RPT-BHP Billiton likely to delay Olympic Dam $30b expansion decision -report
SYDNEY, JULY 28 - BHP Billiton (BHP.AX) (BLT.L) is likely to delay a decision on a $30 billion proposed expansion of the Olympic dam mine in South Australia, a newspaper said, months after it scrapped a capital spending plan citing tough economic conditions.
A decision by the world's biggest miner on whether to proceed with the proposed expansion of its copper and uranium mine will not be made until 2014 rather than by the end of this year, as previously stated by the company, the Australian reported on Saturday, citing documents it had obtained.
The document said BHP's uranium division confirmed the deferral and said a recruitment freeze was now in place on the Olympic Dam expansion, the single biggest investment project.
"The expansion decision has been put on hold for two years," a consultant's document prepared for BHP said.
BHP spokesman Antonios Papaspiropoulos wouldn't comment directly on the newspaper report but told Reuters there was no change in the status quo.
"Investment decisions will be taken to the board in their own time and the relevant economic decisions taken accordingly," Papaspiropoulus said.
Slumping commodity prices and escalating costs have squeezed cash flows, pushing BHP to join rival Rio Tinto (RIO.AX) in reconsidering the pace of their long-term expansion in countries such as Australia and Canada.
In May, BHP scrapped a five-year, $80 billion capital spending plan, citing uncertain global economic conditions. That included China where it supplies millions of tonnes of iron ore, copper, and other industrial raw materials.
The Australian said a BHP spokeswoman wouldn't confirm whether the Olympic Dam expansion project will be considered by the board in December.
“"We will approve projects in a sequence that maximizes value, reduces risk and balances the consideration of short- and long-term returns," the newspaper cited the spokeswoman as saying.
The $30 billion expansion of Olympic Dam is one of three major BHP projects seen by analysts as vulnerable to setbacks as markets soften. An outer harbour development at Port Hedland in Western Australia crucial to its iron ore growth and the Jansen potash project in Canada are also under pressure.
BHP Chief Executive Marius Kloppers told a business forum last month that labour allocation and rising costs associated with a strong Australian dollar were dulling the competitive edge of some projects in Australia, where BHP employs more than 35,000 people.
The company has until early December to give the final go-ahead for the Olympic Dam project or it faces the need to renegotiate state government approvals.
South Australian Premier Jay Weatherill told the newspaper that BHP confirmed to his office on Friday that there had been no decision made about the Olympic Dam expansion.
“"We anticipate, as we have all along, that they'll make a decision before the end of the year," Weatherill said in a statement.