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Economic Review of BHP Ravensthorpe Nickel Project: Cost-Benefit Analysis

Dive into the economic evaluation of BHP's $1.9 billion investment in the Ravensthorpe nickel project. Explore the financial and cost-benefit analysis, production capacity, industry dynamics, and key considerations for a successful appraisal.

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Economic Review of BHP Ravensthorpe Nickel Project: Cost-Benefit Analysis

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  1. Economic Investment Appraisal Cost and benefit analysis of the BHP Ravensthorpe project Winnie Kwok

  2. BHP Ravensthorpe Project • Background • The nickel industry • The Ravensthorpe project • Financial Analysis • Cost Benefit Analysis

  3. The Nickel Industry • Nickel is mainly used in making stainless steel • Recently the demand has exceeded the supply

  4. The Nickel Industry Firms can’t easily increase supply • 2 types of nickel ores: sulphide and laterite • Laterite is abundant but difficult to process

  5. The Ravensthorpe Project BHP is investing $1.9 billion in a new technology for processing laterite ore. Production capacity • Successful technology – 44.5 M tones/annum • Unsuccessful – 29.5 M tones/annum

  6. Financial Analysis Estimate the expected financial return, with consideration to the following: • Capital expenditure • Operating cost • Tax • Depreciation/amortisation • Royalties • ……

  7. Cost Benefit Analysis Estimate the expected cost/benefit, with consideration to the following: • wages • environment • social discount rate • infrastructure – housing • …….

  8. Questions/comments?

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