BHP profit slump puts major projects on hold

BHP Chief Executive Marius KloppersLower Commodity prices and a slump in profits have caused BHP to shelve the Outer Harbour Project at Port Hedland and Olympic Dam development in South Australia.

BHP decides: no new capital projects:

Mining giant BHP Billiton has cancelled or postponed its two largest expansion projects, with the Olympic Dam development in South Australia formally scrapped today and the Outer Harbour project at Port Hedland postponed indefinitely.

Announcing a slump in full-year profit, driven by lower commodity prices and write-downs on several assets, chief executive Marius Kloppers said the group would investigate lower-cost, incremental expansion opportunities.

"We're not likely to take any major capital decisions in the next 12 months," he told a media briefing today.

At Port Hedland, he said the main focus would be lifting efficiency at the existing inner harbour.

Mr Kloppers said BHP saw potential for "material growth" beyond its current allocation of 240 million tonnes per year, but was unable to offer any specifics.

"Its early days, we haven't given a quantum," he said in response to questions.

He added that the company was continuing to work on the proposed outer harbour development, which was meant to support long-term growth in its iron ore business, but once again offered nothing specific.

At Olympic Dam, BHP said it would investigate an alternative, less expensive expansion than the $US30 billion original plan.

Mr Kloppers said current market conditions including subdued commodity prices and higher capital costs led to the decision.

"As we finalised 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," Mr Kloppers said in a statement.

BHP will recognise impairment and other charges of $US346 million before tax (US$242 million after tax) in respect of the Olympic Dam project.

The group's full year net profit has slumped by more than a third to $US15.42 billion ($A14.7 billion).


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