BHP alumina project experiences $1.2 billion blowout
Mining giant BHP Billiton has suffered another cost blowout after it was announced its Worsley alumina project has experienced a $1.2 billion blowout and nine month delay.
BHP Billiton completed its budget and schedule review of the Worsley Efficiency and Growth project, finding the capital cost estimate had ballooned to $2.86 billion dollars.
The project’s completion date has also been pushed back to the first quarter of 2012, a full nine months later than the initial estimates.
“The US$2,860 (AUD $2,866 million), 1.1 million tonne per annum (mtpa) refinery expansion is being executed within the existing footprint of the facility, making it one of the most complex brownfield projects undertaken. Such complexity has resulted in significantly lower levels of construction progress than previously anticipated, while broader inflationary pressures and the strengthening of the Australian dollar have also contributed to the cost increase.” BHP Billiton Chief Executive Non-Ferrous, Andrew Mackenzie said.
“Upon completion of the Worsley E&G project, the refinery will have the capacity to produce 4.6 mtpa of smelter grade alumina, confirming Worsley as one of the world’s leading alumina refineries. We remain confident that the project will add value to the business over the medium to long term as it delivers low cost production into a fundamentally strong market.”
Factors including project complexity, increasingly strong Australian Dollar and skills shortages have been blamed on the blowout of the project.
Worsley Alumina is a joint venture between BHP Billiton (86 per cent), Japan Alumina Associates (Australia) Pty Ltd (10 per cent) and Sojitz Alumina Pty Ltd (four per cent).