The cost of building BHP Billiton’s Ravensthorpe Nickel Project in southern Western Australia has blown out by more than $1 billion.

BHP says the budget for building the laterite nickel operation and expanding a refinery west of Esperance has been increased to $2.7 billion.

It has blamed increased capital costs and a skilled labour shortage.

The project has also been delayed, and is not expected to produce nickel until early 2008.