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Chief Executive Officer’s Report

The 2007 financial year continued the positive trend in global economic growth that has provided the backdrop for the performance of BHP Billiton in the past several years. This trend, combined with the emergence of the developing economies, has allowed the Company to generate another outstanding set of operating results and record financial performance.

Global demand for our products has enabled us to benefit from our high-quality asset base and from our decisions over the past seven years to reinvest in our business through organic projects and acquisitions. As a result, we have set annual production records in eight commodities. FY2008 is expected to be another year of strong volume growth with the continued ramp-up of a number of projects and the commencement of production from new projects across our businesses.

Global supply of commodities, which are essential for economic and social development, continues to lag growth in demand and we expect this situation to continue. This means commodity prices, while volatile, are expected to exceed long-term averages and, together with record volumes, should continue to contribute to the outstanding financial success of BHP Billiton.

As a leader in the global resources industry, we remain well-placed to respond to continuing demand growth and have demonstrated during the year our capacity to bring on-line major new sources of supply, such as the new Spence copper operation in northern Chile, and commit to further major expansions of operations such as at our iron ore business in Western Australia. When we see value in a potential acquisition we are able to act, as we did during the financial year when we purchased an interest in the Genghis Khan oil and gas development in the Gulf of Mexico, adding to our oil and gas production capacity from this new financial year, and announced a one-third interest in an alumina project in Guinea, West Africa.

We continue to identify and evaluate numerous other project options that can be brought on-line as global demand grows in the years ahead. Our track record in delivering 33 world-class projects across the globe over the past six years is a testament to the capabilities of our people, and we remain committed to developing projects in line with the approved budgets and schedules while acknowledging the current cost and labour pressures. After five years of continual growth, expansion and development, we are still able to say we have an inventory of future project options unparalleled in the global resources industry.

We also remain well-placed to manage the challenges created by increasing demand for commodities and are determined to retain our competitive position in meeting demand. Those challenges include shortages of skilled employees and essential equipment, escalating costs of the labour and raw materials required to construct projects and maintain operations, the intense competition for the rights to develop new resources and the difficulties associated with accessing resources in increasingly remote and sometimes challenging parts of the world.

In meeting these challenges we have been able to draw on the diversity and breadth of our people and our business, combined with robust and evolving systems and processes that ensure we are sharing our skills and experiences across all of our assets and project teams.

I am very proud to be part of a truly global organisation characterised by a senior management team drawn from many parts of the world. As some of the most experienced people in the global resources industry, they lead an organisation drawn from many countries. This diversity and depth of talent, combined with our geographic spread of assets and diversity of commodities and markets gives us a significant competitive advantage through the economic cycle.

Sustainability

The continuing success and sustainability of our Company is heavily dependent on securing and maintaining our ‘licence to operate’, wherever we do business around the globe. We work actively on securing and maintaining our licence to operate through the ethical conduct of all our people, our determination to keep our people healthy and safe, our efforts to improve the quality of life of the communities in which we operate and the protection of the environment.

However, we are facing many challenges. More than 10 years ago BHP Billiton began to set targets to manage and control the gas emissions from and energy usage by our operations. Over the past year the call for precautionary action to reduce greenhouse gas emissions has become loud and universal. This year we again reviewed and reassessed our commitment to tackling climate change. The result is an updated policy that not only sets new aggressive targets for emissions and energy reduction and commits increased funds to finding technological solutions but promises to work in partnership with various organisations to better understand and manage our impacts, and the impact of our products, on climate change.

The health and safety of our people and communities, stewardship of the products we sell and our work in developing communities are all areas that continue to challenge us, but it is critical we get these right in order to preserve and enhance our licence to operate. The ability to meet the strong demand for our commodities requires that we have a positive impact on those we encounter through our business activities.

Companies that develop the skills, resources and relationships to meet these challenges will thrive and prosper. Our long-term success is contingent on our ability to manage our business in a sustainable fashion. But to find truly effective and sustainable solutions will require others to engage in the challenge. We can not do it alone; it is a shared responsibility that we have with our host nations, local communities, our people, our partners and our industry.

Farewell

I have had the enormous privilege of leading the world’s largest diversified resources company for the past five years. BHP Billiton plays a central role in providing the raw materials essential to support economic and social development. The aspirations of billions of people for a better quality of life depends on access to raw materials at a reasonable cost. To be part of an organisation that realises its critical role in making a difference to billions of people around the world has truly been a great honour.

No organisation is successful without talented and dedicated people. At BHP Billiton I have been fortunate to have had the opportunity to work with an outstanding group of people from all over the world. I would like to thank all our employees and contractors for their commitment and efforts and for their contribution to the success of BHP Billiton. I will leave knowing that the Company is well positioned for the years ahead and will continue to prosper and succeed through its next phase of growth. My successor, Marius Kloppers, has been a valuable contributor to the organisation in many roles and will be an outstanding Chief Executive Officer. I wish Marius, the executive team and all the members of the BHP Billiton family all the best for the years ahead.

Chip Goodyear