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BHPBill JV Columbian mine could face strike
According to Business Report, a union at the Columbian coal mining venture, Cerrejon, owned by BHPBill, Anglo American plc and Xstrata plc, will probably vote in favour of a strike. A walkout at the mine might begin as soon as 30 January 2011. Cerrejon is the world's largest open-pit mine that produces coal for export.
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BHPBill-interim exploration and development report
This report covers the group's exploration and development activities for the quarter ended 31 December 2010. Unless otherwise stated, BHPBill's interest in the projects referred to in this report is 100 per cent and references to project schedules are based on calendar years.
Development
During the December 2010 quarter, a further USD570 million (BHPBill share) of capital expenditure was approved to underpin continued growth in Western Australia Iron Ore's production profile. The investment expands on BHPBill's earlier pre-commitment of USD1.73 billion (BHPBill share) announced in January 2010 and will facilitate the ongoing development of port, rail and Jimblebar mine infrastructure. Industry wide cost pressure is being experienced across a broad range of projects and reflects stronger producer currencies, particularly in Australia, and underlying inflation on raw material and labour costs.
Minerals Exploration
Grassroots exploration continued on copper targets in Chile and Zambia; nickel and copper targets in Australia; manganese targets in Gabon; and diamond targets in Canada. Exploration for iron ore, coal, bauxite, potash and manganese was undertaken in a number of regions including Australia, Canada, South America and Africa.
For the half year ended 31 December 2010, BHPBill spent USD279 million on minerals exploration, of which USD228 million was expensed. Petroleum exploration and appraisal wells drilled during the quarter or in the process of drilling as at 31 December 2010.
Petroleum exploration expenditure for the half year ended 31 December 2010 was USD173 million, of which USD135 million was expensed.
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BHPBill approves higher project costs
BHPBill announced the approval of increased capital expenditure for the Esso Australia operated Kipper and Turrum projects in the Gippsland Basin, offshore Victoria. Kipper's capital expenditure has increased to USD900 million (BHP Billiton share) and the facilities are now forecast to be completed in calendar year 2012. Mercury was encountered in the reservoir during development drilling and mercury mitigation will be managed as a separate project. The timing of first production is subject to resolution of the mercury related issues.
Turrum's expenditure has been adjusted to USD1 350 million (BHPBill share) and is now forecast to begin production in calendar year 2013. Additional design and fabrication of key structural components has delayed installation and increased the offshore hook up campaign resulting in the cost and schedule adjustments.
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BHPBill -- half-year production highlights
Production highlights for the half-year to 31 December 2010:
- BHPBill continues to benefit from its consistent deployment of capital towards high quality growth projects, with three commodities and five businesses recording half yearly production records.
- Record iron ore production and shipments were achieved for both the half year and quarter. Western Australia Iron Ore shipments rose to an annualised rate of 148 million tonnes per annum in the quarter (100% basis).
- Other quarterly production records were achieved at Hunter Valley Energy Coal (Australia) and the Alumar refinery (Brazil), while both Olympic Dam (Australia) and Antamina (Peru) reported record milling rates. Record exports from Hunter Valley Energy Coal for the quarter and half year reflected first production from the MAC20 project.
- Queensland Coal (Australia) production was significantly affected by the persistent rain and flooding that impacted the Bowen Basin during the period. In the December 2010 quarter, Queensland Coal production declined by 30% when compared with the September 2010 quarter, while sales declined by 15%. The decision to increase pumping and drainage capacity following severe wet weather in the March 2008 quarter has minimised inpit water accumulation, although heavy rainfall that persisted for much of the December 2010 half year has significantly restricted overburden removal. When combined with disruption to external infrastructure, we expect an ongoing impact on production, sales and unit costs for the remainder of the 2011 financial year.
- Permitting delays in the Gulf of Mexico (USA) continue to impact the Petroleum operations, causing the deferral of drilling of high volume production wells. The current expectation is that production volumes for the 2011 financial year will be in line with the 2010 financial year.
Robust growth in developing economies remains the primary driver of commodity demand and further positive signs are emerging in the United States following the Federal Reserve's ongoing efforts to stimulate the economy. When coupled with supply side constraint, which has been further exacerbated by weather related disruptions in countries such as Australia, Colombia and South Africa, BHPBill remains confident in the fundamentals for its core products.
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BHPBill's SA coal production hurt by rain
Business Day reported that BHPBill's South African coal unit has been affected by heavy rains, which has impacted on coal output and supplies to Eskom. However, the company is confident that production will return to normal when the rain eased.
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