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BHPBill approves mine water project
BHPBill approved an investment of USD1 972 million (BHPBill share) to sustain operations at Escondida in Chile, by constructing a new 2 500 litre per second sea-water desalination facility. The project will ensure continued water supply to Escondida, as water use increases upon completion of the 152 000 tonne per day OGP1 copper concentrator.
Construction of the new desalination facility will commence in July 2013 and will include the development of two pipelines, four high pressure pump stations, a reservoir at the mine site and high voltage infrastructure to support the system. The new facility will be commissioned in 2017. Escondida is located 3 100 meters above sea level, 170km South-East of the City of Antofagasta. It is owned by BHPBill (57.5%), Rio Tinto (30.0%), JECO Corporation (10.0%) and JECO 2 Ltd (2.5%). BHPBill operates the Escondida mine. Further information on BHPBill can be found at: www.bhpbilliton.com.
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BHPBill -- production report
- A strong year of production as two of BHPBill major assets, Western Australia Iron Ore and Escondida, exceeded production guidance and annual records were achieved across seven operations and five commodities.
- Western Australia Iron Ore delivered a thirteenth consecutive annual production record as shipments in the June 2013 quarter increased to an annualised rate of 217 million tonnes (100% basis).
- Escondida copper production increased by 28% to 1.1 million tonnes (100% basis) in the 2013 financial year as the average copper grade mined rose to 1.4% and milling rates improved.
- Queensland Coal production in the June 2013 quarter increased by 54% from the prior corresponding period to an annualised rate of 61 million tonnes (100% basis).
- Despite strong performance from Onshore US, extended maintenance and drilling delays at BHPBill's non-operated Gulf of Mexico assets constrained petroleum production growth to 6% during the 2013 financial year.
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BHPBill exploration and development report
This report covers the group's exploration and development activities for the June 2013 quarter. 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
The majority of BHPBill's 18 low risk, largely brownfield, major projects are scheduled to deliver first production before the end of the 2015 financial year.
BHPBill's Western Australia Iron Ore (WAIO) business achieved several milestones during the 2013 financial year, which included an increase in port capacity to 220 million tonnes per annum (100 per cent basis) following the successful installation of all major infrastructure associated with the WAIO Port Hedland Inner Harbour Expansion project. In addition, WAIO Orebody 24 delivered first production during the period.
The WAIO Jimblebar Mine Expansion, which will increase supply chain capacity to 220 million tonnes per annum (100 per cent basis), is now expected to achieve first production in the December 2013 quarter, ahead of schedule. The project is on budget in local currency, although the capital cost in US dollars is expected to be 10 per cent, or USD340 million higher than the original budget. This increase has been more than offset by a change in scope and USD400 million reduction in the budget for the WAIO Port Blending and Rail Yard Facilities project, which reflects the decision to prioritise capital efficient growth in the inner harbour. As a result, WAIO remains well positioned to deliver 220 million tonnes per annum of supply chain capacity ahead of schedule and on budget.
The Daunia and Broadmeadow Life Extension projects (both metallurgical coal) also delivered first production during the 2013 financial year, ahead of schedule. In addition, first coal was loaded from the Newcastle Third Port Stage 3 project (energy coal) during the June 2013 quarter. The WAIO Port Hedland Inner Harbour Expansion, WAIO Orebody 24 and Daunia projects will not be reported in future Exploration and Development Reports.
BHPBill's Onshore US drilling and development expenditure totalled USD4.8 billion in the 2013 financial year and reflected a higher working interest across several fields and an increase in drilling speed, which delivered more wells per rig and a higher rate of completion activity. Over 80 per cent of our Onshore US expenditure was directed towards the Eagle Ford and Permian, as planned. An improvement in drilling productivity is expected to facilitate a reduction in our rig count in the 2014 financial year, while a lower level of capital expenditure for Onshore US will be increasingly focused on our liquids rich acreage in the Eagle Ford.
BHPBill continued to simplify its portfolio during the period. On 20 June 2013 the company announced an extension of its WAIO long term joint venture relationship with ITOCHU Corporation (ITOCHU) and Mitsui & Co., Ltd. (Mitsui). This transaction was completed in July 2013 and has aligned interests across the WAIO supply chain. Under the terms of the agreement, ITOCHU and Mitsui invested approximately USD0.8 billion and USD0.7 billion, respectively, in shares and loans of BHP Iron Ore (Jimblebar) Pty Ltd., representing an eight per cent and seven per cent interest in the Jimblebar mining hub and resource. The consideration included a share of capital costs associated with the Jimblebar Mine Expansion project.
During the June 2013 quarter, BHPBill also completed the sale of its 8.33 per cent interest in the East Browse Joint Venture and 20 per cent interest in the West Browse Joint Venture, located offshore Western Australia, to PetroChina International Investment (Australia) Pty Ltd. for USD1.63 billion plus customary purchase price adjustments.
Minerals exploration
Greenfield minerals exploration is focused on advancing copper targets within Chile and Peru. Minerals exploration expenditure for the 2013 financial year was USD651 million, of which USD500 million was expensed.
Petroleum exploration
Exploration and appraisal wells drilled during the quarter or in the process of drilling as at 30 June 2013.
Petroleum exploration expenditure for the 2013 financial year was USD675 million, of which USD522 million was expensed.
BHPBill expanded its Petroleum exploration portfolio with the signing of Production Sharing Contracts for Trinidad and Tobago's deep water Blocks 5, 6, 28 and 29.
- Initial production through the Turrum facilities, scheduled for the 2013 calendar year, will be low CO2 gas. Additional high CO2 production from the Turrum reservoir will come online with completion of the Longford Gas Conditioning Plant in the 2016 calendar year.
- Following completion of the ITOCHU and Mitsui transaction in July 2013, BHPBill's economic interest in the Jimblebar Mine Expansion project is now 85 per cent and our share of approved capital expenditure is reduced to USD3 220 million.
- Excludes announced pre-commitment funding.
- The construction of port blending and rail yard facilities at the South Stockyard is no longer included in the scope of the WAIO Port Blending and Rail Yard Facilities project.
Further information on BHPBill can be found at: www.bhpbilliton.com
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BHPBill restated supplementary information
As a result of changes to the BHPBill management structure announced on 18 April 2013, BHPBill will report future segment and supplementary information for the following Business groups:
- Petroleum and Potash
- Copper
- Iron Ore
- Coal
- Aluminium, Manganese and Nickel
BHPBill today, 17 July 2013, released Supplementary Financial Information for the half year ended 31 December 2012 and the year ended 30 June 2012 restated on this basis.
BHPBill's financial results for the 2013 financial year will be reported on 20 August 2013.
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