BHP set to abandon $20b harbour push
Friday, 08 June 2012 | 11:00
BHP Billiton looks set to jettison the $20 billion Port Hedland outer harbour push, instead flagging a slow, staged development to deal with WA's "pretty hot" economy and a subdued iron ore outlook.
Analysts are likely to tip BHP to postpone development of all three of its mega-projects - the iron ore outer harbour venture, Olympic Dam's expansion, and the Jansen potash asset - given the market had seen Port Hedland as the most likely to proceed.
Chief executive Marius Kloppers yesterday also for the first time refused to commit to BHP's previously-flagged year-end decision point for the outer harbour development.
Mr Kloppers said hundreds of millions of dollars were being spent on early-stage outer harbour work but added that BHP would pursue a "stable rate of growth rather than lumpy", a reference to the initial plan to build the outer harbour as quickly as possible.
Speaking after addressing a _WestBusiness _Leadership Matters function in Perth, Mr Kloppers said BHP's Pilbara iron ore construction workforce of about 6000 was an "optimal" number.
"The Western Australian economy is pretty hot at the moment," he said. "We probably feel that dramatically upping your work force requirements and so on and your capital spend right now is not what we want to do," he said.
"If the iron ore price is $US200 a tonne, probably yes. If the iron ore price is $US100/t, probably no, and those are the judgments that we have got to make. Do we think it's highly probable we will get an iron ore price of $US200/t over the next 18 months? No, I do not.
"(So) you're probably more likely to see an outcome where you're trying to level-peg your activity over a longer period of time rather than doing lumpy things."
BHP needs the outer harbour to expand iron ore production beyond 240 million tonnes a year. It is operating at more than 150mtpa.
Rio Tinto's Pilbara business is targeting 353mtpa by 2015.
Mr Kloppers' lukewarm support for the outer harbour push, and a lack of interest in joining the Anketell Point port being proposed by Aquila Resources and Fortescue Metals Group, is because of his subdued outlook for iron ore markets.
He said China's steel consumption rate was poised to fall sharply from the high levels experienced for the past decade. "We just have to make sure that our investments work under that more modest scenario that I have outlined," he said.
Source: The West Australian
There are no comments available.