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BHP's Uranium Project Under Review on Resources Tax
May 11,2010 15:14CST
industry news

YEELIRRIE, May 11 -- BHP Billiton Ltd., the world's biggest mining company, said its Yeelirrie uranium project in Western Australia is being reassessed following the government's plan to impose a 40 percent tax on resource profits.

"The project does remain under review following the release of that mining tax" proposal, Andrew Shook, general manager of Yeelirrie, told delegates at a conference in Perth today. "It will remain under review until we're approved for execution. Our CEO Marius Kloppers has made the company's position very clear in respect to that new mining tax."

Kloppers said May 9 that BHP's expansion plans, including its Olympic Dam uranium project, may be "very difficult" to approve because of the tax plan. The levy, to start in 2012, would stymie investment, spur companies to move offshore and threaten an industry that comprises 9 percent of the economy, he told the Australian Broadcasting Corp.

Australian Treasurer Wayne Swan said on May 2 he plans to introduce a 40 percent tax on natural-resource profits starting 2012, raising an estimated $12 billion in the first two years.

Shares of BHP fell as much as 1.7 percent to A$38.34 in Sydney trading, and were at A$38.46 at 1:47 p.m. local time.

Production Target

BHP aims to begin production at Yeelirrie, the country's second-largest undeveloped deposit of the nuclear fuel, by 2014, Shook said. The company is yet to announce a cost estimate for the project, he said.

"Yeelirrie is in pre-feasibility stage," Shook said. "The next phase of our investment review process is definition, or feasibility. We plan to be heading into that phase toward the end of this year, possibly next year."

Uranium will be transported from the mine through a port in South Australia or the Northern Territory, he said.

Yeelirrie, with an estimated 30-year lifespan, has a projected annual output of about 3,500 metric tons, near the bottom of an initial forecast range that had a top estimate of 5,000 tons, Shook said.

Western Australia has as much as 10 percent of the world's known uranium reserves, valued at about A$40 billion ($36 billion), according to an estimate from the federal government in Canberra.

The long-term prospects for uranium are strong, with supplies of the nuclear fuel expected to go into deficit about 2015, Shook said. By 2030, global demand will outstrip supply by about 10,000 tons a year, he said.

Yeelirrie, discovered in 1972 in the remote and arid East Murchison region and wholly owned by BHP, would be an open-cut mine with a maximum depth of 25 meters (82 feet). The ore may be transported by road to Kalgoorlie and then by rail to an export harbor.


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