Gas Week

EWN Publishing

Western Australia’s failed HBI plant had poor strategy, unproven technology and sudden changes of scope during construction

Posted by gasweek on 26 September, 2007

The West Australian government has been spectacularly short-changed by Hot Briquetted Iron’s (HBI) failure, according to a letter to the editor from Peter Matters, Canterbury, Victoria, in The Australian Financial Review (5/9/2007, p. 59).

Project plan made difficulties certain: Matters wrote: “Wasn’t downstream processing a co-commitment to the licensing and royalty arrangements agreed by BHP when iron ore operations were established? How long will they wait for the replacement investment? As I recall from reporting at the time, the HBI plant failed through a spectacularly inappropriate contracting strategy, included risky scope changes during construction, and was based on unproven technology. The resulting extended construction time, the huge cost overrun, and the low plant output were inevitable given the project strategy. To claim that the failure of the investment demonstrates that China is more capable of delivering downstream facilities is a bit rich. With a half-decent project plan, a drover’s dog would have delivered the project for 60 per cent of what BHP spent.”

The Australian Financial Review, 5/9/2007, p. 59

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