Ladies and gentlemen, welcome to today's presentation of BHP Billiton's interim results for the December 2011 half year. I'm speaking to you today from Sydney, and I'm joined by our CFO, Graham Kerr, who's presenting our financials for the first time. Welcome, Graham. I'm also pleased to note that we are joined by members of the BHP Billiton management committee, including Alberto Calderon, Mike Henry, Andrew Mackenzie -- please excuse me, Marcus Randolph, Karen Wood and Mike Yeager. They are on the telephone lines, and they'll participate in the question-and-answer session. I should also point out that Jimmy Wilson, President of our Energy Coal Business and based here in Sydney is here with us today. Before we begin today, I'd like to point the disclaimer out to you and as always, remind you of its importance in relation to today's presentation. With regards to today's format, I will start off by giving a general overview of our operating performance. Graham will take a little bit more of an in-detail look at our financial performance, and then I will conclude by discussing the unique attributes of our strategy that positions us for superior margins and strong investment returns. That is, in the first place, the strong and predictable nature of our fundamental -- of our financial performance that fundamentally improves our ability to plan for both the short and for the long term; secondly, the contrasting fortunes of various businesses in our portfolio and the specific actions that we've taken to address those challenges; thirdly, the latent capacity that is set to be released from our portfolio -- from our existing portfolio and the strong momentum that will be generated by this release of latent capacity; and then in the last instance, our commitment to live with our means as we…

Thank you for your introduction, Marius. Before I start, I would like to acknowledge the significant contribution of my predecessor, Alex Vanselow. I'm pleased to present a strong and predictable set of financial results, which are a testament to the consistent and disciplined execution of our strategy. As Marius mentioned, these robust results were delivered in a period characterized by significant market volatility and a number of operating challenges across our key businesses. Let me start by taking you through the key earnings drivers for the period. Underlying EBIT for the December 2011 half year was $15.7 billion, up 6% from the prior period. As shown in the waterfall graph, higher prices, net of pricing and costs, increased underlying EBIT by $2.8 billion. Notwithstanding the significant pricing increase at the group level, the contrasting performance of individual commodities within our portfolio tells a somewhat different story. For example, prices for our bulk and energy products were supported by continued strong demand from the emerging economies and ongoing supply-side constraints. In contrast, prices for our metal products were weaker, reflecting a general shift in market sentiment towards the end of the period. Adding to the decline in Base Metals' underlying EBIT was a provisional pricing adjustment of $258 million relating to our copper concentrate and cathode sales. While not flowing through to the revenue line, I should also note in our Petroleum business a strong operating performance across the portfolio were supported by a number of one-off benefits in the half, including a $222 million gain associated with legacy U.S. onshore gas derivatives and a $118 million noncash gain on an embedded derivative at Angostura. Consistent with BHP Billiton's commitment to market base pricing, all U.S. onshore legacy gas derivatives are in the final process of being unwound and will have…

Thanks, Graham. I'd first like to summarize our thoughts on the global economy. With regards to the short-term outlook for the developed world, and Europe in particular, we remain cautious. Our concerns are not unique and unfortunately, we see no simple solution to the structural imbalances and high level of sovereign indebtedness in the OECD countries. However, as I've mentioned before, our level of optimism for general commodities demand is, was and continues to be based on the longer-term structural drivers of industrialization and urbanization in the developing world, as confirmed by very detailed proprietary bottom-up analysis. In that sense, it's important to recognize that approximately 170 million people in China alone are expected to urbanize over the next decade. The progressive shift in the way that these people live and work is driving the transition in growth that you can see on the right-hand side of this slide. Now over time, economic activity in China will shift from being investment- to being consumption-led, and the demand for various commodities will change. As I've highlighted before, we expect steel intensity per capita to peak first, followed by commodities such as copper and aluminum, and then energy and potash demand is linked with economic expansion in the more linear fashion, and we expect to experience both later stage and longer-term demand growth for those products. That's why we place such a great importance on diversification by product, by geography and market, and which brings me to our strategy that really by now has been passed down from one generation of management to another. That is our commitment to own and operate large, long-life, low-cost, expandable upstream assets diversified by commodity, geography and market. Now consistent with that strategy, management made a very deliberate decision many years ago to prioritize investment in…

Marius, it's Paul Young from Deutsche Bank. Your comments on your sequencing of development projects is important. The phasing on those requires return, plus lost risk commissioning [ph] in those comments. And I've got a comment on your copper strategy. And if I look at your mega projects that you might approve this year, I would think the dam expansion sticks out to me as the one with the highest CapEx, longest payback and therefore, potentially lowest returns. And if I look at your proposed expansion at Escondida, and it has a much shorter payback and significantly higher return. So the question I have is have you considered actually delaying Olympic Dam and allocating the CapEx into accelerating a more aggressive expansion of Escondida i.e., compressing ODP 1 to 3 in the construction time frame? And just the second part of the question is just an idea, with the 15 you built on and higher technical risks than the other mega projects, how do you prevent CapEx blowouts on such a project?

Yes, Paul, probably a couple of comments, some of which agree with you and some of which perhaps stand in a little bit of a contrast. In the first instance, I should reiterate what I've said about project activity over many years. We have to look forward well into the future, and we have to gear the level of staffing on our project teams consistent with what we see today and what we hope to see over that 5-year period. The ability for us to dramatically alter towards the quickest side projects, to do projects quicker than what we've been preparing for, is very limited. The opportunity to go slower is you've got many more options to do that, Paul. So I think our ability to actually go and do the additional projects, Project Number 2 and 3 and so on at Escondida, and at quicker pace than what we signal to the market is just not there. We're doing them at the pace that we can do them. Because you have to have 4 things in place in order to do a project: You've got to have the resource, you've got to have the approvals, you've got to have the people and you've got to have the cash flow. And all of those things, it's years of work. We cannot accelerate appreciably CapEx from the trajectory that we set ourselves. We can go lower, but we can't easily accelerate. And I think that probably tells half the story on why we would like to do both the ODP 1 and OGP 1. Sorry, about the confusing 3 letter acronyms. One in Escondida and one in Olympic Dam. With regards to technical risk, Phase 1 -- I'm sorry, put differently, we've had a close to 30-year test kit on the…

Paul McTaggart at Credit Suisse. Let me -- just want to ask about the Illawarra. The precommitment capital wasn't any surprise to most people. But perhaps what was a surprise to me was the timing in a sense that you're now suggesting commissioning will be mid-2016, a little faster than I might have anticipated. I wanted to get a sense of how quickly, once that's done, you think you can ramp up tonnes into the market? Can you give any insights about that? And then everyone has obviously asked about the capital around the Illawarra for some time now. Having now committed near enough $1 billion, you've got a better sense of what the ultimate capital cost might be?

Paul, I think that our confidence on the estimates for the Outer Harbour, building the port and associated infrastructure, the stockyards and so on, is already very advanced and growing day by day. On the mining side, obviously, what we've tried to do is to build our standard modular around 50 million tonnes a year mine over and over again, just like we've said 5 or 6 -- 4, 5 years ago under different circumstances. I hope that everybody by now has understood better that while there is clearly quite a lot of dredging and the dredge pockets to be done, and clearly that's -- there's at least 37 kilometers ship channel, some incremental dredging to be done. That the project from a technical perspective is largely doing the sorts of things that we've been doing. There is clearly some element of the jetties themselves that have to be amortized over the entire capacity. But that amount is probably less than half of the total amount -- if I take the key components we're going to build in that project, it's the jetties and the loaders, the dumpers and the stockyard, and then everything to connect that up. If you look at the true bottleneck capacity, flag-fall investment that you're putting in, it's really the dredging and the jetties. And it's still a lot of money but that is the amount of money to be amortized over future tonnes. The rest of the stuff, the stockyards, the car dumpers and eventually the mines that follow is exactly the same as what the best of our competitors have got to build. And obviously, as a direct shipping ore project of superior grade with long flat lives as we've said in terms of grade, we believe that the ultimate capital intensity here…

It's Lyndon Fagan from RBS. Marius, I've got a question on shale gas. Obviously, the gas price has fallen a lot. I'm just wondering to what extent is the business looking at changing its strategy in shale gas. At the time, you flagged some plans to spend in the order of $20 billion over the next 5 years. And with the gas price where it is, I'm wondering to what extent are you looking at redirecting some of that CapEx into other projects or hydrating the portfolio as you've mentioned previously?

Lyndon, I'm glad the question was asked. About 18 months ago, we gave a snapshot of our forward view of CapEx because at that stage the market set we don't know what you're going to spend your money on. Let me tell you that companies never like giving snapshots because snapshots are snapshots, things change. And we highlighted $80 billion at the time. And then we made the Petrohawk acquisition, we set that $20 billion for shale gas over that corresponding 5-year period. And then I took some pressure from some of the analysts when I added and one plus one doesn't equal 2, i.e., when you add the $20 billion to the $80 billion -- the $80 billion was a snapshot that had come earlier. The $20 billion was a snapshot of what we thought we would spend in the shale gas, but I clearly indicated and what is going to happen is now that we've expanded the opportunity set, we're going to high grade again. I think it's fair to say that probably where forward cash flow projections were at that point in time, after fortunes changed a little bit from the last half of the year and you've seen that in the results today, probably 5-year CapEx forecast on average, the cash, all cash generated by the assets have probably come down a little bit, and they're just forward projections. And so what we are trying to do is we're just trying to steer that overall high grading of CapEx. Now in the first instance, you shouldn't read too much in that -- in terms of the overall amount that we're going to spend in shale gas. Because I think in reality, while I do deliberately not want to give a 5-year outlook for spend in shale…

It's Glyn Lawcock of UBS. You got the 2 mics on the phone, so I hope maybe I try and direct some questions that way potentially. Just firstly, just extending the shale gas discussion a little bit with the weak gas price, where are you at internally now thinking about exports from the U.S.? Or is that still something you're not thinking about? And then I'll give you the second one shortly. This one's more -- I know, as a company, you don't look short term. You want to take the multiyear investment horizon, but I'm just curious about seeing China at the moment, steel production is still bobbing around the low 600s.

Yes. We haven't really seen numbers after the New Year.

Iron ore inventories are rising to record levels. On a supply side, you're still pumping at flat out record levels except for weather. I'm just wondering what Mike is seeing, if he can give us any thoughts on what he is seeing happening in the outlook.

I'll make one comment and then Mike Henry may add. On the iron ore piece, the story really has been, what did we see? Steel come from 700 to 600 effectively. I think our expectation is that after the New Year, we're going to see operating rates pick up. And the other 2 things that we've seen is that the exports from India are continuing to lag expectations, well-lag expectations, and then we're seeing a high-cost capacity in China acting in a very predictable manner and showing that there is a real big chunk of capacity sitting at well above $100 cash cost production. Now having said all of those positive things, I do think that I want to say very strongly that our prediction for iron ore is clearly that it is going to, in terms of its ultimate growth potential, we believe, peak earlier. I don't think it's as short term as we've just discussed and hence, our investments in the Outer Harbour and so on. But I do think that if for example, I have to make a project choice here that would only start producing in 10 years time and take another 15 to pay back after that. We probably would have taken some pause on both quantum and speed there, Glyn. Mike, I don't -- Henry, I don't know if you can add anything to that?

Let me just say a couple of points, Marius...

Sorry, the line is a little shoddy, Mike, so you'll have to speak both loudly and slowly, which is tough for Canadians but try in any case, Mike.

Okay. I'd make a couple of points, Marius. One is in respect of the picture that we've seen over recent months, and there's 2 ways of looking at that, as Glyn highlighted steel production has come up. But I think there's some encouraging signs that we can take from what we've seen over the past couple of months. You saw steel demand drop or steel production drop in China by 100 million tonnes plus. Obviously, there is a large chunk of iron ore demand that fell in association with that. But at the same time, you saw seaborne supply continuing to move at full capacity. You saw inventories in China stay relatively stable in the final few months of the year in absolute terms, and you saw iron ore pricing pulled up at $140 a tonne. So large slab of iron ore demand coming out of the market. But at the same time, iron ore prices maintained at $140 a tonne and seaborne supply pulling at full capacity. That's a strong indicator or supportive of the view that, that high-cost -- both for the high-cost supply in China act as a buffer in times of low steel production. So those are some positive signs that we can take at the last half year. Going forward, the fundamentals remain strong in the short to midterm for iron ore demand. As Marius highlighted earlier, 170 million people to urbanize over the coming decade. That's going to drive continued demand for steel. Falling of steel demand in construction and infrastructure, but growing demand for steel in machinery and transportation as China continues to move up the development curve, as per capita income growth, as China seeks to boost productivity and as growth moves West extending the supply chain.

Mike, thanks for highlighting those 2 points, which I probably didn't pick on properly. That is within China that the steel usage patterns are also going to shift, from buildings to machinery, roughly put. And then I think from steel usage perspective, we probably don't have an update to the graph that is on our website, which sort of says that steel intensity per unit of GDP halves over the next 15 or so years. That would still be correct. I'll give Mike Yeager a chance to comment on the energy arbitrage as well. But perhaps a couple of thoughts. We believe the world -- sorry, we believe the world will continue to arbitrage our differentials in the energy prices, but over a long period of time. We're not talking about something which we anticipate will happen next week. And secondly, I should note that we clearly didn't take anything of that nature into account as we made our acquisitions in the gas sector. Now my personal belief is that, that arbitrage will be a mosaic of things. It will be gas at these pricing levels continued -- sorry, let me step back. U.S. calorie consumption about 1/3 coal, 1/3 liquids and 1/3 gas. I'm grossly oversimplifying, but it's that order of magnitude. And I think that gas is going to continue to push in the coal side. Eventually, it will push into the liquid side, both by gas to liquids, diesel and so on and so on, as well as perhaps things like compressed natural gas and so on and so on. And then it will arbitrage by way of industrial production, chemicals, fertilizers, congealed energy in the form of aluminum, other things and so on. And then there will be, I anticipate, a modest amount of LNG exports. We should not look at LNG exports as the total solution to the overall picture. What's got to happen is that at these price levels, the immense calorie arbitrage has got to change behavior patterns of those consumption, so I highlight that. And our participation, look, we never rule out anything, but we're on balance, sort of a more resource, take it out and sell it at the first possible point that we can sell it at type of a company. Mike, I don't know if you want to add some color on your personal observations on this as well.

Well Marius, I think as you stated, you rounded out pretty well. Glyn, we owe it to ourselves to understand this, and we are doing so. We understand the construction side, the location side, the shipping, how the regulations are going to work and how hopefully the U.S. politics are going to work there. So we owe it to ourselves, as Marius has indicated, to understand, and we're all over that. Likewise though, we're just as eager to continue to understand how the domestic market is evolving. Obviously, the power sector has a tremendous amount of growth that can occur here. Petrochemicals are increasing and other uses are rapidly evolving. So as Marius says, I think there's going to be a number of things. And as all of us know, a shale is not a shale is not a shale. There are different costs. There are different destinations. There are different aspects of technology. So as you've heard, we're going to look at all this and make sure that we're across all of it, and then act on it in the best way we can. But clearly, we're optimistic of how this fuel is going to be preferred and how -- this is the fastest growing market in the world, and we expect it to continue and we're glad to be part of it.

And perhaps one last thing to note. And the question is not really asked, but perhaps I should volunteer an answer in any case. A lot of the people in Australia who cover us are more mining-side analysts. And the analogy of the gas market that I always do is if you build the bulk mine, if you stylize, it basically keeps going at the same rate for a long time. If you build a base metals mine, the grade declines at 3% or 4% a year on a normal copper porphyry mine. So what that means is that in order to keep production flat, you have to continue to invest money, put more tracks in the pit and so on in the base metals mine. That means that what has happened in copper is that instead of a market that is growing, I don't know, 3.5% a year on a global basis over the last couple of years, the copper miners don't have to produce 3.5% more copper every year, they have to produce 7% or 8% more copper every year, and they have to run projects to produce 7% or 8% more. The gas business, particularly with the short or the front-end loading of the gas profiles on these shale gas and tight gas and so on is the decline curves are big. Therefore, fresh capital decisions have to be made all the time. Now technology is improving, and that will mitigate it because wells get better and better and better. But fresh capital decisions have to be made, and the gas producer doesn't see an X% growth rate in what they've got to meet. The capital decisions have got to be made to be X plus the average decline rate of the industry. And that is very, very important as we think about how temporary overcapacities work its way out of the system. In systems where fresh capital decisions have to be made, where decline rates are large -- and copper is the best example that I can think of in the minerals business. And a temporary oversupply works its way out of the system relatively quickly because the apparent demand growth that has got to be satisfied is quite large. And I do want to point that, that just as we think mentally how to scale that from -- to the shale gas industry. It's a more pronounced version of that. What that means is that people will need to take fresh capital decisions to get fresh gas. And at these gas prices, simply, some will choose not to do it because they don't have the resources. In other cases, the activity levels will adjust, and fresh capital decisions will adjust. So just at the back.

Marius, Lee Bowers from Macquarie. Just returning to the topic of prioritization of capital. You're obviously looking to approve 3 large projects in 2012, the Outer Harbour, Olympic Dam and Jansen. If we see a persistence of current commodity prices into the medium term, that certainly looks perhaps a bit more challenging than it did 6 months, 12 months ago. I guess my question is, I'm not asking you to rank them on an expected-return basis, but perhaps looking at the resource side of the equation, which you mentioned. In 2 ways, one, I guess, which of the projects do you see as perhaps having the highest risk around execution and executability? And then secondly from a terminal market perspective, all 3 of these projects have significant impacts on the terminal markets as and when they come to production. Perhaps from a timing perspective, which of the projects are more critical do you think, and this obviously sort of relates to some of the comments you made around the peaking steel intensity, et cetera?

Yes. Lee, I think there's probably another dimension to add to that, which is what is your security of tenure over the resources in the ground? Again, to point -- just to finish off that shale gas discussion, I mean Mike's got those molecules. It's in the most fiscally stable environment in the world. He can produce them today or he can produce them tomorrow, very important considerations. So I'd probably, just as we move to those 3 projects, rank that as well, because there are some jurisdictions where -- which is very, very understanding of the long-term nature of our business, development sequences and so on. And simply put, there are other jurisdictions where it is much more difficult in the ordinary course to hang on to your resources but even more so, if you're not going to take them out of the ground, with in some cases, explicit or use it or lose it. So I think let's dwell on that. Firstly on market, lowest risk, Olympic Dam, copper, gold, silver. At terminal markets, liquid prices, uranium, back-end loaded, not really relevant for this decision. Second most risky, let's not use the word risk, but second in pecking order on markets, iron ore. We deeply understand the business. Our teams have placed all of that product on a day-by-day basis and increasing liquidity in market as we go forward. Derivatives, China starting its own physical iron ore market, everything driving towards more transparency, more rational behavior, more capital allocation on the basis of returns. Third, potash, a small spot market, fairly small, 55 million, 60 million tonne per year global market, less capacity to quickly turn that into a price discovered market, particularly as a nonincumbent and as a smaller producer. Then going to the next dimension, security…

Marius, it's Clarke Wilkins from Citi. Two questions, one on the shale gas. Obviously the short term price has been a bit of an issue, driven by the warm seasonal weather in the north hemisphere, I suppose. But is there any structural that's changed do you think in terms of when you look at the shale gas market in the U.S. in that having been in the business now towards 6 months, in terms of getting some experience, has your view of the ramp up of production changed in terms of the frac-ing and the ability of others to put drill rigs in place and therefore to ramp-up production, and does that change your overall view of the market at all?

No, it hasn't really. Probably the one thing that for me personally has been a surprise that is both positive and negative is that the wells keep on getting better. They keep on getting better. The positive there is that the resource base is better. The negative there is that the productivity per well means that there is more resource. I do think that the overall picture if I put it together is this is a revolutionary energy source, it's going to change things in energy around the world, not only in the U.S. And that's probably where I would leave it.

Just second question regards to aluminum. You sort of said a lot of free cash. Does that potentially involve also curtailing production? Obviously in that pipe, widely across other producers. And also with the words of investment still ongoing, carrying value of some of these assets value can potentially come at risk given cost of carbon and things like that in Australia.

Yes. Clearly in carrying value, we've taken the view that there are no issues at the moment. It's obviously something that we've got to continue to review. And where you have a view that the rent capability in the industry has structurally reduced, not cyclically, cyclically, which happens all the time, but structurally which is our view on aluminum. We have to continue to watch the evolution of that structural change. Insofar as it's an out power obviously, there's the external auditing and so on. This management is completely prudent around -- there is no sense in letting something hang -- or trying to get something to hang around on the balance sheet, if it doesn't want to be there. And I think that's been our approach. You've seen that over the past. Even though Graham is a couple of sizes smaller than Alex, we know that he's scared of him, and that's going to continue to be our approach going forward. So it's something that we got to review. It's clearly not something that's an issue now. But I do think, I have to note, the aluminum reductions are structural. It's not a cyclical thing, it's a structural and secular change in the ability to earn rent in that industry. Curtailments. I mean our principles are really, really simple. If we can't sell it and we don't make cash, we don't run it. And that's what's going to happen here. You've seen that happened in some parts of our portfolio. I think that there are some areas where we signaled it in our portfolio. Even in our met coal assets, you've seen some of the comments that we've made over the last couple of days. If it doesn't make cash from an existing asset perspective and we can't sell the product, we're not going to run it. And that philosophy has served us extremely well during the global financial crisis. It's one that maintains your discipline. It just maintains -- it just tells people you can't come and say to us tomorrow will be better. Today is what counts, and we're going to take our view on your ability to generate cash today, and we're going to shut you down until you've figured out how to run this asset differently or until prices have changed. I'm getting a signal here that I'm grossly neglecting the people on the phone. So I'm just going to go to the phone for a quick, few questions, Neil, and then I'll get back to you. I think Jodie, you're on the line, if we can have the first question, please.

The first question is from Peter O'Connor from Merrill Lynch.

Two questions, Marius. Firstly on met coal CapEx. You gave us a view on how the iron ore should be compared on a like-for-like basis to your peers. Can you walk us through your CapEx numbers in met coal and how they stand up versus your peers? And secondly, your views at a corporate level of the ASX move towards listing an ADR for BHP in Australia at sometime this year.

Okay, met coal CapEx. Perhaps the best way to look at it is to take a look at Caval Ridge. So own workforce, nothing contracted out, own kit, very low-cost expansion, option embedded, which is really part of the decision making and a substantial amount of housing. And let me use the last bit as the -- as perhaps the catalyst to have a conversation about capital intensity. While we can elect not to build the houses, which means that we've got to rent the houses from somebody and pay them a margin, which is paid on their cost of capital. That is not a smart thing for us to do. The lowest, highest return option for us in many instances is to do those things that are core and associated with our assets ourselves. And that includes usually ports, rails, particularly if we take that through the chain efficiencies that we can get from that. But you must understand, the reason why we can have the highest return, lowest-cost approach is we don't want to share that rent with other people that have a higher cost of capital than we are -- than we have in the noncore assets. I would rather invest in a railway line and a port in the coal business, and get all of those considerable synergy efficiencies and not pay somebody else the rent and rather not invest in a noncore asset than do both investments. And it's built into the genetic material of the company, and you've seen that in the place where it was difficult to change. And the historic practice was different in the Iron Ore business on the contract mining side, where we started a small mine, and then it got away from it. I mean Chris Campbell, who is here today, was given a very specific instruction, get rid of that situation. We get better control on an end-to-end basis. We get better synergies. We ultimately have a lower-cost operation. We don't share the margins with other people. Second question, ADR. Not a company view, personal view. We market people, more transparency is good, more ways for the investor to discover what the true value is, is better. We have that approach on all of our businesses, on all of our products so it shouldn't come as a surprise to you that, that would be where I come from as an individual as well. But probably not anything beyond that, Peter.

The next question comes from Sanil Daptardar from Sentinel Investments.

I just wanted to ask a broader question. You talked about the macro things. As the structural issues in Europe, they may not go away in the short term. From that view, do you see any kind of falloff in the total metals production, although there are long-term demand trends in China, but any kind of weakness do you see from this issue?

Okay, let me try. We have no proprietary insight how the global financial system works. Other people have better insight than we've got. What we have been worried about, particularly in the quarter leading up to Christmas, was for a discontinuity. And a discontinuity is something that in our world gums up credit circuits, trade finance, ability for companies to deal with each other and so on. That was more our fear out of Europe, rather than Europe is going to grow slow and not consume our products. And Europe only consumes 14% or 15% of our production in any case. If that goes to 13%, I'm not sure how much sleep we would lose over that. But we would lose sleep if we had a discontinuity. And while I don't have any proprietary insight, clearly where the risk premier are going, where people -- where the actions that have been taken on liquidity, support and so on, I think as we look at those 2 impacts of Europe, I don't think there's anybody that thinks Europe is going to grow as a whole. But there seems to be a general acceptance that the possibility or the probability even, which is where it was rated in December of an invent that has spinoff impact outside Europe has gone down. So on balance, while that doesn't translate for me into anything that changes in our base case outlook, it doesn't mean that we're a little less worried about discontinuities. And then the second thing is China is a maritime economy at the end of the day. Yes, it's an open economy, it exports and imports but it's not an export-dependent economy. China's growth will depend on China to a large extent, for growth in GDP. Net export growth is not likely to be a dramatic driver of change in China. So what is more important in China is its ability to, clearly in a world that doesn't have a continuity, to stay the course, continue to transform the economy, continue to drive towards a consumption-based economy and so on. And it's that latter scenario that is based in our -- is figured into our base plans, and we haven't changed that very much. So the only real change for us has been this reassessment of the discontinuity risk.

The next question is from John Tumazos from John Tumazos Very Independent Research.

Given your generally cautious outlook on the OECD economies, should we expect the aggregate CapEx to be a little less than the $20 billion trend level for several years? I realize you'd touched on this earlier in your remarks, but maybe you could be more specific.

John, perhaps the easiest way of doing it is to go back to what my predecessor said, I think, sometime in the beginning of his tenure, so we're going back about 10 years now. He said "Look, the base assets generate cash flow, you've got to forecast for that. You subtract the dividend, you see what adjustments you've got to make to gearing, that's what you've got left to invest." It was true 10 years ago. I think it's still true today. And so things change going forward. We're going to -- if I forward it 5-year outlook and beyond is lower, we're going to spend less CapEx. If 5-year and above, our view is higher, we're going to spend more CapEx. Within the confines that we can't accelerate easily, and it's something that -- those that have followed the stock for a long time has heard me say many, many times, if there's a sudden discontinuity and things get better, we can't spend it because we can't ramp up the project teams. I think Lee had the same question today. And then we're going to do a buyback. If things get worse, we're going to turn down the projects, and that is how it works every single day. CapEx is a job for every day, which is why we hate so much giving static snapshots because they do not reflect the intrinsic dynamism with how we look at it. We look at CapEx every single time we have a management meeting. We look at forward cash flows every single month, and we say, go a little bit quicker, go a little bit faster, not so quicker, this one has progressed quicker than we thought, go slower on that, and that's how we manage it. Okay, I'm just going to go back to the room here in Sydney. Neil?

Neil Goodwill from Goldman Sachs. Just a couple of questions. One on industrial relations, and particularly the coking coal. I'm just interested in really, what are the next steps? And is there a stage where BHP needs to bring this situation to a head? And just to hop, get back onto shale gas. I mean just listening to what you said about returns and people not putting in the money, and then therefore, the prices are coming down from getting better returns. But at the end of the day, I mean do you see good returns for all the participants in this business? Or is there something specific to BHP that gives them a competitive advantage in the shale gas business, that gives you specifically better returns?

Neil, probably the second one is the easier one to answer. A resources company is defined by its resources. We think we bought a good set of resources. We think that the concentrated positions, they allow industrialization of the process. We think they've got lots of liquids, not just by our assessment, but be happy to share via our Investor Relations team, point you at some of the things that other people are saying. And it's the resource base plus the ability to do it at scale that I think -- given the balance sheet and so on that makes the difference for us. And so just to recap, resource base, scale, cost of capital, balance sheet. That's basically -- those 4 things are in place. I think that some people in this business are going to make terrible returns in the same way that some people are making terrible returns in iron ore or copper today. And I think that's going to be the case here as well. Coking coal. Long term, we want to invest very significant capital in the Bowen Basin and both on the BMC asset as well as in the BMA asset. And I'm not even going to all of the capital we want to invest in this jurisdiction. It is extraordinarily important that management has the right to manage. It's extraordinarily important, under normal circumstances, it's even more important if you're trying to grow a business. I think Hubie said at 6% a year over the next 10 years. And it's extraordinarily important to have that right to manage, if you are committing billions, perhaps tens of billions of dollars in expansion. So we would have liked this to end 6 months ago, but we must unfortunately insist that management's right to manage is sacrosanct. It always is, but it is even more so the case now. We must not look at short-term profitability. We must not look at what is expedient. We must look at what risks are we taking when we put another $10 billion of capital in place. And how does -- the precedent that we set there pile onto other things where we hope to spend, let me not name a figure, but tens of billions of dollars. And Neil, that's the governing thought here for us. This is not an issue about wages. It's not an issue about benefits. This is an issue about things that go beyond, things that I've always put in, it costs management 100x and gives the workers on a good day, a benefit of X. We mustn't do those things. And we're not going to do them.

It's Mark Busuttil from JPMorgan. I've got a question about your balance sheet. Now 25% is by no means overgeared. But you talked about adjusting your CapEx depending on market conditions. What are the specific balance sheet metrics that would cause you to delay CapEx spend if commodity prices started to deteriorate?

It's an issue that's fraught because you don't want to -- over the last couple of years, we've made 40% return on our portfolio, something like that, EBIT pretax. So every dollar that you spend -- that you don't spend and you do a buyback for is an opportunity foregone under the right conditions to make a return for the shareholders. So the balance is between overcommitting and not committing enough. We probably, on balance, but I'm grossly simplifying A, we'd rather do the buyback than get in trouble type of a company, which is where we've been over the last couple of years and that's probably where we'd like to end up, and which is why we've always emphasized with those who have followed the stock for a long time, we said, "Look, if things go better than we think, you're going to see a buyback. If it goes worse, we're just going to turn down the spending." I think we've never articulated what a strong single A is in terms of gearing percentage, it differs at various points in the cycle, differs on your level of nervousness about what comes. Probably on average, the events of last half made us a little bit more cautious than we were, let's say, the 6 months before that. But that's the job for every day. And hence, some of the words that I'm particularly -- I'm saying nothing new. I'm just taking the words that have been said for the last 10 years and putting them in context, as people get a little over excited that we're going to do everything at once immediately and then we're going to do more beyond that. I think we're probably okay here for questions at the moment. Let me just check back with Jodie if we've got any additional questions on the phone?

We have one further question from the phone, Peter O'Connell from Merrill Lynch.

Marius, just a question for Mike if he's on the line. Regarding the one-off items in the half year just gone. What should we expect for A, the hedging books going forward, and C, the derivatives, weak pricing going forward. Is it likely to be, something will come up in the future results as well or are they now unwound?

The hedges are off, it's all in. And on the repricing of the ammonia contract, Mike, I don't know if you can give a little bit more guidance on how that works so that people can understand. I don't think we have, but that will periodically continue to adjust because it's an embedded derivative in a sales contract. But Mike, I don't know if you can help. Or maybe Peter, what I'll do is I'll ask Mike to talk to Brendan and try and find that. Mike, I don't know if there's anything you can say just on the hoof so to speak?

Marius, that sales contract there in Trinidad has just got a Henry hub component of the derivatives there of ammonia and a little bit of local LNG. It's just a blend. That's the way it was set up to try to give us some better maximum and these small derivative changes going forward and backwards are just a part of that. They're not real consequential and clearly probably will continue with a little bit of volatility, but it's never been more than $100 million on any kind of reporting basis, and we don't expect it to be.

Thanks, Mike. That sort of gives it a guidance. But I will -- it is sort of like the copper finalization result. It's a mechanism that is intended to mimic export prices. And I'll ask Brendan to think about how we can frame that a little bit better in terms of modeling, Peter. I think we're just about complete. We've probably running out of time. There is obviously the opportunity for us to continue to work with Brendan and the team. And Graham and myself and Mike and all of the others are very happy to take questions beyond. But please pass them along. Thanks for coming today. I do want to emphasize the long-term nature, the predictability and the prudence of what we've spoken about here. Thank you very much.