IGO to record impairment against nickel assets in strategy shift
IGO has been undertaking a strategic review in an attempt to revaluate its resources.
The world’s number one miner, BHP Billiton (LON/ASX/NYSE:BHP), has put its $30 billion Olympic Dam copper-uranium expansion back in the spotlight by asking for a 46-month extension for the project.
According to The Herald Sun, the resource giant sent a letter to South Australian Mineral Resources and Energy Minister, Tom Koutsantonis, requesting a deadline extension to October 10, 2016.
The minister said he believed the request meant BHP was serious about the project and staying in the state.
“What they are debating is how they will do that, what it will cost to do that,” he was quoted as saying.
“This is not a time to simply shout ‘hallelujah’ and believe the future is rosy because of the company’s decision,” reads today’s editorial of local paper Adelaide Now.
BHP’s prime interest, says the media outlet, is not with the South Australian community, it is with its shareholders who are demanding a return on their investment.
“The Premier’s prime interest should, and must, be the interests of this state and its people who have put their trust in his government to ensure the state’s economy can keep them in employment,” it adds.
Shelved in August over cost concerns, the mine was never ruled out completely. Instead, CEO Marius Kloppers said that the company needed to take a fresh look at the Olympic Dam expansion to make it more financially sustainable before December, when the approval from South Australia’s government expires.
“As we finalized all the details of the project in the context of current market conditions, our strategy and capital management priorities, it became clear that the right decision for the company and its shareholders was to continue studies to develop a less capital intensive option to replace the underground mine at Olympic Dam,” he said in a statement in August.
Doubts about the lauded project first emerged a couple of months back when BHP told markets of its intention to cut back an $80 billion capex programme. A JP Morgan research note out in June also suggested Olympic Dam will not go ahead “for at least three or four years, if at all”.
In June BHP bought additional exploration plots near Olympic Dam bringing the money spent this year by the miner, to increase the footprint of the project, to more than $20 million.
BHP had received government approval for the mammoth $30 billion expansion and also has a long-term labour agreement in place at the existing operations.
The ambitious project in South Australia’s outback would have been the world’s biggest open pit. It included the construction of 270km of powerlines, a 400 km pipeline, a new desalination plant and a 105km railway.
Major global miners have all been battered by weaker prices for iron ore, copper, coal, nickel and aluminum as economic growth in China, one of the world’s largest consumers of those commodities, slows to its frailest pace in over a decade.
Image: Waiting room of Chicago’s Union Station (LOC), 1943
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