The Monitor Newspaper for 22nd February 2012

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Volume 9, Wednesday, February 22, 2012

Expansion on track R

By Vanessa Switala

ecently, The Sydney Morning Herald reported BHP Billiton plans to send a train from Olympic Dam to Darwin every day of the year once the mine is operating. The biggest shareholder in BHP Billiton and the world’s largest investor in resource companies, BlackRock Investments, have doubled its stake in Genesee and Wyoming- the American company that operates the railway which has

been proposed as the main export route for Olympic Dam’s resources. This move has increased expectations the mine expansion will be approved by the BHP Billiton Board by July. The Adelaide to Darwin railway is considered Genesee’s most important growth asset as the company operates the track on a 50 year lease. This move comes as Chief Executive of BHP Billiton Marius Kloppers stated the expansion of Olympic Dam is at the core of the company’s strategic plan.

BHP Billiton also recently announced their half year profit of US $9.94 billion; a stable cash flow but not as high as one year ago. Mr Kloppers said there is minimal technical risk in stage one of the expansion of Olympic Dam and out of three major projects is the project with the most urgency. “Nothing is low risk when it comes to spending a lot of money, but we feel very comfortable in deeply understanding the Olympic Dam ore body,” he said. “We feel that what we are going to do there is slap-bang in the middle of the strategy and the core skill set of the corporation.” Mr Kloppers said miners have always had to be cautious as nothing is low risk in the mining environment. “ Th i n g s c a n g o wrong, rather than go better than expected,” he said. “But phase one is largely ‘dig hole’, you know… It’s largely build airstrip, build camps, dig hole- and keep digging for a five-year period.” Mr Kloppers added, “And that is the precommitment.” “ The subsequent phases are, again, not low risk but the metallurgy of the ore body is well known and we’ve got a couple of years before we need to approve the final configuration of what the second and third phases of the expansion are.” In reply to a question

from Chris Russell of The Advertiser Mr Kloppers responded, “No investment decision is ever made until it’s made.” He added, “Having said that, I do think that, over the last year in particular, on the indenture negotiations, on the environmental approvals and so on, we have gone as well as we could have hoped in advancing that project into the next stage. “Now, I always tend to look at it that a project must have four things: it must have the resource; it must have all of the approvals; we have got to have the people and the capability; and we have got to have the financial means. “Now, all of those boxes are only ticked when we sanction it, but the Olympic Dam project has progressed very satisfactorily through all of those gates, so we are very pleased, and we have no reason to update our timing at this stage.” The Olympic Dam expansion, the outer harbour development at Port Headland in Western Australia and Jansen potash in Canada are three major investments scheduled for Board decision this year. Mr Kloppers said no final decisions had been made regarding the projects as they would be measured against difficulty of the project and the effect of the commodity on the market. Mr Kloppers ranked Port Headland easiest, followed by Olympic Dam and then Jansen. For effect on the market Mr Kloppers said Olympic Dam’s copper would feed into the most liquid market with Western Australia’s iron second and Jansen’s potash last. “Clearly- Olympic Dam- some decisions (have) to (be) made by the end of the year, or the agreements we’ve got with the SA Government expire,” concluded Mr Kloppers. This comes as Boom Logistics recently finalised a five year contract worth $100 million to work on the mine. BHP Billiton and Rio Tinto have also recently announced $3.7 billion in spending and upgrades for the Escondida copper mine in Chile.

BIG warm welcome! At last weekend’s Big Warm Welcome in the Lions Park were Janie and Hamish Butterworth (5 weeks) and Kadriye and Ewan Burggraff (16 weeks).

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