By Robb M. Stewart
MELBOURNE--Speculation is mounting BHP Billiton Ltd. (BHP) will
scale back or defer a decision on the near-US$30 billion expansion
of its Olympic Dam copper and uranium mine in South Australia after
the state's premier scheduled a press conference for shortly after
the mining giant releases full-year earnings.
The conference will address an impending statement from BHP, a
spokesman for Premier Jay Weatherill said, without elaborating
further on what will be discussed.
A BHP spokeswoman in Melbourne declined to comment when asked
about the status of the project. The company had previously said a
board decision on Olympic Dam, as well as two other US$10
billion-plus projects the company is developing in Western
Australia state and Canada, was due at the end of the year.
"Nothing would surprise me," said Tim Schroeders, a fund manager
at Pengana Capital, which owns shares in BHP, adding he would
expect the company and government have agreed a deal for a slower
pace of development.
A decision on building a massive open-pit mining operation
alongside the existing underground operation comes against a sharp
fall in prices for industrial commodities, including copper, in
recent months that is eating into mining companies' cash flow.
Analysts and investors in BHP have increasingly expected the
company will postpone at least one of its big expansion projects
until the outlook for commodities is clearer and the company has
worked through projects already approved.
BHP hasn't given a figure for how much the expansion will cost,
but late last year committed more than $US1 billion to preparation
work ahead of a final decision.
If the expansion goes ahead, BHP has said the capacity to
produce copper would rise fourfold over two decades to about 2.4
million metric tons a year and uranium output by even more to
19,000 tons.
To support the enlarged operation, BHP first needs to remove a
deep layer of rock and soil before it can extract the ore and also
needs to build a coastal desalination plant, new airport,
additional port facilities and further accommodation for its
workers.
Fund managers in recent weeks have said they would welcome signs
of capital discipline from BHP Chief Executive Marius Kloppers,
given the uncertainty over near-term demand for metals and
minerals. Analysts widely expect BHP to post a decline in its
profit for the year through June later Wednesday, the first drop in
earnings in three years due partly to softer prices.
Write to Robb M. Stewart at robb.stewart@wsj.com
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