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BHP Billiton Plc
NEWS RELEASE
26 April 2002
January 2002 - March 2002
This report covers exploration and development activities for the quarter
ended 31 March 2002. Unless otherwise stated, BHP Billiton's interest in the
projects referred to in this report is 100 per cent.
MINERALS DEVELOPMENT
Aluminium
Mozal II Expansion, Mozambique (BHP Billiton 47.11%)
Construction Work on the 253,000 tonne per annum Mozal II aluminium smelter
project continued during the quarter and remains on schedule for initial
production towards the end of 2003. On site earthworks, drainage and piling
is complete. Steady progress is being made on civil works and structural
steel erection, while early building cladding has also commenced.
At the end of March 2002 overall construction progress had reached 22 per
cent. The mobilisation of mechanical, electrical and instrumentation
contractors will commence during April 2002. Commitments totalling over 90
per cent of the project budget of US$860 million (BHP Billiton share US$405
million) have been made and the project remains within budget.
BHP Billiton manages the project on behalf of the shareholders in Mozal
S.A.R.L who are BHP Billiton (47.11 per cent), Mitsubishi Corporation (25
per cent), IDC South Africa (24.04 per cent) and the Government of
Mozambique (3.85 per cent).
Hillside Expansion, South Africa
Main construction work on the 130,000 tonne per annum Hillside III aluminium
smelter project commenced on 1 April 2002 with the mobilisation of
earthworks and piling contractors.
All long lead-time items have been ordered and critical path activities are
in place to allow for the first hot metal to be cast in July 2004.
Commitments totalling over 22 per cent of the project budget of US$442
million have been made and the project is on schedule.
Base Metals
Escondida Phase IV Expansion, Chile (BHP Billiton 57.5%)
BHP Billiton and its joint venture partners in the Escondida copper mine in
northern Chile continued development activities for the Escondida Phase IV
development project during the quarter. The Phase IV expansion will increase
ore processing capacity by 85 per cent resulting in an average copper
production of 400,000 tonnes per annum (average total production of 1.2
million tonnes per annum) over the first five years.
The development has an estimated capital cost of US$1,045 million (BHP
Billiton share US$600 million). The installation of major mechanical
equipment continues to progress satisfactorily. All major engineered
equipment is now on site. At the end of March 2002 the project was 75 per
cent complete. A major milestone will be achieved during the early part of
the next quarter with the commencement of water reclamation from the new
Laguna Seca tailings system. Project mechanical completion is on track for
September 2002 with full production expected to be achieved by April 2003.
Tintaya Oxide Project, Peru (BHP Billiton 99.9%)
Construction of the Tintaya Oxide project was completed this quarter. The
project achieved mechanical completion as defined in the contract on 22
March 2002. This was about four weeks ahead of schedule. The project is now
in the commissioning phase with first cathode expected next quarter
(slightly ahead of schedule) and full production by mid 2002. The
project remains on budget with an estimated capital cost of US$138 million.
Carbon Steel Materials
Blackwater Integration Project, Australia (BHP Billiton 50%)
The project involves the creation of a single mining entity combining the
South Blackwater open cut operations with the Blackwater mine to produce an
estimated 13.5 million tonnes per annum (mtpa) of metallurgical and energy
coal.
The project is 75 per cent complete with a new fleet of eight 300-tonne
capacity haul trucks performing to specification. Further mining equipment
including dozers, coal haulers and an excavator will be delivered throughout
2002. Pre-strip contracts have also been completed.
Blackwater has been functioning as a single operation for three months since
the completion of the interlink haul road. When annualised, production for
the January to March period has achieved the 13.5 mtpa rate. Construction of
the new industrial facility is progressing on schedule for completion in
April 2002 with the operations centre commissioned. All departments will be
located in a single facility by March. Total project capital remains on
target of US$64 million (BHP Billiton share US$32 million).
Dendrobium Coal Project, Australia
The Dendrobium Mine will be a low cost underground longwall operation
capable of producing 5.2 mtpa of raw coal resulting in 2.6mtpa of
metallurgical coal and 1mtpa of energy coal. The main customer for the
metallurgical coal is the Port Kembla steelworks, located only seven
kilometres from the mine site.
New South Wales Government and BHP Billiton Board Approvals were received in
November 2001. Approximately US$50 million has been committed to date with
construction activities underway at all of the three main sites covering the
coal loading facilities, mine surface facilities and ventilation shaft. The
capital forecast and longwall start-up schedule remains unchanged at US$170
million and May 2005 respectively.
Mining Area C Project, `C Deposit', Australia (BHP Billiton 65%)
During the March 2002 quarter the Feasibility Study for the mine, plant,
infrastructure and rail spur was completed and the submissions were prepared
for project approvals. The project was subsequently approved on 3 April 2002
to proceed to implementation.
The approval provides for the development of a mine, processing plant, 38-
kilometre rail spur and associated infrastructure for an operation to build
up production to 15 mtpa at Mining Area C, which is situated approximately
120 kilometres from Newman in Western Australia's Pilbara region. The
capital cost is estimated to be US$213 million (BHP Billiton share US$181
million).
A joint venture has been signed with POSCO of South Korea for the
development of the `C Deposit' section of Mining Area C whereby POSCO will
take a 20 per cent interest in the deposit.
Product and Capacity Expansion (PACE) Project, Australia (BHP Billiton 85%)
During the March 2002 quarter the Feasibility Study for the PACE project was
completed. The project was approved by the BHP Billiton Board and at the end
of the quarter the finalisation of Western Australian State government
approvals was in progress. It is expected that these approvals will be
granted during April 2002.
The scope of the project provides for the upgrade of the BHP Billiton rail
and port facilities in a staged process to meet the forecast increase in
sales over the next decade. The approvals cover the first stage of PACE,
which will increase capacity to 81 mtpa by 2004. Further stages will provide
for capacity levels to exceed 90 mtpa. The estimated capital cost for Stage
1 is US$351million (BHP Billiton share US$299 million).
Energy Coal
Mount Arthur North, Australia
The Mount Arthur North mine will be capable of producing up to 15 mtpa of
raw energy coal when full production is achieved in 2006.
Commitments during the quarter ending March 2002 were US$55 million, with
total commitments at March 2002 of US$209 million. Capital expenditure for
the quarter was US$28 million. Construction of the project is on schedule
with nine months of an anticipated 32-month program completed. Forecast
cost to completion has been reduced from US$411 million to US$355 million as
per the March 2002 Definitive Estimate.
Detailed design and engineering reached 67 per cent completion during the
first quarter of 2002. Critical pass schedule activities are progressing
well with procured equipment and major contract work on or ahead of
schedule. Mining equipment has been ordered and is in the process of being
delivered. In addition, box cuts on both the upper and lower coal sequences
within the central pit are being prepared for selective coal mining.
San Juan Underground, New Mexico USA
The project reached 94 per cent completion at the end of March. The longwall
equipment has all been received and is being assembled on the surface for
testing prior to underground installation. Surface facilities were 99 per
cent complete at the end of the quarter with the ventilation shaft, fire
brigade building, high-pressure pump station and conveyor system all having
been completed during the period.
Start-up of the longwall is anticipated to take place in late September to
November depending upon the geological conditions encountered during the
development of the remaining roadways.
Project spending is forecast to be on budget at US$146 million, with
US$135.6 million committed at the end of March 2002.
PETROLEUM DEVELOPMENT
Bream Pipeline, Australia (BHP Billiton 50%, non operated)
The five kilometre onshore section of the Bream pipeline was installed
during the March quarter. Offshore pipeline installation and the shore
crossing are scheduled to start mid-May 2002 (following completion of Duke
Energy's Tasmanian Gas Pipeline installation work). Detailed design work for
associated modifications on the Bream A production platform is complete and
now undergoing final design review. Modification work on the platform is
also scheduled to start during May 2002. First gas and gas-liquids
production is scheduled for mid 2003.
Laminaria Phase II Development, Australia (BHP Billiton 32.6%, non operated)
The project entails two new infill sub-sea wells tied-back to the Northern
Endeavour. Drilling commenced on Laminaria 8 in mid January and Laminaria 7
in late January as part of a batch drilling program. Laminaria 7 has been
drilled to total depth and the well completion has been installed. Drilling
has recently re-commenced on Laminaria 8.
North West Shelf expansion, Australia (BHP Billiton 16.67%, non operated)
The construction of the fourth liquefaction processing train is progressing
and is 29 per cent complete as per forecast. The onsite mechanical erection
contract was awarded in February 2002 and the second trunkline is
progressing as per schedule (currently five per cent complete).
Zamzama Field Development, Pakistan (BHP Billiton 38.5%, operated)
In March 2002 approval was announced for the full-scale development of the
Zamzama gas field, following the signing of separate Gas Sales and Purchase
Agreements and a Gas Pricing Agreement with the Government of Pakistan, the
Sui Southern Gas Company Limited and Sui Northern Gas Pipelines Limited. The
agreements cover the supply of up to 320 million standard cubic feet per day
of gas over a period of 20 years. The Zamzama development is being executed
on a fast track basis and production is expected to commence in the third
quarter of 2003. The basic engineering design and the tendering process for
equipment packages and long lead-time materials is complete.
Ohanet Development, Algeria (BHP Billiton 45%, joint operating organisation
comprising SONATRACH/BHP Billiton)
The Ohanet project consists of the development of four gas-condensate
reservoirs in the Illizi Basin in southern Algeria. The project will
encompass a 20 million cubic metre per day gas treatment facility fed by 47
production wells, 32 of which will be new and 15 will be re-completions of
existing oil producers. 3-D seismic data acquisition across all reservoirs
was completed in June 2001 and the data has been processed. By the end of
March 2002 a total of 14 new wells had been drilled and completed and four
existing wells had been re-completed.
Facilities engineering is effectively complete and the majority of equipment
and bulk materials are now on site. Overall construction progress is 29 per
cent. First production remains schedule for the third quarter of 2003.
ROD Integrated Development, Algeria (BHP Billiton 35.1%, joint operating
entity comprising SONATRACH/BHP Billiton)
The ROD project consists of the development of six satellite oilfields in
the Berkine Basin in eastern Algeria. The project will produce 80,000
barrels of Sahara Blend crude oil per day, with associated gas being re-
injected into the reservoir (with water) to provide pressure support. It is
anticipated that 36 development wells will be required, 10 of which will be
re-completions of already drilled wells. Drilling of the first development
well commenced in November 2001 and at the end of March 2002 the rig was
working on the fourth development well. Critical long lead engineering items
are progressing to schedule. Bids for the EPC (Engineer/Procure/Construct)
contract for the production facilities were received in mid-January 2002 and
the contract was awarded to Saipem/Bouygues on 21 January. It is expected
that the contract will be formally signed in April 2002. First production is
scheduled for first quarter of 2004.
Caesar/Cleopatra Transportation Systems, Gulf of Mexico, USA (BHP Billiton
interest in Caesar pipeline, 25%; interest in Cleopatra pipeline, 22%. Non-
operated)
In February 2002 BHP Billiton acquired a 25 per cent interest in the Caesar
oil pipeline and a 22 per cent interest in the Cleopatra gas
pipeline. BHP Billiton's share of the capital costs for these new-build
projects is estimated at US$100 million. Detailed engineering continues for
both systems, which will transport product from the Mad Dog and Atlantis
fields to pipelines closer to shore. The hydrocarbons will then be sold into
major markets in Texas and Louisiana. Commissioning is expected in 2004.
Mad Dog Development, Gulf of Mexico, USA (BHP Billiton 23.9%, non-operated)
BHP Billiton announced it had sanctioned the Mad Dog field in February 2002,
approving up to US$335 million for development of the Gulf of Mexico oil and
gas field. Detailed engineering work is underway. The project will encompass
a SPAR facility with a daily production capacity of 80,000 barrels of oil
and 40 million cubic feet of gas. First production is expected at the end of
calendar year 2004.
MINERALS EXPLORATION
The exploration group of BHP Billiton Minerals continued to carry out global
grass roots exploration for key commodities of interest to the Group. In
addition, the Junior Alliance Program (third party alliances and joint
ventures) has continued to expand, involving more companies and providing
entry into new countries. Further success has also been experienced with
Minotaur Resources Limited in South Australia.
An overview of BHP Billiton's Junior Alliance Program was presented in a
public forum at the 2002 PDAC conference in Toronto, Canada. The program
emphasises the use of distinctive capabilities and innovative commercial
investments to gain the widest possible exposure to the results of third-
party funded exploration.
The two FALCON units in South America and Africa continue to be fully
employed and survey areas are being expanded.
PETROLEUM EXPLORATION
Exploration and appraisal wells drilled during the quarter or in the process
of drilling as at 31 March 2002.
WELL LOCATION BHP STATUS
Billiton
EQUITY
Kairi-2 Trinidad Block 45% BHP Encountered
2(c) Billiton hydrocarbon
(Operator) bearing sands.
For more
information see
News Release of 7
March 2002.
Canteen-2 Trinidad Block 45% BHP Drilling ahead at
2(c) Billiton 3,168 feet.
(Operator)
Angostura-2 Trinidad Block 45% BHP Drilling ahead at
2(c) Billiton 6,760 feet.
(Operator)
Crapaud-1 Trinidad Block 50% BHP P&A. Non
2(ab) Billiton commercial
(Operator) quantities of
hydrocarbons
found.
Cascade-1 Gulf of 50% BHP Drilling ahead.
Mexico, Walker Billiton
Ridge 206 (Operator)
Kangandala-1 Block 21, 30% BHP P&A. Dry.
Angola Billiton
(Operator)
EXPENDITURE
Information related to exploration expenditure will be included in the BHP
Billiton third quarter Profit Report, to be released on 1 May 2002.
MINERALS COMPETENCE AND RESPONSIBILITY
The following statements apply in respect of the information in this report
that relates to any stated Mineral Resources or Ore Reserves.
* The information is based on and accurately reflects information compiled
by the person named under each relevant section of the report
* Each named person is either a Corporate Member or Fellow of The
Australasian Institute of Mining and Metallurgy or the Australian Institute
of Geoscientists, or a Recognized Mining Professional under the ASX listing
rules, and is a full-time employee of a member company of the BHP Billiton
Group;
* Each named person has sufficient experience which is relevant to the style
of mineralisation and type of deposit under consideration and to the
activity which he or she is undertaking to qualify as a Competent Person as
defined in the 1999 Edition of the "Australasian Code for Reporting of
Mineral Resources and Ore Reserves". Each named person consents to the
inclusion in the report of the matters based on their information in the
form and context in which it appears.
****
Further news and information can be found on our Internet site:
www.bhpbilliton.com
Australia United Kingdom/South Africa
Dr. Robert Porter, Investor Michael Campbell, Investor &
Relations Media Relations
Tel: + 61 3 9609 3540 Tel: +27 11 376 3360
Mobile: +61 419 587 456 Mobile: +27 82 458 2587
email: email:
Robert.Porter@bhpbilliton.com Michael.J.Campbell@bhpbilliton
.com
Mandy Frostick, Media Ariane Gentil, Manager
Relations Communications
Tel: +61 3 9609 4157 Tel: +44 20 7747 3977
Mobile: +61 419 546 245 Mobile: + 44 7881 518 715
email: email:
Mandy.J.Frostick@bhpbilliton. Ariane.Gentil@bhpbilliton.com
com
United States
Francis McAllister, Investor
Relations
Tel: +1 713 961 8625
Mobile: +1 713 480 3699
email:
Francis.R.McAllister@bhpbilli
ton.com
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