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BHP Billiton - quarterly report on exploration
BHP Billiton's strong balance sheet have allowed the company to invest through the cycle with a highly disciplined and value-focused approach. Highlighting the company's commitment to value accretive longer term growth, the group sanctioned two projects during the quarter, being the Western Australia Iron Ore Rapid Growth Project 5 , and the North West Shelf Cossack, Wanaea, Lambert, Hermes Life Extension projects. BHP Billiton continues to identify and prioritise various exploration activities. All of the exploration activities are reviewed regularly to ensure that the group have captured valued accretive opportunities for future development. Selection study work on the proposed Olympic Dam Expansion (Australia) is effectively complete. A draft environmental impact statement based on the five stage project configuration has been provided to the Federal, South Australian and Northern Territory governments for a compliance review, with the intention that it be released for public comment during the first half of calendar year 2009. Pending government approvals for the EIS and consistent with the prevailing economic circumstances, project activity will be scaled back to that necessary to support the approvals process and the study of a number of mining and processing technology options. Olympic dam expansion expenditure for the six months ended 31 December 2008 was USD112 million, of which USD29 million was capitalised. Grassroots exploration continued on targets in Australia, Chile, Argentina, Zambia and the Democratic Republic of Congo (DRC) and on diamond targets in Canada. Exploration for iron ore, coal, bauxite and manganese was undertaken in a number of regions including Australia, South America, Russia and West Africa. For the six months ended 31 December 2008, BHP Billiton spent USD357 million on minerals exploration, of which USD313 million was expensed.
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BHP Billiton - production report
BHP Billiton delivered a robust production performance in the first half of the 2009 financial year. The result was achieved within a challenging environment that resulted in prudent decisions being made regarding production adjustments as well as maintenance being brought forward. Production adjustments announced by BHP Billiton to date have been limited to Samarco (Brazil) and the Samancor manganese operations. In Western Australia Iron Ore and the company's metallurgical coal operations, the group have received requests for deferrals from some long term contract customers.This has not impacted iron ore or metallurgical coal production in the first half of the 2009 financial year. Whilst the group sold the deferred long term iron ore tonnages into the spot market, BHP Billiton are likely have to opportunistically adjust the group metallurgical coal production in line with the weaker demand, during the second half of the 2009 financial year. BHP Billiton separately announced that it will indefinitely suspend operations at Ravensthorpe Nickel operation (Australia).Yabulu (Australia) will also stop the processing of the mixed nickel cobalt hydroxide product. The global economic environment deteriorated sharply in the last quarter of the 2008 calendar year and the company expects the market to remain weak and uncertain.
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BHP Billiton change to Billiton's nickel business
BHP Billiton announced that it will immediately commence the safe ramp down and indefinite suspension of the Ravensthorpe Nickel Operation (Australia).Yabulu (Australia) will cease processing mixed nickel cobalt hydroxide product from Ravensthorpe and will revert to processing ore only. The group plans to complete a future options study for Yabulu during the first half of calendar year 2009. The decision announced are largely the result of the diminished prospects for profitability of Ravensthorpe and Yabulu in the current environment, significant and continuing deterioration in the outlook for the nickel market. An additional pre-tax impairment charge of approximately USD1.2 billion will be reflected in the group's results for the half year ended 31 December 2008. An estimated pre-tax charge of approximately USD400 million will be recognised in the second half of the 2009 financial year. These two charges will be recognised as exceptional items.
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