BHP Billiton to Buy Into Guinean Bauxite Project

BHP Billiton to Buy Into Guinean Bauxite Project

Following news of BHP Billiton’s [NYSE:BHP] interest in a very early stage DRC bauxite project, Marius Klopper, an executive director, says his company is also looking at a stake in Global Alumina’s [TSX:GLA-U] Republic of Guinea-based deposit containing the same commodity.

Bauxite is aluminium ore which is smelted into alumina and then refined into aluminium.

The company already produces aluminium in Africa and more specifically in South Africa and Mozambique.

Speaking at his company’s end-December interim results presentation, Klopper said the deal in Guinea would see his company become the “executor and a shareholder in the project” itself, which involves a potential mine and alumina refinery.

Klopper described the deposit’s size as a “couple of billion tonnes” and said a R7-8 billion ($976 million to $1.15 billion) investment decision would be made in the future on the project.

According to the Global Alumina website, a 2.8 million tonnes per annum aluminium refinery is planned, with the potential to boost this to 4mtpa, with first production in 2009.

The company has a heavy exploration focus on Africa, including diamonds in Angola and mineral sands in Mozambique. Klopper said that more than half of BHP Billiton’s exploration spend is in Africa.

“In terms of copper prospectivity, we are probably the largest landowner in the DRC,” said Klopper.

In South Africa, he said the Klipspruit coal project, which would cost about $250-$300 million to build, was just recently added to the company’s project pipeline, as a feasibility study stage project.

Klopper was speaking at a briefing in Cape Town on the company’s interim results released earlier in the day.

For the half year to end-December BHP Billiton reported a record interim attributable profit of $6.2 billion, up 41% on the comparable period a year earlier.

An increased dividend of 20 US cents per share was declared, as well as another $10 billion share buy back program.

Klopper said if all of the company’s distributions were added up since it merged with BHP Billiton earlier in the decade, the full market capitalisation at that time would already have been paid back.

BHP Billiton also said today that it has achieved empowerment ownership credits on its South African energy coal assets that exceed the country’s legislative requirements.

At a briefing in Cape Town on the company’s end-December interim results announcement, executive director Marius Klopper said that sales from coal assets, including the Eyesizwe transaction a number of years ago and the upcoming Optimum sale, will put the company’s coal empowered ownership of production at between 30%-40%.

Under South Africa’s mineral law 26% of a company’s production must be under the control of previously disadvantaged South Africans by 2014, with 15% required by 2009.


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