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BHP Billiton Ltd., the world’s biggest mining company, will delay approval of a $33 billion mine expansion in Australia for two years because of falling commodity prices, The Australian newspaper reported.
The company will delay a decision until 2014, the newspaper said, citing a document prepared by an unidentified consultancy. The document was prepared with knowledge from BHP staff, the Australian said.
The board of Melbourne-based BHP Billiton has been due to decide on proceeding with the Olympic Dam copper-uranium-gold mine expansion by the end of this year. Chief Executive Officer Marius Kloppers warned in May that rising costs and easing commodity prices may change the economics of certain projects.
“We will inform the market when decisions have been taken,” Antonios Papaspiropoulos, a spokesman for BHP Billiton, said by phone today. He declined to comment on the boards’ previously stated end-year decision deadline.
Mining companies are reassessing spending plans as commodity prices drop, amid concern over growth in Europe and China, the biggest metals consumer. China’s economy expanded at its slowest pace for six quarters in the three months to the end of June. BHP needs to be flexible in the face of change, Kloppers said last month.
An indenture agreement with South Australia state covering aspects including royalty payments and tenure expires in December. BHP will lose the right to proceed with the expansion if it doesn’t start work by the end of the year, Tom Koutsantonis, South Australia’s minister for mining, said in May. Environmental approvals are valid until 2016.
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