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BHPBILL - sale of Ravensthorpe nickel operation
BHP Billiton announced it has signed an agreement to sell the Ravensthorpe Nickel Operation to First Quantum Minerals Australia Pty Ltd, a wholly owned subsidiary of First Quantum Minerals Ltd for USD340 million. It is expected the sale will be finalised during the first quarter of 2010 calendar year.
The sale is subject to relevant approvals from the Australian Foreign Investment review board and the West Australian Minister for Mines and Petroleum. First Quantum is listed on the Toronto Stock Exchange in Canada and the London Stock Exchange in the United Kingdom. The company intends to undertake further review work with a view to recommencing operations at Ravensthorpe. In addition to the purchase price, First Quantum's proposal was compelling having regard to their financial and operational capability, and their offer`s minimal conditionality and immediate acceptability.
BHP Billiton will reverse previously recognised pre-tax impairment charges from 30 June 2009 of an estimated USD630 million (USD441 million post tax) for the half year ended 31 December 2009. This will be reported as an exceptional item.
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BHPBILL and Rio Tinto sign binding agreements
On 5 June 2009, BHP Billiton and Rio Tinto signed an agreement of core principles to establish a production joint venture covering the entirety of both companies' Western Australian iron ore assets. The companies signed binding agreements on the proposed JV that cover all aspects of how the joint venture will operate and be governed. The companies have also filed submissions with the European Commission and the Australian Competition and Consumer Commission in relation to the proposed production joint venture and expect to submit filings in other relevant jurisdictions shortly. The companies understand that the European Commission will review the production joint venture under Article 101 (formerly Article 81). Taking into account all regulatory review processes and shareholder approvals, BHP Billiton and Rio Tinto anticipate completion of the JV in the second half of calendar year 2010.
The production joint venture encompasses all current and future Western Australian iron ore assets and liabilities and will be owned 50:50 by BHP Billiton and Rio Tinto. It will deliver substantial synergies resulting from combining the companies' Western Australian iron ore operations, with the aim of producing more iron ore at lower cost. BHP Billiton and Rio Tinto believe the net present value of these unique production and development synergies will be in excess of USD10 billion (100 per cent basis). As previously outlined, these synergies are anticipated to come from:
- Combining adjacent mines into single operations.
- Reducing costs through shorter rail hauls and more efficient allocations of port capacity.
- Blending opportunities which will maximise product recovery and provide further operating efficiencies.
- Optimising future growth opportunities through the development of consolidated, larger and more capital efficient expansion projects.
- Combining the management, procurement and general overhead activities into a single entity.
On 15 October 2009, BHP Billiton and Rio Tinto announced that the partners would not proceed with any joint venture marketing activity. This is the only material change to the non-binding core principles agreement signed on 5 June 2009. The production joint venture will deliver all its iron ore output to BHP Billiton and Rio Tinto to sell independently through their own marketing groups. For more information on BHP Billiton, go to www.bhpbilliton.com.
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