Company: BHP-BILLITON

State: VICTORIA

Sector: RESOURCE

BHP Billiton has been doing business with India for over 30 years; its
initial involvement was through technical and training agreements with the
Steel Authority of India Limited, SAIL.

However, the relationship broadened considerably through the 1980s and
1990s, when BHP Billiton began exporting increasing tonnages of
metallurgical coal to Indian customers. At the same time, it also entered
into importing arrangements with Indian iron ore producers in order to mix
their product with West Australian ores prior to exporting to East Asia.
BHP Billiton is also a major supplier of energy coal into the Indian
market, mainly destined for the cement sector.

In addition to building trading arrangements, with the gradual opening
up of the Indian foreign investment regime, BHP Billiton started to
explore mineral and petroleum investments. After establishing a full
representative office in 1994, BHP Billiton began to explore opportunities
in base metals, iron ore and diamonds. However, only recently have these
opportunities become more concrete as the exploration licence and mineral
concessions regime improved and fiscal terms for oil and gas exploration
have developed to world class standards. BHP Billiton's

interest in potential domestic coal mining developments awaits
substantial changes in the regime governing private sector entry,
especially passage of the Coal Mines (Nationalisation) Amendment Bill.

Another priority for BHP Billiton in India is to establish a position
as a significant supplier of natural gas via both liquefied natural gas,
LNG and pipeline developments. BHP Billiton recently received a mandate
from the Iranian government to lead the feasibility study and subject to
viability, the ultimate development of a major gas pipeline from Iran to
India via Pakistan.

In general, BHP Billiton maintains an opportunistic view on divestments
of Indian government enterprises and approaches each on a case by case
basis. BHP Billiton believes business success in India depends on several
factors including patience and relationship building. It is also important
to have an appetite for India as a long term proposition, with a company
needing clear vision to adapt and stay for a long period. BHP Billiton
also believes Australian branding and a reputation as fair players is
significant, but at the same time it is imperative to be perceived as and
increasingly operate as, an Indian company and not a ' non adaptive'
global corporation.

While encouraged by the gradual opening of both the economy and the
minerals sector, BHP Billiton notes there is still a considerable way to
go in these efforts. It notes the business environment can be trying,
where red tape, infrastructure, labour issues and overlapping
jurisdictions between central and state governments can cause considerable
delays and frustration. In the minerals sector, BHP Billiton has found
some states, particularly Rajasthan, Karnataka and Andhra Pradesh, have
recently implemented far more progressive and investor friendly policies,
something that is reflected in the number of licences granted in these
states compared to other mineral rich states. These policy developments
see BHP Billiton looking more favourably at the potential of India as both
a market and as a place to invest, albeit at a steady pace.

Source: BHP Billiton, 2001.