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Released August 23, 2012 | PERTH, AUSTRALIA
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Researched by Industrial Info Resources (Perth, Australia)--After months of speculation, BHP Billiton Limited (NYSE:BHP) has finally confirmed that it will not be making a final investment decision for the $21.2 billion (AUD $20 billion) Olympic Dam before December 15, 2012, as required under its agreement with the South Australian government. BHP Billiton will now be going back to the drawing board and reviewing the project with the view of reducing the total investment required and improving the project's economics.
On August 22, 2012, BHP Billiton Limited CEO Marius Kloppers, said: "As we finalize all the details of the project in the context of the current market conditions, our strategy and capital management priorities, it became clear that the right decision for the company and its shareholders was to continue studies to develop a less capital-intensive option to replace the underground mine at Olympic Dam."
If the expansion had gone ahead as planned, Olympic Dam would have become the largest open cut mine in the world, producing some 2.4 million tonnes per year of copper concentrate and 19,000 tonnes per year of uranium oxide. With the recent drop in commodity prices globally, as well as BHP Billiton having several other multi-billion dollar projects in development, many industry analysts believed that they would eventually be forced to cancel or delay at least one of them, with Olympic Dam being the main candidate. Today's decision has confirmed these speculations.
The South Australian government has already voiced its disappointment at the decision today, especially after the much-publicized opposition to the government approval of the project earlier this year. Andrew Mackenzie, BHP Billiton's Chief Executive of Non-Ferrous, pre-empted this in the company's announcement by stating, "The South Australian government has been fully supportive of Olympic Dam and has created an environment that is highly conducive to business investment. We have been very much encouraged by their attitude to business development and the Olympic Dam expansion project."
Mackenzie also added, "Olympic Dam is a resource of enormous potential, and we will continue to work on technological and design alternatives that have the potential to substantially improve the economics of the expansion, while also completing some early-stage site works."
How long BHP Billiton will be reviewing the project and what the new project timeline will look like is still unclear. Industrial Info will continue to track the development of the project and continue to identify potential opportunities as they arise.
Industrial Info Resources (IIR), with global headquarters in Sugar Land, Texas, and eight offices outside of North America, is the leading provider of global market intelligence specializing in the industrial process, heavy manufacturing and energy markets. Industrial Info's quality-assurance philosophy, the Living Forward Reporting Principle, provides up-to-the-minute intelligence on what's happening now, while constantly keeping track of future opportunities.
On August 22, 2012, BHP Billiton Limited CEO Marius Kloppers, said: "As we finalize all the details of the project in the context of the current market conditions, our strategy and capital management priorities, it became clear that the right decision for the company and its shareholders was to continue studies to develop a less capital-intensive option to replace the underground mine at Olympic Dam."
If the expansion had gone ahead as planned, Olympic Dam would have become the largest open cut mine in the world, producing some 2.4 million tonnes per year of copper concentrate and 19,000 tonnes per year of uranium oxide. With the recent drop in commodity prices globally, as well as BHP Billiton having several other multi-billion dollar projects in development, many industry analysts believed that they would eventually be forced to cancel or delay at least one of them, with Olympic Dam being the main candidate. Today's decision has confirmed these speculations.
The South Australian government has already voiced its disappointment at the decision today, especially after the much-publicized opposition to the government approval of the project earlier this year. Andrew Mackenzie, BHP Billiton's Chief Executive of Non-Ferrous, pre-empted this in the company's announcement by stating, "The South Australian government has been fully supportive of Olympic Dam and has created an environment that is highly conducive to business investment. We have been very much encouraged by their attitude to business development and the Olympic Dam expansion project."
Mackenzie also added, "Olympic Dam is a resource of enormous potential, and we will continue to work on technological and design alternatives that have the potential to substantially improve the economics of the expansion, while also completing some early-stage site works."
How long BHP Billiton will be reviewing the project and what the new project timeline will look like is still unclear. Industrial Info will continue to track the development of the project and continue to identify potential opportunities as they arise.
Industrial Info Resources (IIR), with global headquarters in Sugar Land, Texas, and eight offices outside of North America, is the leading provider of global market intelligence specializing in the industrial process, heavy manufacturing and energy markets. Industrial Info's quality-assurance philosophy, the Living Forward Reporting Principle, provides up-to-the-minute intelligence on what's happening now, while constantly keeping track of future opportunities.
