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BHP BILLITON APPROVES HILLSIDE ALUMINIUM SMELTER EXPANSION
BHP Billiton today announced approval for the Hillside expansion project
(Hillside 3). The project will add a further 132,000 tonnes per annum (tpa)
of primary aluminium capacity to the smelter at Richards Bay, South Africa.
Construction costs are estimated at US$449 million, which is equivalent to a
competitive US$3,403 per tonne of new capacity. Construction will commence
in April 2002 and commissioning is scheduled for April 2004, with full
production expected in mid 2004. Hillside 3 represents the continuation of
BHP Billiton Aluminium's strategy to expand its high quality portfolio of
smelting assets.
Hillside 3 will comprise the construction of a third potline (of half size),
an anode-baking furnace, additional casting facilities and all necessary
related infrastructure. Aluminium production will increase by 132,000 tpa,
which is 25 per cent of Hillside's current capacity.
The decision to proceed with Hillside 3 comes eight months after the
announcement to expand Mozal, so that construction synergies between the two
projects can be maximised. The project will be 100 per cent financed through
external debt, with no additional equity injected by the Group.
A new, competitive, electricity tariff has been agreed with South Africa's
utility provider Eskom under a rand-based contract, not linked to commodity
price. The contract has a 25-year term and contains a formula for
future tariff increases.
BHP Billiton Deputy Chief Executive Officer Brian Gilbertson said: "This
expansion will consolidate Hillside's position as one of the world's lowest
cost aluminium producers, and should generate above average financial
rewards. It reflects again the attractive investment climate that South
Africa offers the resource industry."
Vice-President and Chief Operating Officer BHP Billiton Aluminium Southern
Africa Mahomed Seedat said: "The Hillside aluminium smelter has been a major
contributor to the South African economy, through employment,
infrastructure, and foreign exchange earnings. Hillside 3 further expands
BHP Billiton's large asset base in Southern Africa."
* * * *
Further information can be found on our Internet site:
http://www.bhpbilliton.com
Australia
Dr. Robert Porter, Investor United Kingdom/South Africa
Relations Michael Campbell, Investor & Media Relations
Tel: + 61 3 9609 3540 Tel: +27 11 376 3360 Mobile:
Mobile: +61 419 587 456 +27 82 458 2587
email: email: Michael.J.Campbell@bhpbilliton.com
Robert.Porter@bhpbilliton.com
Ariane Gentil, Manager Communications
Mandy Frostick, Media Tel: +44 20 7747 3977
Relations Mobile: + 44 7881 518 715
Tel: +61 3 9609 4157 email: Ariane.Gentil@bhpbilliton.com
Mobile: +61 419 546 245
email:
Mandy.J.Frostick@bhpbilliton.
com
United States
Francis McAllister, Investor
Relations
Tel: +1 713 961 8625
Mobile: +1 713 480 3699
email:
Francis.R.McAllister@bhpbilli
ton.com
BACKGROUND NOTES
The existing Hillside aluminium smelter (Hillside 1 and 2) is a 515,000
tonne per annum primary aluminium smelter located at Richards Bay, South
Africa. The plant comprises two potlines, an anode manufacturing plant,
casting facilities and all related infrastructure. The original greenfield
project was completed in 1996 and the plant has achieved excellent operating
results. It is presently one of the world's lowest cost producers.
The Hillside smelter expansion will increase production by 132,000 tonnes of
aluminium onto the international market. The project scope allows for
aluminium produced by the expansion to be solidified into value added
products.
BHP Billiton has a record of outstanding success in implementing aluminium
smelter projects in Southern Africa. Both Hillside and Mozal were completed
ahead of schedule and under budget, setting a world standard for the
completion of greenfield aluminium projects. The same team that executed the
original Hillside and Mozal smelter projects, and is currently employed on
the Mozal expansion, will be used to manage Hillside 3.
Cost Competitiveness
BHP Billiton is well positioned in primary aluminium, based upon its low-
cost facilities, and can seek further growth. The Hillside expansion project
provides an excellent opportunity to move the smelter further down the
industry cost curve and will consolidate Hillside's position as a low cost
producer. The other major raw material inputs to the smelter, coke and
alumina, are purchased under long term US$ denominated contracts.
South African Government
BHP Billiton has operated successfully in South Africa for many years and
continues to maintain a good relationship with the South African Government,
which has shown its enthusiasm for the project.
Employment
Eighty-five new appointments will be required. The majority of the
appointments will be from the local community. Total number of construction
workers on site will peak at 2,600. Hillside is considered to be a leading
company in the implementation of South Africa's Employment Equity Act.
Environment
A comprehensive Environmental Impact Assessment (EIA) was conducted in
accordance with South African statutory requirements and internationally
acceptable standards. Following extensive public participation and technical
assessment phases the South African regulatory authority issued a Record of
Decision in February 2001 whereby the expansion project was approved subject
to a number of conditions, all of which will be met by the project.
Construction Schedule
Construction will commence in April 2002 and the main facilities should be
complete in 24 months, with the plant ready to receive initial raw
material shipments in April 2004. Full production should be reached mid
2004.
The same joint venture contracted for Mozal 1 and 2, SNC Lavalin of Canada
and Murray & Roberts Engineering Solutions Limited of South Africa
(formerly EMS), has been awarded the Engineering, Procurement, Construction
and Management (EPCM) contract for Hillside 3.
Technology
The Hillside smelter uses French-based Aluminium Pechiney AP30 technology
and is one of the world's cleanest and most efficient smelters. Basic
engineering for the expansion will also be provided by Aluminium Pechiney,
while detailed engineering is executed by a combination of the EPCM
engineering department and selected turnkey vendors. Much of the detailed
engineering is very similar to that presently being completed for the Mozal
expansion project, providing excellent synergy opportunities.
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