http://au.finance.yahoo.com/news/bhp-billiton-freezes-major-project-074339651.html

The world's biggest miner, BHP Billiton, says it is freezing all board-level major project approvals for six months.
The statement by BHP Billiton's chief executive Marius Kloppers reinforces a warning earlier this month by the miner's chairman Jacques Nasser that the company would scale back its $80 billion investment plans.
The message was delivered directly to its major customer, China, through a major Chinese news agency.
"You should not expect in the next six months any new major approval of projects," he told Caixin Media.
"The economics of some of these projects is changed.
I think for the next two years, 18 months perhaps, will we just wait and see how things develop." The company says his comments are not a change of policy, but BHP Billiton had previously planned to make a decision on major expansions such as South Australia's Olympic Dam mine by the middle of this year.
A board decision on that expansion must be made by December 15, otherwise the South Australian Government's approval expires and BHP will have to head back to the negotiating table.
South Australia's Mineral Resources and Energy Minister Tom Koutsantonis says the deadline for approval is non-negotiable.
"BHP Billiton knew at the time of the signing of the indenture that the approvals came with a time limit," Mr Koutsantonis told the ABC in a statement.
"To date, I have not received any request for an extension and we are proceeding in the expectation that the board will meet and approve this project before the end of this year." While Mr Kloppers' self-imposed six-month moratorium on expansion decisions ends just before the December deadline, Minelife 's senior resource analyst Gavin Wendt says the Olympic Dam expansion is in doubt.
"It's still 50-50.
I've had my doubts, it's taken a long time for the [feasibility] study to be completed," Mr Wendt said.
"If BHP was really dead keen on getting the project into production I think the whole process could have been expedited.
"I don't think BHP really wants to be flooding the market over the next five years or so with new supply [of copper, gold and uranium]." He says that is because the future of many commodity prices is too uncertain to guarantee a good return.
"It's effectively sending out the sort of message to the market that hey, at the end of the day, we can turn supply on and off," Mr Wendt said.
"And if we don't see a strong pricing environment for our commodities where we can generate a reasonable margin, then we'll leave the stuff in the ground." Platypus Asset Management portfolio manager Prasad Patkar says rising costs are also deterring expansion.
"The pressure on costs has become so intense for the large mining projects and it comes at a time when commodity prices are starting to flatten at best and coming back a bit," Mr Wendt explained.
That has made boards unwilling to commit to new projects until the economic situation becomes more clear.
Mr Patkar says a lack of skilled labour is largely to blame for the cost issues.
"A lot of projects are being sanctioned around the world and around Australia at a time when the supply of skilled labour just can't catch up in the short term," he said.
Skilled labour shortages are a problem for miners around the world, but Paul Gray, the principal iron ore analyst for global resources consultancy Wood Mackenzie, told Radio National Breakfast that cost increases have been especially large in Australia.
"In the mining sector they [wages] roughly doubled since 2005.
Australian wage rates in the mining sector are amongst the highest in the world now," he said.
However, while costs are rising across the mining sector, the quality of Australia's iron ore deposits means that it still remains among the lowest cost producers.
"Operating costs may be somewhere around $40 to $50 a tonne, and for China small scale, high cost private mines now has operating costs above $120 a tonne," Mr Gray explained.
He says that cost differential will limit iron ore price declines, as unprofitable Chinese mines halt production when prices fall too low.
"That should provide some underlying support at levels pretty close to where we are today - it may be $10 or so below current levels," he added.
Mr Patkar says that makes BHP's iron ore plans, such as an expansion of Port Headland's harbour, the least likely to be canned.
"I think the BHP iron ore expansion is the safest of the three large projects that they are considering," he concluded.
Mr Wendt says the long-term outlook for many commodities is good, and BHP Billiton has reacted to short-term investor concerns that it is spending too much on expanding production.
"They have been criticised in some aspects of the market, but particularly by one of their major shareholders BlackRock, for spending too much money on long-term development projects," he observed.
"They seem to be reacting to the negative near-term sentiment that's around in the financial markets at the present time."

isnt this a good thing for all those CLIMATE CHANGE fanatics.. like flannery...saves pulling teeth.

cods wrote on Jun 1^st, 2012 at 4:55am:

isnt this a good thing for all those CLIMATE CHANGE fanatics.. like flannery...saves pulling teeth.

Pity about all those people who lost their jobs recently due to the carbon tax that they can't find new work with BHP because of, yep - you guessed it, the carbon tax!

Armchair_Politician wrote on Jun 1^st, 2012 at 6:51am:

cods wrote on Jun 1st, 2012 at 4:55am: isnt this a good thing for all those CLIMATE CHANGE fanatics.. like flannery...saves pulling teeth. Pity about all those people who lost their jobs recently due to the carbon tax that they can't find new work with BHP because of, yep - you guessed it, the carbon tax!

Or could it be that China's economy is slowing down? surely not. It estimates GDP down 2% for the coming year. Could it be the beginning of the mining bust? All booms have a bust, that's why they are called 'booms'.

Ex Dame Pansi wrote on Jun 1^st, 2012 at 7:01am:

Armchair_Politician wrote on Jun 1st, 2012 at 6:51am: cods wrote on Jun 1st, 2012 at 4:55am: isnt this a good thing for all those CLIMATE CHANGE fanatics.. like flannery...saves pulling teeth. Pity about all those people who lost their jobs recently due to the carbon tax that they can't find new work with BHP because of, yep - you guessed it, the carbon tax! Or could it be that China's economy is slowing down? surely not. It estimates GDP down 2% for the coming year. Could it be the beginning of the mining bust? All booms have a bust, that's why they are called 'booms'.

3 cheers for pansi....dont they love the good news.. hahahaha.. I think!


yes I am sorry to see jobs go.. we have been hanging on for the arrival of swans 1.6million jobs he was creating..

gotta be around the corner...

I cant believe he meant the mining industry would create jobs..

that is so hypocritical..when they get the biggest blast from the left as far as polluting the planet goes.

not sure why anyone is mentioning carbon tax (although I knew some idiot would try to blame it on the carbon tax) ... this is about BHP trying to limit supply so as to keep commodity prices inflated

John Smith wrote on Jun 1^st, 2012 at 7:47am:

not sure why anyone is mentioning carbon tax (although I knew some idiot would try to blame it on the carbon tax) ... this is about BHP trying to limit supply so as to keep commodity prices inflated

So there are absolutely no connection at all to the carbon tax?

Maqqa wrote on Jun 1^st, 2012 at 7:49am:

John Smith wrote on Jun 1st, 2012 at 7:47am: not sure why anyone is mentioning carbon tax (although I knew some idiot would try to blame it on the carbon tax) ... this is about BHP trying to limit supply so as to keep commodity prices inflated So there are absolutely no connection at all to the carbon tax?

everything in linked ... it's the nature of business. ..but to try and pin this on the carbon tax is like saying I garaged my car permanently becuse the price of petrol went up from $1.39 to $1.40 /l ... while possible, highly unlikely ... to garage my car permanently there would be a whole range of issues I would need to look at ... wait, I 'll use my wifes car, that way i can keep my km's down and make more on resale with my car

John Smith wrote on Jun 1^st, 2012 at 8:04am:

Maqqa wrote on Jun 1st, 2012 at 7:49am: John Smith wrote on Jun 1st, 2012 at 7:47am: not sure why anyone is mentioning carbon tax (although I knew some idiot would try to blame it on the carbon tax) ... this is about BHP trying to limit supply so as to keep commodity prices inflated So there are absolutely no connection at all to the carbon tax? everything in linked ... it's the nature of business. ..but to try and pin this on the carbon tax is like saying I garaged my car permanently becuse the price of petrol went up from $1.39 to $1.40 /l ... while possible, highly unlikely ... to garage my car permanently there would be a whole range of issues I would need to look at ... wait, I 'll use my wifes car, that way i can keep my km's down and make more on resale with my car

and you've got proof that this action is BHP's way of limiting supply?

this is in light of Wayne Swan standing in Parliament yesterday raving on about the infrastructure pipeline of $500B which has just shrunk by $80B within 24 hours??!!

Maqqa wrote on Jun 1^st, 2012 at 7:49am:

John Smith wrote on Jun 1st, 2012 at 7:47am: not sure why anyone is mentioning carbon tax (although I knew some idiot would try to blame it on the carbon tax) ... this is about BHP trying to limit supply so as to keep commodity prices inflated So there are absolutely no connection at all to the carbon tax?

Why would there be any connection to a carbon tax? The coal goes to China.

The amount of money made by selling coal to Australian power plants is miniscule. And the tax burden is the responsibility of the burners.

Any carbon tax on getting coal OUT of the ground is nothing. In comparison to even minute fluctuations in commodity prices, it's p!ssing against the wind. Kloppers is playing the markets here.

All those jobs. How evil of him.

Mining employs 7% of Australian workers.

So why even have a carbon tax? Good question.

We need an ETS.

Armchair_Politician wrote on Jun 1^st, 2012 at 6:51am:

cods wrote on Jun 1st, 2012 at 4:55am: isnt this a good thing for all those CLIMATE CHANGE fanatics.. like flannery...saves pulling teeth. Pity about all those people who lost their jobs recently due to the carbon tax that they can't find new work with BHP because of, yep - you guessed it, the carbon tax!

Stop lying to people, the carbon tax has nothing to do with them loosing their jobs.

Maqqa wrote on Jun 1^st, 2012 at 7:49am:

John Smith wrote on Jun 1st, 2012 at 7:47am: not sure why anyone is mentioning carbon tax (although I knew some idiot would try to blame it on the carbon tax) ... this is about BHP trying to limit supply so as to keep commodity prices inflated So there are absolutely no connection at all to the carbon tax?

Of course not

This is what happens when you get a federal govt spending all its time attacking the miners. Olymp[ic dam is going to be the worlds BIGGEST mining project and Gillard is about to torpedo it by her idiotic policies. Wait for the mining company attacks on her. they have deep pocklets and it destroyed Rudd last time and will terminate Gillard AND her govt. And so it should. This country rode the miners out of the GFC and all the thanks they get for it is increased taxes and daily  criticism of them.

I was at Olympic Dam a few weeks ago..trust me the open cut is going ahead because the work on it has already started.
Thats why I was there

longweekend58 wrote on Jun 1^st, 2012 at 4:52pm:

This is what happens when you get a federal govt spending all its time attacking the miners. Olymp[ic dam is going to be the worlds BIGGEST mining project and Gillard is about to torpedo it by her idiotic policies. Wait for the mining company attacks on her. they have deep pocklets and it destroyed Rudd last time and will terminate Gillard AND her govt. And so it should. This country rode the miners out of the GFC and all the thanks they get for it is increased taxes and daily  criticism of them.

Dont sell your BHP shares on media comments Longy

adelcrow wrote on Jun 1^st, 2012 at 5:00pm:

I was at Olympic Dam a few weeks ago..trust me the open cut is going ahead because the work on it has already started. Thats why I was there

I was at the ICN meeting for BHP suppliers. the preliminary work is being done with $1B of seed money but the final approval for the $80B expenditure is not yet there. It aint done until its approved. Yes, it will probably be approved but it can just as easily be delayed a few years. After all, if you were a miner, would you be feeling the love from Canberra right now? Would a $200M advertising campaign against labor be something you'd consider?? Labor needs to be a bit cleverer than this.

longweekend58 wrote on Jun 1^st, 2012 at 5:32pm:

adelcrow wrote on Jun 1st, 2012 at 5:00pm: I was at Olympic Dam a few weeks ago..trust me the open cut is going ahead because the work on it has already started. Thats why I was there I was at the ICN meeting for BHP suppliers. the preliminary work is being done with $1B of seed money but the final approval for the $80B expenditure is not yet there. It aint done until its approved. Yes, it will probably be approved but it can just as easily be delayed a few years. After all, if you were a miner, would you be feeling the love from Canberra right now? Would a $200M advertising campaign against labor be something you'd consider?? Labor needs to be a bit cleverer than this.

It will go ahead at the end of the year

adelcrow wrote on Jun 1^st, 2012 at 5:38pm:

longweekend58 wrote on Jun 1st, 2012 at 5:32pm: adelcrow wrote on Jun 1st, 2012 at 5:00pm: I was at Olympic Dam a few weeks ago..trust me the open cut is going ahead because the work on it has already started. Thats why I was there I was at the ICN meeting for BHP suppliers. the preliminary work is being done with $1B of seed money but the final approval for the $80B expenditure is not yet there. It aint done until its approved. Yes, it will probably be approved but it can just as easily be delayed a few years. After all, if you were a miner, would you be feeling the love from Canberra right now? Would a $200M advertising campaign against labor be something you'd consider?? Labor needs to be a bit cleverer than this. It will go ahead at the end of the year

Probably true, but that's not the point, is it? It was supposed to be voted on by the BHP board next month and now it MIGHT be voted on in 6 months time. The point is that this is hardly a good time for Gillard and Swan to spend every waking moment tryng to find some new way to attack the miners. Ive accused Gillard in the past of having truly awful political judgment. This is just another brilliant example of her complete ineptitude in political matters. a responsive govt would be seeking to find ways to assist this enormous industry but no.,... they attack it. You do realise that the Swan idea of removing the diesel rebate nearly led to the actual abandonment of Olympic dam plus a lot of other projects? He is a moron.

longweekend58 wrote on Jun 1^st, 2012 at 5:43pm:

adelcrow wrote on Jun 1st, 2012 at 5:38pm: longweekend58 wrote on Jun 1st, 2012 at 5:32pm: adelcrow wrote on Jun 1st, 2012 at 5:00pm: I was at Olympic Dam a few weeks ago..trust me the open cut is going ahead because the work on it has already started. Thats why I was there I was at the ICN meeting for BHP suppliers. the preliminary work is being done with $1B of seed money but the final approval for the $80B expenditure is not yet there. It aint done until its approved. Yes, it will probably be approved but it can just as easily be delayed a few years. After all, if you were a miner, would you be feeling the love from Canberra right now? Would a $200M advertising campaign against labor be something you'd consider?? Labor needs to be a bit cleverer than this. It will go ahead at the end of the year Probably true, but that's not the point, is it? It was supposed to be voted on by the BHP board next month and now it MIGHT be voted on in 6 months time. The point is that this is hardly a good time for Gillard and Swan to spend every waking moment tryng to find some new way to attack the miners. Ive accused Gillard in the past of having truly awful political judgment. This is just another brilliant example of her complete ineptitude in political matters. a responsive govt would be seeking to find ways to assist this enormous industry but no.,... they attack it. You do realise that the Swan idea of removing the diesel rebate nearly led to the actual abandonment of Olympic dam plus a lot of other projects? He is a moron.

Why start the project now?

Forrest is looking to challenge the Carbon Tax and the Mining Tax

Abbott will repeal it

So the longer they leave it - the less impact it will have their business

Maqqa wrote on Jun 2^nd, 2012 at 8:42am:

longweekend58 wrote on Jun 1st, 2012 at 5:43pm: adelcrow wrote on Jun 1st, 2012 at 5:38pm: longweekend58 wrote on Jun 1st, 2012 at 5:32pm: adelcrow wrote on Jun 1st, 2012 at 5:00pm: I was at Olympic Dam a few weeks ago..trust me the open cut is going ahead because the work on it has already started. Thats why I was there I was at the ICN meeting for BHP suppliers. the preliminary work is being done with $1B of seed money but the final approval for the $80B expenditure is not yet there. It aint done until its approved. Yes, it will probably be approved but it can just as easily be delayed a few years. After all, if you were a miner, would you be feeling the love from Canberra right now? Would a $200M advertising campaign against labor be something you'd consider?? Labor needs to be a bit cleverer than this. It will go ahead at the end of the year Probably true, but that's not the point, is it? It was supposed to be voted on by the BHP board next month and now it MIGHT be voted on in 6 months time. The point is that this is hardly a good time for Gillard and Swan to spend every waking moment tryng to find some new way to attack the miners. Ive accused Gillard in the past of having truly awful political judgment. This is just another brilliant example of her complete ineptitude in political matters. a responsive govt would be seeking to find ways to assist this enormous industry but no.,... they attack it. You do realise that the Swan idea of removing the diesel rebate nearly led to the actual abandonment of Olympic dam plus a lot of other projects? He is a moron. Why start the project now? Forrest is looking to challenge the Carbon Tax and the Mining Tax Abbott will repeal it So the longer they leave it - the less impact it will have their business

BHP already has equipment en route for the mine and hundreds of millions invested in works and other areas for Olympic Dam. But Gillard is determined to make sure she looks tough  on the miners in what could be one of her worst political decisions in 2 years of truly awful decision-making.