strong platform from which to build.

"The proposed demerger of South32 is also on track, with the BHP Billiton Board unanimously recommending shareholders vote in favour of the demerger. With a more focused portfolio, BHP Billiton will have the potential to unlock further shareholder value, while creating a new global diversified metals and mining company with a significant industry presence in each of its major commodities."

Operational performance summary

Production for the nine months and quarter ended March 2015 is summarised in the table below.

Production guidance for the 2015 financial year is summarised in the table below.

Major development projects

The BMA Hay Point Stage Three Expansion project loaded first coal during the March 2015 quarter, on revised schedule and budget, and will not be reported in future Operational Reviews. At 31 March 2015, BHP Billiton had six major projects under development with a combined budget of US$12.0 billion.

Corporate update

On 17 March 2015, the BHP Billiton Board recommended shareholders approve the proposed demerger of South32 at the shareholder meetings to be held on 6 May 2015. The Board believes that with a more focused portfolio, BHP Billiton will be better placed to achieve further productivity benefits in its core portfolio, while creating a substantial new company, South32. The proposed demerger would be effected via a distribution of South32 shares by way of an in-specie dividend to shareholders in both BHP Billiton Limited and BHP Billiton Plc. Eligible BHP Billiton shareholders will receive one South32 share for every BHP Billiton share held on the applicable record date.

On 19 March 2015, the Group priced a five year A$1.0 billion note issue under its Australian Medium Term Note Program which will pay interest at three per cent and mature in March 2020. The proceeds will be used for general corporate purposes.

Petroleum and Potash

Production

Total petroleum production - Total petroleum production for the nine months ended March 2015 increased by six per cent to a record 192.5 MMboe. Guidance for the 2015 financial year remains unchanged at 255 MMboe.

Crude oil, condensate and natural gas liquids - Crude oil, condensate and natural gas liquids production for the nine months ended March 2015 increased by 21 per cent to 93.4 MMboe.

Onshore US liquids volumes for the nine months ended March 2015 rose by 76 per cent to 40.2 MMboe. This strong performance was underpinned by a doubling of liquids production from both the Black Hawk and Permian as we continue to realise significant improvements in shale drilling and completions efficiency.

In our Conventional business, strong uptime performance at Atlantis and Pyrenees was offset by natural field decline at North West Shelf and the impact of industrial action at Bass Strait.

Natural gas - Natural gas production for the nine months ended March 2015 declined by five per cent to 595 bcf.

Strong uptime performance at North West Shelf and Macedon partially offset scheduled maintenance at Pakistan, industrial action and weaker seasonal demand at Bass Strait and the divestment of Liverpool Bay in the 2014 financial year.

On 16 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.

Projects

Onshore US development activity

Onshore US drilling and development expenditure totalled US$3.0 billion for the nine months ended March 2015 and we expect expenditure of approximately US$3.4 billion in the 2015 financial year.

Our Onshore US operated rig count decreased from 26 to 17 during the March 2015 quarter. The reduction in drilling activity will not impact 2015 financial year production guidance and we are confident that shale liquids volumes will rise by over 50 per cent in the period. We continue to review our drilling and development program and will exercise the flexibility within our shale portfolio to maximise value.

Capital expenditure includes land acquisition, site preparation, drilling, completions, well site facilities, mid-stream infrastructure and pipelines. The number of wells drilled and completed can vary significantly from period to period based on changes in rig activity and the inventory of wells drilled but not yet completed at period end.

Petroleum exploration

There were no exploration or appraisal wells drilled during the March 2015 quarter. Petroleum exploration expenditure for the nine months ended March 2015 was US$393 million, of which US$363 million was expensed. Total petroleum exploration expenditure for the 2015 financial year is expected to be US$600 million and remains focused on the Gulf of Mexico, Western Australia and Trinidad and Tobago.

The seismic acquisition program in Trinidad and Tobago was successfully completed for the nine deep water blocks accessed between 2012 and 2014(6).

Copper

Production

Copper - Total copper production(2) for the nine months ended March 2015 increased by two per cent to 1.3 Mt. Production for the 2015 financial year is now expected to be 1.7 Mt, six per cent below prior guidance. The revision to guidance reflects the impact of heavy rainfall in Northern Chile in March 2015 and an electrical failure which caused a mill outage at Olympic Dam in January 2015.

Escondida copper production for the nine months ended March 2015 increased by seven per cent to 891 kt. Strong operating performance, including a 14 per cent increase in truck utilisation, resulted in record material mined for the period. This was partially offset by the impact of severe wet weather in March 2015, along with water restrictions, two days of industrial action and a power outage throughout Northern Chile in the first half of the 2015 financial year. Escondida copper production of approximately 1.22 Mt is now anticipated for the 2015 financial year.

Pampa Norte copper production for the nine months ended March 2015 increased by 15 per cent to 192 kt as Spence benefited from higher recoveries. Production at Pampa Norte for the 2015 financial year is now expected to be marginally higher than the prior year, despite the impact of severe wet weather in March 2015, as improved grades and recoveries at Spence continue to offset declining grades and recoveries at Cerro Colorado.

Olympic Dam copper production for the nine months ended March 2015 decreased by 15 per cent to 111 kt following an electrical failure which caused a mill outage in January 2015. The mill is expected to be offline for approximately six months with an associated reduction in copper production of 60 to 70 kt with the majority of the impact anticipated this financial year.

Antamina copper production for the nine months ended March 2015 decreased by 32 per cent to 80 kt as lower grades more than offset record mill throughput. Average copper grades at Antamina are expected to remain broadly unchanged in the June 2015 quarter, consistent with the mine plan.

Lead- Lead production for the nine months ended March 2015 was in line with the prior period.

Silver - Silver production for the nine months ended March 2015 decreased by eight per cent as higher mill throughput at Antamina and Cannington was more than offset by lower ore grades at both operations, consistent with the mine plans.

Zinc- Zinc production for the nine months ended March 2015 increased by 29 per cent and primarily reflected increased mill throughput and higher grades at Antamina and Cannington.

Uranium - Uranium production for the nine months ended March 2015 decreased by 13 per cent as a result of the mill outage at Olympic Dam.

Projects

Iron Ore

Production

Iron ore - Total iron ore production for the nine months ended March 2015 increased by 17 per cent to a record 172 Mt. Production for the 2015 financial year is now expected to be 230 Mt, two per cent higher than prior guidance.

Western Australia Iron Ore (WAIO) production for the nine months ended March 2015 increased by 16 per cent to a record 188 Mt (100 per cent basis). This result was underpinned by continued improvement in the performance of our integrated supply chain, the successful ramp-up of the Jimblebar mining hub to a rate in excess of 45 Mtpa, and the relatively limited impact of the wet season. WAIO also achieved record sales volumes of 190 Mt (100 per cent basis) as our strategy of increasing the percentage of direct to ship ore unlocked port capacity.

WAIO production for the 2015 financial year is now expected to be 250 Mt (100 per cent basis), two per cent higher than prior guidance. Further growth in supply chain capacity to 270 Mtpa (100 per cent basis) is expected to be achieved without the need for additional fixed plant investment. The potential of our installed infrastructure continues to exceed expectations and as a result we are deferring the Inner Harbour Debottlenecking project. While this will lead to a slower path to system capacity of 290 Mtpa, it will come at a lower capital cost.

Samarco production for the nine months ended March 2015 increased by 37 per cent to a record 22 Mt (100 per cent basis) as the fourth pellet plant reached full capacity during the period.

Coal

Production

Metallurgical coal - Metallurgical coal production for the nine months ended March 2015 increased by 14 per cent to a record 38 Mt. Production for the 2015 financial year is now expected to be 49 Mt, four per cent higher than prior guidance.

Record production and sales volumes at Queensland Coal for the nine months ended March 2015, reflected the successful ramp-up of the Caval Ridge mine and sustained improvements in truck and wash-plant utilisation across the operations. Production declined by 13 per cent from the December 2014 quarter as a result of a longwall move at Crinum and wet weather.

Illawarra Coal achieved record production for the nine months ended March 2015 of 6.5 Mt as maintenance efficiencies supported higher equipment utilisation rates. Longwall moves at Dendrobium and West Cliff led to a 25 per cent decline in volumes during the March 2015 quarter.

Energy coal - Energy coal production for the nine months ended March 2015 increased by two per cent to 56 Mt. Guidance for the 2015 financial year remains unchanged at 73 Mt.

South Africa Energy Coal production for the nine months ended March 2015 increased by 15 per cent and reflected improved equipment utilisation and optimised mine planning. This was partially offset by lower production at Cerrejón as a result of drought conditions and the need to manage dust emissions, and lower customer demand for our Navajo Coal product.

Projects

Aluminium, Manganese and Nickel

Production

Alumina - Alumina production was broadly unchanged for the nine months ended March 2015 at 3.9 Mt and included record production at the Alumar refinery. Worsley volumes decreased by 12 per cent from the December 2014 quarter, which benefitted from the processing of stockpiled hydrate.

Aluminium - Aluminium production for the nine months ended March 2015 decreased by 15 per cent to 762 kt despite record production at Mozal. Lower volumes primarily reflected the cessation of smelting activities at Bayside and the temporary suspension of potlines II and III at Alumar in the 2014 financial year, and the planned replacement of transformers at Hillside. Production at Hillside and Mozal remains robust despite the increased frequency of load shedding.

On 30 March 2015, BHP Billiton announced that South32 had agreed with Alcoa, its joint venture partner and operator of the Alumar aluminium smelter, to suspend potline I from 15 April 2015. All three potlines will continue to be subject to ongoing review, having regard to market conditions.

Manganese ores - Manganese ore production for the nine months ended March 2015 increased by nine per cent to 6.6 Mt as an increase in plant availability at Wessels and an improvement in ore recovery at Mamatwan underpinned record production at Hotazel. Higher mill throughput and grades at GEMCO partially offset adverse weather conditions in the March 2015 quarter.

Manganese alloys - Manganese alloy production for the nine months ended March 2015 increased by 19 per cent to 554 kt as Metalloys and TEMCO benefitted from improved smelter stability and availability.

Nickel - Nickel production for the nine months ended March 2015 decreased by nine per cent to 102 kt. Lower Nickel West production reflected the closure of the Perseverance underground mine in November 2013 and an unplanned outage at the Kwinana refinery, while lower grades affected Cerro Matoso production. Production for the 2015 financial year at Nickel West is now expected to be 90 kt, while guidance at Cerro Matoso remains unchanged at 43kt.

Minerals exploration

Minerals exploration expenditure for the nine months ended March 2015 was US$203 million, of which US$148 million was expensed. Greenfield minerals exploration is predominantly focused on advancing copper targets within Chile, Peru and the South-West United States.

Variance analysis relates to the relative performance of BHP Billiton and/or its operations during the nine months ended March 2015 compared with the nine months ended 2014, unless otherwise noted. Production volumes, sales volumes and capital and exploration expenditure from subsidiaries are reported on a 100 per cent basis; production volumes, sales volumes and capital and exploration expenditure from equity accounted investments and other operations are reported on a proportionate consolidation basis. Production and sales volumes for our manganese operations are reported on a 100 per cent basis.

The following footnotes apply to this Operational Review:

(1) Copper equivalent production based on FY13 average realised product prices.

(2) Excludes Pinto Valley which was sold during the 2014 financial year.

(3) Unit cash cost excluding freight and royalties.

(4) Excludes Liverpool Bay which was sold during the 2014 financial year.

(5) Change in productive well count includes the reduction associated with the divestments of North Louisiana conventional assets (Haynesville) and Pecos unconventional gas assets (Permian).

(6) 21,220 square kilometres 3D seismic acquisition completed over Trinidad and Tobago Blocks 3, 5, 6, 7, 14, 23a, 23b, 28 and 29.

(7) 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.