KBR Secures EPCM Contract for Hopes Down-4 Iron Ore Project in Western Australia

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Researched by Industrial Info Resources (Sugar Land, Texas)--KBR Incorporated (NYSE:KBR) (Houston, Texas) has secured a $1.29 billion contract to provide engineering, procurement and construction management (EPCM) services for the Hopes Down-4 project in the Pilbara region of Western Australia. The Hopes Down-4 iron ore mine is part of the Hopes Down project, which is being jointly developed by Hancock Prospecting (Perth, Australia) and Rio Tinto plc (NYSE:RIO) (London, United Kingdom). As part of the 50:50 joint venture agreement signed in 2005, Rio Tinto will develop and manage the project.

The EPCM contract awarded to KBR will also include construction of roads, water, staff accommodation and other infrastructure facilities. The Hopes Down-4 project will include an ore-processing facility with the capacity to accept 220-ton haul trucks and an ore crushing, scrubbing and screening process designed for stringent export requirements. Construction of lubricant, bulk fuel and explosive facilities, as well as train export facilities will also be in the scope of the project. Presently, there are about 500 people working at the Hopes Down project, which has iron ore reserves (63.1% iron content) and resources (62.5% iron content) of 137 million tons and 163 million tons, respectively.

KBR successfully completed the initial and final feasibility studies for the 15 million-ton- per-year project. Regulatory approvals are pending, and after these are obtained construction is expected to begin in February next year. The iron ore mine is likely to begin operations in 2013. KBR completed construction of the first and second phases of the Hopes Down project in 2008 and 2009, respectively.

Pilbara is rich in natural resources, especially iron ore. The region dominates Australian iron-ore mining and production. Hancock Prospecting was the first mining company to discover iron ore resources in this region. Pilbara's mining operations provide employment to more than 9,000 people. In July, Rio Tinto, which is also extending the Lang Hancock railway network, announced an investment of $6 billion on various mining projects in the Pilbara region. Of this investment, $4.4 billion will be utilized to augment mining capacity, and $1.6 billion will be invested in the Hopes Down-4 project.

For information on other active mining projects in the Pilbara region, see September 8, 2010, article - Iron-Ore Miners Announce New Projects in Western Australia's Pilbara Region.

Recently, Rio Tinto decided to spend an additional $3.1 billion to expand its mining capacity in the region to 283 million tons per year by 2013. Rio Tinto has also completed feasibility studies to increase mining opportunities throughput Pilbara to 333 million tons per year in the future. In September, Rio Tinto commenced operations of its 22-million-ton-per-year Brockman-4 iron ore mine in the region. There are plans to double the capacity of the mine in future.

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