Strategic Framework

BHP Billiton Limited
8 April 2002

     BHP Billiton Limited is issuing this announcement to fulfil disclosure
  obligations arising from its secondary listing on the London Stock Exchange.

    The text of this release is identical to that issued by BHP Billiton Plc
                                    earlier.



8 April 2002
Number: 20/02

                BHP BILLITON STRATEGIC FRAMEWORK BRIEFING PAPER

BHP Billiton CEO and Managing Director Paul Anderson and Deputy CEO Brian
Gilbertson will today present an overview of the Group's Strategic Framework at
an Australian Securities Institute luncheon in Sydney, Australia.

Attached is a copy of the Briefing Paper that will be distributed at the
luncheon. Additionally, a copy of the PowerPoint slide presentation from the
briefing will be available on the BHP Billiton website (www.bhpbilliton.com/
investor) at about 1.00pm today (Australian Eastern Standard Time).

The BHP Billiton Strategic Framework briefing will be repeated in London on
Wednesday 10 April 2002.


Australia                                                  United Kingdom/South Africa
Dr. Robert Porter, Investor Relations                      Michael Campbell, Investor & Media Relations
Tel: + 61 3 9609 3540 Mobile: [phone]              Tel: [phone] Mobile: [phone]
email: [e-mail]                       email: [e-mail]

Michael Buzzard, Media Relations                           Ariane Gentil, Manager Communications
Tel: [phone] Mobile: [phone]               Tel: [phone] Mobile: + 44 7881 518 715
email: [e-mail]                     email: [e-mail]

United States
Francis McAllister, Investor Relations
Tel: [phone] Mobile: [phone]
email: [e-mail]





                                 Briefing Paper

                        BHP Billiton Strategic Framework



CONTENTS

I     Strategic Framework

      • Vision
      • Value Objectives



II Strategic Framework and Performance Measures



III Business Model to Support Strategy

      • Customer Sector Groups (CSGs)
      • Portfolio Model
      • Marketing Structure
      • Common Business Processes (BHP Billiton Way)



IV Capital Management Disciplines







I     STRATEGIC FRAMEWORK

Vision:



BHP Billiton aspires to be one of the world's premier companies.

This will be accomplished by delivering upon our vision to earn superior returns
for our shareholders as the world's premier supplier of natural resources and
related products and services.



Value Objectives:

Shareholders:

The delivery of superior total shareholder returns through a focus on Net
Present Value (NPV) enhancement, sustainable returns above the cost of capital
and free cash flow generation. This is associated with a recognition that the
Group's ultimate goal must be to be a core holding for global equity investors.

Customers, Employees, Communities and the Environment:

BHP Billiton's success as a global corporation depends, in large part, on how
effectively we work with our customers, our employees and the communities in
which we operate. Our objective is to be the employer and partner of choice in
the resources sector, and to serve our customers better with a broader and more
flexible product offering.

We are committed to continued improvement in our Health, Safety, Environment and
Community (HSEC) performance towards the aspirational goal of zero harm to
people and the environment. Our standards and guidelines reflect leading
industry practice and community expectations both local and global.


        II     Strategic Framework and Performance Measures

                                        Strategic Imperatives                    Performance Measures
        BHP Billiton Value Drivers
        (Organisational capabilities &                                           (How the market can judge progress)
        distinguishing factors)

I. Outstanding Assets                   1. Zero Harm                              1. Improving HSEC Performance

                                          • BHP Billiton is committed to           • Policy goal of zero harm (zero
                                            continued improvement in its HSEC        fatalities, zero significant
                                            performance towards our aspirational     environmental incidents, no
                                            goal of zero harm to people and the      transgressions of UN Declaration of
                                            environment.                             Human Rights)

                                                                                   • Expenditure of 1% of pre-tax
                                                                                     profits (three year rolling
                                                                                     average) on community development
                                                                                     programmes


                                        2. Operating Excellence
                                                                                 2. Cut Operating Costs
                                          • 60% of the Group's assets are in
                                            the first quartile of costs and 80%    • Reduce operating costs for
                                            are in the lowest half of the cost       existing businesses by 2% in real
                                            curve.                                   terms per annum on average over the
                                          • Improved unit cost performance.          next three years (US$500m in FY
                                          • Improved capital efficiency.             2003-05)
                                          • Systematic process to establish,       • Achieve US$270m merger benefits
                                            benchmark and transfer best              by the end of FY 2003
                                            practices across the Group (The BHP    • Improved EBIT & Free Cash Flow
                                            Billiton Way).                           (FCF) (normalised)

                                                                                 3. Return on Capital

                                                                                   • Return on capital - greater than
                                                                                     15% by 2006


II. Growth From Deep Inventory of       3. Project Evaluation & Execution        4. Evaluate/Implement Projects
Projects
                                          • The Group has a deep inventory of      • BHP Billiton has US$10 billion of
                                            high quality growth projects spread      mature identified growth potential
                                            across its main Customer Sector          in the current portfolio
                                            Groups (CSGs).                           (approximately US$2.5 billion has
                                          • Investment evaluation and project        been committed since the merger to
                                            execution skills will be central to      April 2002)
                                            the efficient delivery of this         • The indicative split of
                                            growth potential.                        expenditure by CSGs to 2006 is as
                                          • High value growth will be pursued        follows
                                            through a combination of brownfield      - Aluminium 15%
                                            and greenfield projects, as well as      - Base Metals     15% - 20%
                                            appropriate M&A activities.

                                                                                     - Carbon Steel Materials 10%
                                                                                     - Energy Coal 10%
                                                                                     - Petroleum 35% - 40%
                                                                                     - Stainless Steel Mat. & Others 10%






III. Customer-Centric Marketing         4. Serving Customers Best                5. Preferred supplier status & global
                                                                                 marketing and trading
                                          • BHP Billiton's marketing approach
                                            seeks to combine physical product
                                            handling skills with the flexibility
                                            and trading skills of a merchant,
                                            and the risk management skills of a
                                            financial institution.

                                          • The combination of these skills
                                            will allow additional value creation
                                            and growth opportunities through the
                                            transformation of products from a
                                            purely physical, to an augmented
                                            offer.


IV. The Portfolio Effect                5. Portfolio Management

                                          • Key capital management, risk
                                            management and portfolio management
                                            decisions are taken at a Group
                                            level. The major focus is on
                                            enhancing the performance of the
                                            existing portfolio of assets, and
                                            the management of portfolio risk

                                        6. Funding & Capital Management          6. Maintain a credit rating of A or
                                                                                 better
                                          • BHP Billiton will maintain an
                                            approach to funding and capital        • Generate positive cash flow after
                                            management to support delivery of        tax & investment every year.
                                            its strategic imperatives. This        • Maintain EBITDA to interest
                                            includes maintaining a credit rating     coverage ratio such that the ratio
                                            that will enable the Group to            exceeds eight times over the cycle
                                            minimise its cost of debt within the     (gearing band of 35%- 40%)
                                            constraints of optimising its          • Cash Flow at Risk to Cash Flow
                                            gearing ratio and debt maturity          ratio not greater than 25%
                                            profile to reduce its overall cost
                                            of capital.

V. The Petroleum Customer Sector Group   7. Value Adding Growth                  7. Low discovery costs & growth in
                                                                                 reserves and production
                                          • Petroleum provides the ability for
                                            BHP Billiton to pursue high quality
                                            growth opportunities in the E&P
                                            sector, without some of the
                                            regulatory and market constraints
                                            that may impact upon growth in some
                                            metals and mining sectors.

                                          • Petroleum, in combination with the
                                            Group's other energy positions
                                            allows the pursuit of energy
                                            marketing and trading opportunities.


VI Innovation                            8. Creative Thinking                    8.    Dependent on opportunities
                                            Commercial Judgement
                                            Transaction Execution


                                        Pursuit of selective growth
                                        opportunities based on accessing
                                        external and internal networks related
                                        to existing BHP Billiton activities
                                        (business development initiatives, BCAP)








III.     Business Model to Support Strategy

BHP Billiton's business model is designed to support the achievement of superior
shareholder returns through the:

  • Maximization of returns and the management of risk at the portfolio level
  • Effective deployment of capital to new growth projects and merger and
    acquisition (M&A) opportunities
  • Efficient extraction of value from existing assets
  • Facilitation of knowledge sharing and best practices procedures throughout
    the Group
  • Achievement of value through the marketing structure, as well as the
    identification of new business initiatives through BCAP.


The main features of the BHP Billiton business model are as follows:



 1. Customer Sector Group Structure

    The Customer Sector Groups or CSGs have been established based on natural
    customer-oriented groupings of commodities. This is consistent with our
    approach of orienting our business from the customer to the mines rather
    than simply on the extraction and delivery of product.

    Each of the CSGs is a substantial business in its own right, a number are
    leaders in their field. The CSGs have significant autonomy to optimise their
    businesses with clear accountabilities, based on their own strategic plan,
    around EBIT performance and shareholder value add.

    The CSGs operate with their own Board comprising the CSG President and two
    Executive Committee members drawn from other CSG or functional areas. The
    marketing personnel from within the CSGs are located in one of the twin
    marketing hubs - in The Hague and Singapore - and have a direct reporting
    line to their CSG President as well as the Chief Marketing Officer.


 2. Portfolio Model

The purpose of the portfolio model is two-fold:

  • To define the risk/reward frontier to support investment and capital
    allocation decisions, and
  • To enable the organization to manage both the portfolio of assets and the
    portfolio of risks

The portfolio model rests fundamentally on a robust capital management system
applying techniques, such as Cash Flow at Risk, and Value at Risk, as well as
the centralization of key capital management, risk management, business and
economic evaluation methodologies.

The ability to utilise the portfolio's characteristics provides the capability
to deliver value beyond that provided by the aggregation of business strategies
at the CSG level. These include:

- The inherent increased stability of cash flows of the portfolio

-     The ability for investments to be made through business cycles

-     The ability to provide more customer focused solutions

-     Critical mass in capital markets


3.    Marketing Structure

The marketing approach entails the adoption of a coordinated marketing function
based around twin hubs in The Hague and Singapore, designed to augment and
extend the product offering to customers and enhance value from a
customer-orientated approach to the delivery of product, as well as sell more
goods than the Group produces.

This customer-centric marketing approach is underpinned by a number of pillars,
including:

  • Operations standardisation (common SAP centred marketing execution and
    risk management systems)
  • Integrated supply chain planning (providing the ability to offer a fully
    integrated capability to customers for their raw material needs)
  • Trading, merchanting and aggregation (enhancing product offering to
    customers, enabling geographical arbitrage)
  • Market consolidation (moving from a mine by mine marketing basis to the
    centralised offering of full commodity output)
  • Market transformation (energy market offering; substitution of one form of
    energy exposure for another within the portfolio)


4.    Common Business Processes (The BHP Billiton Way)

The adoption of common business processes and practices (termed the BHP Billiton
Way) to deliver operational improvements through the rigorous application of the
same proven improvement process across the Group.


        Benefits to derive from:

  • Knowledge sharing and alignment
  • The evolution to a global corporate culture within BHP Billiton
  • Cost reduction
  • Production/yield increases
  • Capital elimination/deferral
  • Enhanced health, safety, environmental and community performance
  • Faster and more efficient project implementation





IV     CAPITAL MANAGEMENT DISCIPLINES

Capital Management Disciplines (including Financial Risk Management Model)

  • Authorisation levels

Asset Leaders, Selected VP                       Up to US$5 million
Business CEO/President CSG                       US$5 million to US$50 million
Executive Committee                              US$50 - US$100 million
BHP Billiton Board                               Above US$100 million

  • The Investment Review Committee (IRC) is responsible for the risk analysis
    and evaluation and advice to the Executive Committee and the Board on all
    investment decisions above US$100 million, including capital (growth and
    sustaining), mergers, acquisition, divestments, non-capital (exploration,
    technology, expense investing), venture capital and BCAP investments etc.
  • The IRC will endorse projects to the Executive Committee.
  • CSGs are responsible for identifying growth opportunities and taking
    investment proposals through the tollgating process.
  • Investment evaluation is based on:
      • Base high and low case returns
      • Probability distribution of project returns
      • Impact on Group financial statements
      • Impact on the Group portfolio
  • The investment process has five phases:
      • concept
      • pre-feasibility
      • feasibility and approval
      • execution, and
      • operation
  • Independent Peer Reviews (IPR) - for each investment an IPR Leader is
    appointed. The IPR Leader is selected by a sub-committee of the IRC.
  • IPR Team investigates the investment proposal to determine if it is robust
    based on:
      • appropriate quality control processes
      • generally accepted best practices
      • sound assumptions
      • solid criteria and
      • high integrity in information output
  • During the feasibility phase the IPR focuses on:
      • the strategic fit of the proposal
      • portfolio risk/group impact
      • value drivers
      • detailed economics
      • project team capabilities
      • key risks, including HSEC risks and opportunities
      • technology and
      • execution plans
  • Project Development Services assists the IRC in relation to:
      • endorsement of the selection of the project manager and key reports
      • management of an independent review process during execution phase
      • management of the project's close-out review process



Financial Risk Management

  • BHP Billiton has undertaken a comprehensive review of its strategy in
    relation to market price risks (including commodity prices, foreign
    exchange, interest rates and freight). This has quantitatively demonstrated
    the benefits of the diversified portfolio in terms of cash flow at risk
    (CFAR).
  • The diversification effects within the combined portfolio materially
    reduce market risks (cash flow at risk to cash flow pre merger was: BHP -
    25%, Billiton 26%. Post merger, the CFAR to cash flow ratio was assessed at
    19%.).
  • The diversification benefit is complemented by the strength and
    flexibility provided by the Group's world class, low cost assets and the
    options inherent within its project pipeline.
  • This provides a natural hedge against adverse market price movements and
    reinforces the self insurance approach.
  • Oil, aluminium, copper, coal and currency exposures dominate in the
    portfolio.
  • BHP Billiton's portfolio is also diversified in terms of country risk -
    over 90% of EBITDA generation is in investment grade sovereign risk
    jurisdictions.


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