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BHP Billiton's Worsley Project Hit with Costs, Delays

|Jun 29|magazine10 min read

 


BHP Billiton’s Worsley alumina refinery is undergoing more growing pains, now that construction costs have increased 55 per cent to A$1.2 billion and a nine-month delay is pushing expansion back even further into the first quarter of 2012. The additional funding for the extra 1.1 million tonnes of additional annual production makes Worsley one of the costliest expansions in the industry.

BHP, who currently owns 86 per cent of the Bunbury, WA-based Worsley minerals project, is attributing the cost increases to a number of factors, including inflation. BHP Billiton Chief Executive Non-Ferrous, Andrew Mackenzie, said “The refinery expansion is being executed within the existing footprint of the facility, making it one of the most complex brownfield projects undertaken.  Such complexity has resulted in significantly lower levels of construction progress than previously anticipated, while broader inflationary pressures and the strengthening of the Australian dollar have also contributed to the cost increase.”

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Still, BHP stands firm that Worsley is one of the world’s leading alumina refineries.  “We remain confident that the project will add value to the business over the medium to long term as it delivers low cost production into a fundamentally strong market,” the company said in a statement Friday.

In other news, BHP announced it will spend $US488 million for early-stage development of its Jansen Potash Project in Saskatchewan, Canada.  This additional pre-commitment capital will fund site preparation and the procurement of long lead time items during the project’s feasibility study.  The funding will also enable BHP Billiton to develop the first 350 metres of the production and service shafts should Government approvals be received.