Southern Africa: BHP Has Eye on Congo Smelter, Corridor Sands

GLOBAL resources group BHP Billiton is continuing to study two large-scale investments in southern Africa, the Bas Congo smelter in the Democratic Republic of Congo and the Corridor Sands mineral sands project in Mozambique, CEO Marius Kloppers said yesterday. The projects, which are ranked among Billiton's "future options" costing $501m-$2bn each in its project pipeline, have not yet advanced to pre-feasibility study stage. The Bas Congo project, entailing an aluminium smelter and hydropower station, was first announced last October. Kloppers said the Bas Congo project was exciting, but difficult to execute and very long term. It would have long lead times as Billiton had to work with various stakeholders, including government, multinationals and local environmentalists, and it would also entail building power transmission lines. "Bas Congo is a historically politically stable area and the Congo River is a marvellous source of hydropower for the Congo and the region," Kloppers said. "We would put in more power capacity than we need for our own smelter." Corridor Sands, first mooted more than 10 years ago, became part of Billiton when Billiton bought Australia's Western Mining Corporation. Initial estimates showed it could be at least the size of Richards Bay Minerals. Kloppers said it had been in the pipeline for a long time because capital costs were an issue. It would require significant infrastructure and Billiton was studying how to do it more cost-effectively. "There is also the fact of power, as a smelter would need a lot of power, so we need to get our timing right," Kloppers said. "We need to do things when we are ready and not rush into them. I am still convinced this is a great ore body and we have to find a way to make the project work." Billiton does not give a geographical breakdown of profits, but Kloppers estimated they were earned mainly from Australia, followed by Chile, southern Africa and North America. The impression in SA is that Billiton has been shrinking its operations, particularly in coal where it has sold some mines and part of its Richards Bay export allocation. But Kloppers said the group had made some "really big" investments in SA in the past decade, such as the Hillside and Mozal smelters, and two coal projects costing R3,5bn (Klipspruit) and R7,5bn (Douglas-Middelburg optimisation). "People tend to ignore the fact that after the BHP and Billiton merger we sold a lot of non core assets," he said. "South Africans only saw us selling South African assets, but in Australia we sold two steel businesses, which was seen as sacrilege as BHP was known as a steel company. That reduced the workforce from 110000 people to 40000, mostly in Australia. "Nothing makes me happier than the spectacular performance of our coal mines in SA, the performance of our manganese business and the good performance from our aluminium smelters, under difficult power conditions." Higher manganese prices boosted the division's contribution to underlying operating profit almost sixfold to $1,6bn from $253m last year. ---Business Day