BHP Billiton says it will permanently close its ill-fated hot briquetted iron facilities at the Boodarie Iron plant in Port Hedland, Western Australia.
The closure will cost the company US$266m for the settlement of existing contractual arrangements, plant decommissioning, site rehabilitation, redundancies and other closure costs.
The decision follows a detailed review of options for the plant, which included partnering with another organisation in the resumption of operations, selling the facility for conversion to another use or closure.
As part of the closure plan BHP Billiton is negotiating with other of parties to purchase the majority of gas contracted under take-or-pay arrangements.
The company says it will keep the Boodarie Iron beneficiation plant to complete feasibility studies into longer term options for its lower grade iron ore resources. This has the potential to create further value for the company and jobs in the Pilbara.
BHP Billiton Iron Ore president Graeme Hunt says that while the company had hoped to continue operations at Boodarie Iron in one form or another the decision was ultimately based on whether the plant could be operated safely and economically.
“Of the proposals we received, all required major capital investment for plant modifications and/or significant discounts from BHP Billiton on key inputs such as gas,” Hunt said.
“Unfortunately, the failure to consistently achieve the financial and technical targets announced in 2000, coupled with the economic impact of these proposals, left us with no alternative but to close the hot briquetted iron facilities and mitigate our financial exposure through on-selling the contracted gas,” he said.
Work on the demolition of the hot briquetted iron facilities will commence early next year following the receipt of state government approvals. BHBIO expects to complete demolition in 2008 and rehabilitation of the site will commence immediately afterwards.
The company says that while large-scale industrial demolition is a specialist activity, it will try to employ Hedland businesses and residents on the project where possible.
Operations at the Boodarie Iron plant were suspended in May 2004 following an industrial accident that resulted in the death of one employee and severe injuries to two others.
The plant was then placed on care and maintenance in November 2004 while the long-term future of the operation was determined.
Hunt said BHP Billiton will ensure all contractual and employment obligations are fulfilled before closing the hot briquetted iron facilities.