Strategic Framework, etc.

Broken Hill Proprietary Co Ld
28 February 2000


BHP STRATEGIC FRAMEWORK AND PERFORMANCE MEASURES

Broken Hill Proprietary Company Limited (BHP) Chief Executive Officer and
Managing Director Paul Anderson today provided an overview of BHP's strategic
framework and associated performance measures at the Securities Institute
Australia luncheon presentation in Melbourne.

The presentation conveyed that BHP now has greater organisational confidence and
capabilities to embark upon a more deliberate value generation phase.  This
value generation phase will be reflected in the company capturing the
significant value potential from restructuring activities and delivering high
value growth through brownfields, greenfields and acquisition activities.

BHP's strategic framework has the following main components:

* The implementation of new business models and a major cultural change        
process.
* The delivery of operational excellence.
* Active portfolio management.
* The delivery of significant value creating growth.
* Financial management.

The transcript of Paul Anderson's speech will be available from 2.00pm Eastern
Standard Time at http://www.bhp.com.au.

Accompanying this release is a briefing paper detailing the BHP Strategic
Framework and Performance Measures.


Contact: 
MEDIA RELATIONS:     Mandy Frostick, Manager Media Relations
                     Ph:   [phone]
                     Mob:   [phone]

INVESTOR RELATIONS:  Rob Porter, Vice President Investor Relations
                     Ph:   [phone]
                     Mob:   [phone]

     
BRIEFING PAPER

BHP Strategic Framework & Performance Measures

February 2000

Paul Anderson, Managing Director and Chief Executive Officer of BHP Co
Ltd, provided a presentation to the Securities Institute of Australia, in
Melbourne on 28 February 2000.

The full text of the presentation can be found at BHP's Internet site
www.bhp.com.au.

This briefing paper provides an overview of the BHP strategic framework
and specific performance targets.

The BHP strategy entails competing in the Minerals, Petroleum and Steel
businesses in a more focussed and differentiated matter. Minerals will be
a global diversified 'mega' business. Petroleum will be an upstream oil
and gas business with activities focussed in three business niches. Steel
will be a regional business focussed on flat and coated steel products.
BHP Services will source global scale service-based solutions for BHP's
businesses.


BHP Corporate Strategy

* To create shareholder value through the discovery, development, and
  conversion of natural resources

Minerals
* Best multi-commodity global mining company founded on world class ore
bodies which delivers superior returns to shareholders, based on:
- A core collection of Tier 1 mines in multiple minerals and countries
- Operating excellence
- Efficient and effective discovery
- Acquisitions and divestures
- 'Fast followers' in technology
- Marketing excellence
- Managing risk
- Organisational alignment and effectiveness
* Mega Business


Petroleum
* Upstream oil and gas company with activities focussed in three
complementary business niches:
- Deepwater exploration
- Gas commercialisation
- Desert strategy (opportunity capture
North Africa and Middle East)
* Combine the asset quality of the majors and supermajors with the
responsiveness, commercial acumen and technical innovation of a
specialist.


Steel
* Steel business focussed in the Australian and Asian flat products
markets with a very low cost steel making position
* A converter of BHP's natural resources
* Consistent cash generation to fund BHP's future
* A source of industry knowledge.


Services
* Sourcing global scale service-based solutions for BHP businesses:
- Greater emphasis on alliances and joint venturing
* Key catalyst in implementing shared business services,global
procurement and best of breed service solutions


Provided overleaf is a summarised version of BHP's strategic framework
and performance measures.
Further details on the Minerals, Petroleum, Steel and Services strategic
direction will become available during the year.


BHP Strategic Framework and Performance Measures

Business Definition: Global natural resources company with a steel component
Value Objectives:    Superior Shareholder Value Creation measured in terms
of EPS accretion, free cash flow generation and Total Shareholder Return

Corporate/Portfolio Performance Measures:
* Return on Assets - Achieve at least an average 12% return on capital
for the 5 years to June 2004
* Generate net positive free cash flow before dividends and funding every
year.

Description

New Business Models & Culture Aligned with Charter

Implementation of new business models (portfolio model, shared services)
to support achievement of value objectives.

Implementation of a cultural change process designed to achieve
organisational alignment with shareholder value delivery objectives.

Enhancement of organisational capabilities (management, commercial and
leadership development)


Deliver Operational Excellence

New business model based around a portfolio management concept and a
large component of shared services amongst the business units.

Margin improvements, cost reduction, project delivery on time and within
budget, safety and environmental standards.


Main Components & Indicative Programme Elements

New Business Models & Culture Aligned with Charter

Portfolio management model, whereby operational assets report to, and
have performance contracts with, the Minerals, Petroleum and Steel portfolio
leadership teams.
Portfolio leadership teams supported by expert advisory services and all
transactional shared services provided by Services.
People strategy model to facilitate achievement of Charter and strategy
via:
* Attracting and retaining best talent
available globally.
* Changed employment arrangements, based on marketability and relevance
of competencies.
* Incentive based remuneration arrangements, linked to value objectives;
greater 'at risk' compensation.

A series of initiatives are being pursued within BHP.
Significant, current examples are:
* Minerals reorganisation
* Re-configuration of BHP Services (eg. outsourcing of IT)
* Implementation of shared services model.


Deliver Operational Excellence

Continued focus on productivity improvements and cost reductions in main
areas of business, vis:
* Western Australian Iron Ore - Project Phoenix and enhancements to
workplace practices (manning flexibility, equipment productivity).
* Queensland Coal - cost and productivity improvements, technological
applications (eg Punch Longwall developments -Goonyella Riverside)
* Petroleum - focus on internationally competitive finding and
development costs; operational improvements on key assets (eg. Liverpool
Bay)
* Steel - business improvements and margin optimisation approach for flat
products and coated steel.
* Services - shared services implementation; IT outsourcing; best of
breed sourcing models.
* Corporate - continued focus on reduction of overhead (G&A) costs.


Performance Measures

New Business Models & Culture Aligned with Charter

Internal performance measures are associated with the above programme
elements.

Deliver Operational Excellence

Over the five years (to June 2004), decrease operating costs (in real
terms) for existing businesses at the rate of 2% per annum.


Value Proposition: Creation of shareholder value through the discovery,
development and conversion of natural resources, based on:

* World class portfolio of existing assets
* Significant near term brownfield expansion opportunities
* Scale and capacity to capture new growth opportunities globally
* New management team focussed on delivering shareholder value through
organisational, operational and financial excellence
* A commitment to operating within a value set defined by the Charter
* A commitment to return funds to shareholders when better alternatives
do not exist.


Portfolio Management

Description
        
Portfolio optimisation involving strategic and commercial approaches to    
extracting maximum value through the business cycle; determination of which
businesses/commodities BHP is in.

A greater sophistication through Portfolio Management in extracting value
compared to the traditional discover, develop, dig and decommission model.

Strong level of commercial discipline at the business level and broader
portfolio management level.


Main Components & Indicative Programme Elements

Active approach to management of BHP portfolio, including:
* Portfolio upgrading / divestment of assets
* Active consideration of ownership, joint venture and financing arrangements
for assets.
* Monetising future cash flow of assets


Performance Measures

Generate net operating cash flow of in excess of $11 billion over the next three
years (by June 2002).

$4 billion in divestments by June 2001.
      

Deliver Significant Value Creating Growth

Description

Deliver on current projects.
Expedite value from key projects.
Capture and implement material growth opportunities aligned to strategic model.
Manage acquisitions to capture value.
BHP has an excellent portfolio of world class production assets with significant
brownfields and greenfields opportunities, some of which are listed below.

Main Components & Indicative Programme Elements

Brownfield Opportunities:
Minerals
* Escondida Phase IV
* Escondida Norte Bio-Leach
* Tintaya Oxide
* Queensland coal
* Western Australia Iron Ore
* Diamonds expansion

Petroleum
* North West Shelf expansion
* Bass Strait gas commercialisation
* Griffin infill and nearfield exploration tie-in potential 

Greenfield Opportunities:
Minerals
* Gag Island nickel

Petroleum
* Typhoon - Gulf of Mexico
* Atwater foldbelt - Gulf of Mexico
* Zamzama gas - Pakistan
* Algeria oil / liquids


Performance Measures

Invest approximately $12bn in maintenance capital, value-added growth projects,
exploration and investment expenditures (before acquisitions) by June 2004.

All investment decisions subject to meeting and exceeding minimum performance
criteria.  A commitment to return funds to shareholders when better value
alternatives do not exist.


Financial Management

Description

Reduce level of corporate debt.
Lengthening the maturity profile to better match the lifespan of BHP's assets.
Reduce reliance on bank debt.


Main Components & Indicative Programme Elements

Financial management is a key component of implementing other elements of BHP's
value creation strategies.
* Debt Management
* Project & structured finance
* Equity management
* Reduction of capital intensity
* Sustained improvement in working capital.

Performance Measures

Improve EBITDA to interest coverage ratio such that the ratio exceeds 6.0x in
the low point of the business cycle and averages at
least 8.0x over the cycle (this implies a gearing band of 40%-45%).

Extend average debt duration to greater than six years

Reduce reliance on bank funding and credit support to <35% by the end of FY2003.


Performance Measures

BHP has established a series of financial performance measurements to assist the
financial community in assessing the company's performance on the delivery of
its strategy.

BHP will report its performance against these performance measures on an
annual basis, using the definitions described below. (All figures in this
paper are in Australian currencies, unless otherwise stated)

The performance measures have been developed using the following average
price assumptions over a five-year period:

Oil (WTI)                US$19.90/bbl
Copper                   US$0.89/lb
AUD/USD exchange rate    69 cents

Oil and copper prices, and movement in currencies, have the most significant
impact on BHP earnings.  The average oil price oil assumption is based on the
forward curve, reverting to a longer term median.  BHP will report against these
targets both on a realised and normalised price (using the above) basis.

Portfolio Performance Measures

Return on Capital

Performance Measure
Average 12% return on capital for the 5 years to June 2004.

Definition
Return on capital equals (per statutory profit and loss statement and
balance sheet):
Operating profit after income tax before abnormal items
plus        net unallocated interest (after tax)
divided by
Average capital employed
where capital employed equals
total shareholders equity
plus        current and non-current borrowings (long term loans, redeemable
            preference shares and non recourse finance) as reported on BHP's    
           balance sheet.

Three Year Historical Data
Fiscal year                 1997          1998           1999
Return on capital (%)        7.4           6.6            3.5


Free Cash Flow

Performance Measure
Generate net positive free cash flow before dividends and funding every year.

Three Year Historical Data
Fiscal year                 1997           1998         1999
Net cash flows ($m)         (352)         2,036        2,321


Definition
Net cash flows equals (per statutory statement of cash flows):
        Net operating cash flows
less    Net investing cash flows


Deliver Operational Excellence

Operating Costs

Performance Measure
Over the 5 years (to June 2004), decrease operating costs (in real terms)
for existing businesses at the rate of 2% per annum.  This equates to cost
savings pre-tax of approximately $300 million per annum, or total savings
of approximately $1.5 billion over the period.

Performance against this measure will be reported in BHP's profit releases.


Portfolio Management

Operating cash flows

Performance Measure
Generate operating cash flows in excess of $11 billion over three years
(to June 2002).

Three Year Historical Data
Fiscal year                      1997           1998           1999
Net operating cash flows ($m)   3,996          3,559          3,585


Definition
Operating cash flows equals (per statutory statement of cash flows):
               Net operating cash flows


Portfolio Management

Asset Sales

Performance Measure
$4 billion in asset sales for the three years to June 2001.

Three Year Historical Data
Fiscal year                 1997           1998           1999
Asset sales ($m)             666          3,002          2,230


Definition
Asset sales equals (per notes to financial statements):
          Proceeds from sales on non-current assets

The $4 billion of divestments includes the sale of non-core Steel assets
and is in addition to the $11 billion of operational cash flows detailed
above.


Deliver Significant Value Creating Growth

Performance Measure
Invest at least $12 billion in maintenance capital, value adding growth
projects, exploration and investment expenditures (before acquisitions)
by June 2004. This measure is provided primarily for informational purposes, and
reflects the growth potential within the BHP portfolio of brownfield and
greenfield opportunities.  The commitment of this level of investment capital
will be dependent on the robustness of projects. Funds not deployed will be used
to pay down debt or will be returned to shareholders.

Three Year Historical Data
Fiscal year                   1997           1998           1999
Investing outflows ($m)      4,954          4,649          3,463

(The above data includes some acquisition related expenditure)

Definition
Investing expenditure equals (per statutory statement of cash flows):
               Investing outflows

This item includes value added growth, maintenance capital expenditure,
exploration expenditure and investments.

Future reporting of capital expenditure will include a separate identification
of acquisition expenditure, where appropriate and not prevented confidentiality
considerations.


Financial Management

Interest Cover

Performance Measure
Improve EBITDA to interest coverage ratio such that the ratio exceeds 6 times in
the low point of the business cycle and averages at least 8 times over the
cycle. This implies a gearing band of 40% to 45%.

Three Year Historical Data
Fiscal year                          1997           1998           1999
EBITDA interest coverage (times)      6.4            5.2            4.2


Definition
EBITDA (earnings before interest, tax, depreciation and amortisation) interest
coverage ratio equals per statutory profit and loss statement):  
               Operating profit before abnormal items and income tax
plus           Borrowing costs
plus           Depreciation and amortisation
divided by
               Total borrowing costs (per notes to financial statements)

Debt Duration

Performance Measure
Extend debt duration to greater than six years and reduce reliance on
long-term bank funding and credit support to less than 35% of liability
funding by the end of FY2003.

Definition
Debt duration equals the average maturity length of BHP's debt.
Bank funding equals the percentage of BHP's total debt portfolio that is
sourced from banks.

Reporting on this performance measure will be in addition to information
provided in BHP's statutory financial reports.


Prepared by BHP Investor Relations

Contact details
For clarification contact:

Investor Relations

Dr Robert Porter (Melbourne)
Vice President Investor Relations
Ph: (61 3) 9609 3540   Fax: [phone]
Email: [e-mail]

Mr Andrew Nairn (Melbourne)
Senior Business Analyst
Ph: (61 3) 9609 3952   Fax: [phone]
Email: [e-mail]

Mr Pierre Hirsch (San Francisco)
Manager, Investor Relations
Ph: 1 [phone]   Fax: [phone]
Email: [e-mail]