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

6. 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

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

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

9. Questions/comments?