Aug 25 2005
BHP Billiton today announced that it would permanently close the hot briquetted iron facilities at its Boodarie Iron plant in Port Hedland, Western Australia.
The closure of the hot briquetted iron facilities will necessitate a charge of US$266 million in the accounts for the year ended 30 June 2005. This charge is primarily related to the settlement of existing contractual arrangements, plant decommissioning, site rehabilitation, redundancies and other costs associated with closure.
The decision follows a detailed review of options for the plant, which included partnering with another organisation in the resumption of operations, selling the facility for conversion to another use, or closure.
As part of the closure plan BHP Billiton is negotiating with a number of parties to purchase the majority of gas contracted under take-or-pay arrangements.
It is BHP Billiton’s intention to retain the Boodarie Iron beneficiation plant to complete feasibility studies into longer term options for its lower grade iron ore resources. This has the potential to create further value for the company and employment options in the Pilbara.
BHP Billiton Iron Ore President Graeme Hunt said that while the company had hoped to continue operations at Boodarie Iron in one form or another the decision was ultimately based on whether the plant could be operated safely and economically.
“Most of the parties we had discussions with either declined to submit a business proposal or withdrew their interest after detailed reviews of the plant,” he said.
“Of the proposals we received, all required major capital investment for plant modifications and/or significant discounts from BHP Billiton on key inputs such as gas.
“Unfortunately, the failure to consistently achieve the financial and technical targets announced in 2000, coupled with the economic impact of these proposals, left us with no alternative but to close the hot briquetted iron facilities and mitigate our financial exposure through on-selling the contracted gas.”
It is expected that work on the demolition of the hot briquetted iron facilities will commence early next year following the receipt of State Government approvals. Demolition is expected to be completed late in 2008 and rehabilitation of the site will commence immediately thereafter.
While large-scale industrial demolition is a specialist activity, every opportunity will be made available for Hedland businesses and residents to work on the project where appropriate.
Operations at the Boodarie Iron plant have been suspended since May 2004 following an industrial accident which resulted in the death of one employee and severe injuries to two others.
The plant was subsequently placed on care and maintenance in November 2004 while the long-term future of the operation was determined.
Mr Hunt said that BHP Billiton would ensure that all contractual and employment obligations were fulfilled prior to the closure of the hot briquetted iron facilities.
“The majority of the 490 permanent employees have already left the plant, with 87 people redeployed to other BHP Billiton operations,” he said.
“In addition, 22 people secured alternative employment at other BHP Billiton sites between May 2004 and November 2004 when the care and maintenance decision was announced.
“We will also be working closely with the 30 people remaining at the plant to help them find alternative employment opportunities, either within BHP Billiton or outside the company.”