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BHP Billiton’s project rollbacks worth USD50 billion, a significant difference from its formerly active expansion tactic, is now being seen as the latest sign that the worldwide mining boom has come to its end.
The mining company announce that its project to turn the Olympic Dam, the most valuable mineral deposit discovered in Australia, into the biggest ever open-pit mine has been delayed because of an increase in construction expenses. In addition, copper and uranium prices fell along with a strong domestic currency. As a possible solution, BHP is looking into a less expensive design for the mine that is poised to make thousands of employment opportunities. Their Olympic Dam, home to one of the biggest copper deposits and the greatest uranium source, is seen as the flagship project of BHP.
This expansion project concerning the Olympic Dam will probably be the first in a string of changes. A USD10 billion potash mine in Canada and an USD19 billion iron ore port in Port Hedland are both reportedly getting scrapped.
According to Marius Kloppers, BHP chief executive, in such a frail market, the company has to look for a way to maximize the use of the Olympic Dam without spending too much of its capital. Possible alterations in design are focused on open-pit expansion where it seems that the project was postponed for a later date but not totally cancelled.
BHP is going to continue 20 projects where it has already spent USD 22.8 billion though it will not approve new ones until the last quarter of 2013. It has postponed the planned facilities in Australia, Canada and Queensland for scam prevention.
“Disciplined investment throughout the economic cycle has established momentum in our business,” Kloppers said, adding that they are planning to drastically reduce expenses next year and will close unprofitable operations.
Twenty years ago, they are reportedly mulling about selling the petroleum division.