Antinuclear

Australian news, and some related international items

Decision to stop new Olympic Dam uranium mine was unavoidable

New era for BHP shareholders Financial Review  24 AUG 2012   TONY BOYD Marius Kloppers secured his job by delaying $30 billion in capital projects in Australia but he needs to do much more to get the BHP Billiton machine humming at optimum speed….

There was an inevitability to the project delays….. Olympic Dam might have been justified several years ago when its cost was estimated at $15 billion. But at a cost double that amount and with Australia’s high construction and infrastructure cost base, it was untenable.

Kloppers said the project never actually jumped the hurdle called “economic concept”, which meant BHP was never able to talk seriously with a potential Chinese partner to develop the world’s largest uranium deposit and fourth largest copper and gold deposit….

His outlook statement issued with the full-year results was seen by several analysts as bullish. But coverage will be dominated by the Olympic Dam decision because of its widespread implications.

Analysts think it is unlikely that a large-scale development project will proceed at the site in South Australia…. Given the company’s desire to operate within a credit rating envelope that delivers it low-costing debt, the Olympic Dam decision was ­unavoidable.

BHP had already committed to spend $22 billion in capital in fiscal
year 2013 on 20 existing projects…. The $US346 million impairment
charge for Olympic Dam comes just 10 months after the company
committed $US1.2 billion in expenditure for the first phase of its
expansion. Much of the equipment bought for that phase can be deployed
elsewhere.

Kloppers said there were two key reasons why the company had to opt
for a less capital-intensive design, and decline to approve it before
an indenture agreement deadline on December 15: the very high
Australian dollar and the very high cost of capital.

However, he rejected any suggestions it was related to tax as the
taxation parameters had not changed over the past six years…
http://afr.com/p/business/chanticleer/new_era_for_bhp_shareholders_ZyhxBkp9oed0VnvoIL5qzM

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August 25, 2012 - Posted by | AUSTRALIA - NATIONAL, business, South Australia, uranium

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