BHP denies decision on Port Hedland

2 Aug 2012, 6:45 pm   -   Source: AAP
(Getty Images)

(Getty Images)

BHP Billiton has dismissed suggestions it has already decided to delay its $19 billion Port Hedland harbour expansion

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Mining giant BHP Billiton has dismissed suggestions it has already decided to delay its $19 billion Port Hedland harbour expansion for at least two years.

However the world's biggest resources company confirmed that BHP iron ore president Jimmy Wilson had emailed staff on Wednesday telling them that the growth of its operations in the Pilbara were under review.

Several days ago it was reported BHP would also delay a decision about the $30 billion Olympic Dam mine expansion in South Australia for two years.

The speculation comes against the backdrop of a slowdown in China's economy, economic turmoil in Europe and some economists predicting the end of the mining boom, also in two years.

In the email Mr Wilson told staff that BHP was reviewing the sequence and pace of its future growth projects in the current environment.

He outlined challenges faced in the market but also reiterated the company's belief in the long term strength of the iron ore market and its commitment to its projects currently in execution.

A BHP spokeswoman said no decision had been made on the outer harbour at Port Hedland.

She also said the company would not be briefing people on the outer harbour proposal or Olympic Dam or providing updates to the market so close to it reporting its annual financial results on August 22.

BHP is expected to post a fall in operating profit from an Australian record $US23.6 billion last year to about $16.9 billion in 2011-12, but it may have to write down some shale gas assets.

"Against a backdrop of increasing costs and falling commodity prices, we continue to focus on reducing our overheads, operating costs and non-essential expenditures to ensure our assets are well positioned on their relative cost curves," the spokeswoman told AAP.

"As we mentioned, this includes reviewing our overhead costs and the sequencing of our major projects."

The possible delays - which are considered likely by analysts - have economic and employment implications for the South Australian and Western Australian state governments.

BHP has until mid December to commit to an Olympic Dam extension, and South Australian premier Jay Weatherill has not ruled out granting the extension if and when it was requested.

Australia's top three iron ore miners: BHP, Rio Tinto and Fortescue have all begun multi-billion dollar expansions in their iron ore output, based on a belief in continued Chinese growth.

However the iron ore price has dropped by a third in the last year to below $US120 a tonne.

BHP shares were stronger on Thursday, up 35 cents to $32.05 by 1530 AEST.

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