BHP approves Worsley expansion project

BHP Billiton Ltd has pressed the button on a $2.5 billion expansion of its Worsley Alumina refinery, after rising costs threatened to derail both the Worsley project and a similar expansion planned by Alcoa at its Wagerup alumina refinery.

The Worsley refinery, which is 86 per cent owned by BHP Billiton, will lift capacity from 3.5 million tonnes per year to 4.6 million tonnes.

The cost of the 1.1 mt pa expansion has nearly doubled from earlier estimates: in August 2007, BHP said an indicative cost for its 86 per cent share was US$1 billion but that has now increased to US$1.9 billion.

"This decision to invest in further production capacity underlines our confidence in the future of the alumina market," BHP Billiton aluminium president Jon Dudas said.

The construction phase starts immediately and first production is expected in the first half of calendar year 2011.

Worsley Alumina is a joint venture partnership between BHP Billiton with 86 per cent, Japan Alumina Associates with 10 per cent and Sojitz Alumina with four per cent.

Alcoa gained environmental approval for its Wagerup expansion in late 2006, with its expansion plan expected to deliver an increase in capacity from 2.6 million tones to 4.7 million tones.

Since then, the martket has been waiting for a final go-ahead.

Full announcemnet below:

Joint Venture partners approve Worsley Alumina Efficiency & Growth Project in Western Australia

The Joint Venture partners in Worsley Alumina today announced approval of the Efficiency & Growth expansion project at the Worsley refinery in Western Australia for an estimated capital investment of $A2.5 billion.
Worsley Alumina is a Joint Venture partnership between BHP Billiton (86%), Japan Alumina Associates (Australia) (10%) and Sojitz Alumina (4%).
The expansion project will lift annual capacity of the Worsley refinery from 3.5 to 4.6 million tonnes per annum through expanded mining operations, additional refinery capacity and upgraded port facilities. The project will also provide opportunities to reduce the intensity of greenhouse gas emissions and improve water efficiency.
The construction phase will start immediately and first production is expected in the first half of 2011.
Worsley Alumina General Manager Julius Matthys said the Worsley operation was one of the world's most efficient alumina refineries with a long history of delivering production growth.
"The support from our JV partners underlines our confidence in the potential growth of the alumina market and in Worsley Alumina's ability to meet the increased demand on a competitive basis," Mr Matthys said.
The $2.5 billion project is one of the biggest single industrial investments in Western Australia's South West region. The construction project will create significant local employment and businesses opportunities.
"We are keen that local communities will benefit from this large investment." Mr Matthys said. "We will open a recruitment office in Bunbury and we will also be working with local business and industry organisations to provide information about contract opportunities."
The expansion is expected to provide about 4000 jobs over the life of the project with an expected peak workforce of 1700 in about 18 months time.
Accommodation camps will be established near Worsley and in Boddington to help cater for the large influx of workers. At this time it is proposed that all workers are recruited from within Australia.
About 100 new long-term jobs will be available at the refinery and mine when construction is complete.
Worsley Alumina began operations in 1984 producing 1 million tonnes a year. Further expansion projects and efficiencies have increased annual production to 3.5 million tonnes in 2006-07.
In October 2007, Worsley Alumina won Australia's highest health and safety honour in the mining and resources industry when it was named winner of the annual Minex Award.
The Company also won the WA Training Award as the Best Large Employer in 2007 for its extensive training program.