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Worsley output boost

WORSLEY Alumina refinery – a joint venture of BHP Billiton, Kobe Alumina Associates and Nissho Iwai – is likely to receive approval to spend $225 million to boost annual output by 250,000 tonnes per year while expansions of up to 4.5 million tonnes/year (mtpa) are discussed.

Sources say Worsley is currently on a large recruitment drive and incremental expansions from 3.5 million tonnes to 4.2mt are even being discussed.

The increase in production from 3.25mtpa to 3.5mtpa has been touted for some time but a Worsley spokesman said investment approval was still dependent on a owner meeting expected “in the very near future”.

The spokesman denied a recruitment drive, saying recruitment levels were “no more than normal”, but confirmed Worsley was looking at increasing output up to 4.5mtpa.

However he warned any increase above 3.5mtpa was “a big step” and would require a number of governmental and owner approvals.

It would also depend upon the world alumina market as well as technological requirements.

“We are looking at [expanding above 3.5mtpa] in terms of very early feasibility study stage,” the spokesman said.

“Whether that is 4.1mtpa or 4.5mtpa, nobody has signed off on a final figure.”

Worsley, which is 86 per cent owned by BHPB, last completed an expansion in May 2000.

It cost $850 million and annual production increased to 3.25mtpa.

On a recent visit to WA, BHPB CEO Chip Goodyear said current market conditions had forced the company to look at internal expansions rather than growth by acquisition.

The Worsley refinery is one of many WA-based projects controlled by BHPB.

The initial 250,000t/year expansion is in response to rampant growth in China and will involve the development of a series of small capital projects spread over a 22-month period.

It is expected to cost $225 million and, as a result, more than 500 contract jobs could be created. Worsley’s 1200-strong workforce will not increase.

Costs of the output push have been put as high as $900 million, but Worsley denies this.

Patterson Ord Minnett research analyst Hayden Bairstow said the recent growth in China indicated the expansion was likely to go ahead.

“How many Chinese-directed growth opportunities haven’t gone ahead,” he said. “Very few.”

Mr Bairstow said increased alumina smelting capacity in South Africa and increased capacity set to come on stream in China was driving the expansion.

Other alumina-focused companies are planning improvements or new projects in WA because of the buoyant outlook for the alumina market.

Alcoa is undergoing a global capital improvement program to increase profitability, while Queensland-based Aldoga Minerals says world demand for Alumina has encouraged it to look at building a refinery in WA.

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