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BHP Board might not approve development of world’s biggest uranium mine

Acting chief executive of the South Australian Chamber of Mines and Energy Nigel Long said the state’s mining industry was not solely reliant on the expansion of Olympic Dam because there were other “exciting opportunities” ahead, 

“The decision to press the pause button is a decision to be made by the BHP board, but we see a very good future for other projects in South Australia regardless…..

The BHP board will be considering whether to approve the project at a time when cost pressures in Australian mining are rising and profit margins are contracting.

BHP has Olympic hurdles to overcomeFinancial Review 17 APR 2012  The South Australian government says it is not inclined to grant BHP Billiton an extension on an approvals expiring in December that cover the $US20 billion expansion of the Olympic Dam mine at this stage. Jamie Freed and Lucille Keen

“They’d need a ministerial exemption to continue those approvals,” the state’s Minister for Natural Resources Tom Koutsantonis told ABC Radio South Australia yester day. “Thus far I’ve seen nothing that would incline me to grant an exten sion.”

His comments followed a report in The Australian Financial Review on Saturday that BHP was weighing whether to hit the pause button on the project amid a weaker outlook for commodities, industry-wide cost inflation, added government imposts and pressure from shareholders to return more cash.

BHP’s largest shareholder, Black- Rock, has lowered its stake in the miner’s Australian arm from 5.7 percent to 4.99 per cent over the past six months, according to US regulatory filings. “BlackRock are realising BHP are going to press the button on Olympic Dam so they are getting out,”

Mr Koutsantonis said. “A lot of these institutional investors looking for short-term returns in a two to five-year period are coming to grips that BHP is going to press the button on a 40-year investment at Olympic Dam.”….

The indenture agreement signed last year that locks in royalties for a 45- year period expires on December 8 unless Mr Koutsantonis agrees to an extension and it is not opposed by either house of the state’s parliament….. Business SA executive officer Peter Vaughan said the negative speculation around the future development of Olympic Dam was not productive…..

Acting chief executive of the South Australian Chamber of Mines and Energy Nigel Long said the state’s mining industry was not solely reliant on the expansion of Olympic Dam because there were other “exciting opportunities” ahead, particularly in the magnetite form of iron ore on the Eyre Peninsula and the Braemar region, near Broken Hill.  Mr Long said if the pause button was pressed it would be felt, as the project would have a significant boost on the state’s economy. “The decision to press the pause button is a decision to be made by the BHP board, but we see a very good future for other projects in South Australia regardless…..

The BHP board will be considering whether to approve the project at a time when cost pressures in Australian mining are rising and profit margins are contracting.

http://afr.com/p/national/bhp_has_olympic_hurdles_to_overcome_cBuIcPVMPIBun2cTSHIXZI

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April 21, 2012 - Posted by | AUSTRALIA, business and costs, Uranium

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