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Economic Contribution

BHP Billiton Illawarra Coal is a leading contributor to the local region and a significant contributor to the State of New South Wales (NSW). This was confirmed by a recent independent economic impact assessment conducted by respected researchers, Illawarra Regional Information Service (IRIS – 2006), which showed that the economic impact of the Company, including flow-on effects, was about 5900 jobs, $520 million (4.4 per cent) in Gross Regional Product and $278 million in household income, which represents a disproportionably significant benefit to the gross regional product when compared to other similar sized businesses in different industry sectors in the Illawarra and Wollondilly regions.

The IRIS report proved how important Illawarra Coal is in terms of flow-on effect to the overall economic wellbeing of the regions in which we operate. For every one person employed by the Company, almost another five jobs are created. This is the highest employment flow-on effect of any industry in the Illawarra and Wollondilly regions.

Illawarra Coal achieved a turnover of US$706million in 2007-08. As outlined in Illawarra Coal’s Sustainability Report 2008, our contribution to the economy in the 12 months to June 2008 included:

• Supply of coking coal: Illawarra Coal sold 7.24 million tonnes of coal; 3.7 million tonnes (51 per cent) of which was sold to five domestic customers and 3.54 million tonnes (49 per cent) was exported to 14 customers in six countries.
• Goods and services: Illawarra Coal spent $334 million (66 per cent) on regional suppliers and, overall, NSW suppliers accounted for $428 million (85 per cent) of our total spend in Australia.
• Employment: 936 permanent employees with a total payroll of $157.3 million (excluding contractor payroll costs).
• Taxes: Illawarra Coal contributed $100.7 million to local, State and Federal Government taxes in 2007-08, a 17 per cent increase from $86.4 million in 2006-2007. This increase can be attributed to increases in company tax (higher profits) and NSW payroll tax (higher payments to employees), partly offset by decreases in NSW royalties (reduced revenue).
• Direct community contributions, including sponsorships and donations: In 2007-08 Illawarra Coal contributed $840,000 to a range of arts, community development, education, environment, health, sport, and recreation projects.

Supply of Coking Coal

Our key product is a premium quality coking coal which is used in the production of steel. In 2007-08 we sold 7.24 million tonnes of coal - 3.7 million tonnes (51 per cent) was supplied to five domestic customers, and 3.54 million tonnes (49 per cent) exported to 14 customers in six countries.

The Illawarra Coal business is the most prominent supplier of coking coal to the Australian domestic steel market. Our largest customer is the Port Kembla Steelworks owned by BlueScope Steel, which utilised almost 50 per cent of the total volume of coking coal we produced last year. Our coking coal supply to the Port Kembla Steelworks is critical to securing its future and we supply close to 100 per cent of their coking coal needs.

Goods and Services

Illawarra Coal has a significant commitment to sourcing its goods, materials and services from NSW and the Illawarra region.

• $334 million spent on regional suppliers (year ending June 08).
• NSW suppliers accounted for 85 per cent or $428 million of our total goods, materials and services spent in Australia (year ending June 08).

Employment

• 936 permanent employees with a total payroll of $157.3 million (excluding contractor payroll costs) (year ending June 08).

We also employed close to 1000 contractors during the reporting period.

A unique aspect of Illawarra Coal's asset is that it is located within 50km of our major customer, the Port Kembla Steelworks, owned by Blue Scope Steel. As a significant contributor to the local and state economy, it relies on supply of coal from BHP Billiton - Illawarra Coal. A 2004 study by Illawarra Regional Information Service) showed BlueScope Steel to be a provider of 16,064 full-time equivalent jobs. Of those jobs, 5880 are directly provided by BlueScope Steel. Together the coal and steel industries make a significant contribution to the local and state economy.

In addition, our location enables employees to be locally-based and to enjoy the lifestyle and services that our unique region provides, without the social and economic disadvantages that can occur with requirement to provide services in some more remote locations. Lifestyle advantages include proximity to high quality educational and health facilities and the attractions that Sydney has to offer. Family advantages include a short commute to the workplace.

Public sector

Taxes

In 2007-08, Illawarra Coal contributed $100.7 million to local, state and federal government taxes, a 17 per cent increase from $86.4 million in 2006-07.

The increase can be attributed to increases in company tax (higher profits) and NSW payroll tax (higher payments to employees), partly offset by decreases in NSW royalties (reduced revenue).

Donations & Sponsorships

Through our two community programs — Illawarra Coal Community Partnerships Program and the Dendrobium Community Enhancement Program — and other initiatives, we fund a range of community projects.

In 2007-08 total expenditure for these programs was $839 144.