Under the shiny surface of the BHP annual report is a nickel-coated crisis
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THE annual report that BHP Billiton sent to shareholders this week is dripping with dollars, crowded with cash, a towering edifice of financial strength, and so on and so forth. The nickel market is, however, sliding to a point that threatens to generate a blot on the next balance sheet.
Nickel prices are now within the price band that BHP chief financial officer Alex Vanselow has nominated as the break-even barrier for the group's shiny new Ravensthorpe laterite nickel mine in Western Australia.
Like other laterite projects, Ravensthorpe's break-even point lay within the range of $US5-$US8 a pound of nickel, he said last month, on a road trip to promote BHP's June-year result. Nickel averaged a price of $US13 a pound in the year to June 2008. It is now around $US7.82 a pound.
Ravensthorpe was officially opened in May this year, and cost BHP $US2.1 billion to develop, twice as much as planned.