June 13 (Bloomberg) -- Australia's energy minister will travel to the nation's western-most state in a push to resolve a disruption in gas supplies caused by an explosion threatening expansion in one of the world's biggest mining regions.

Resources and Energy Minister Martin Ferguson will visit Western Australia to assist in the response to the gas shortage caused by a blast at the Apache Corp. plant on June 3, he told reporters in the Australian capital of Canberra today. State Premier Alan Carpenter said the crisis will cost ``hundreds and hundreds of millions of dollars.''

The explosion has cut gas supplies by 30 percent in Western Australia, supplier of a third of the world's iron ore. Burrup Holdings Ltd. today postponed an initial public offering as it waits to hear when gas deliveries will resume; Rio Tinto Group, the world's third-largest mining company, is shutting plants earlier than planned for scheduled maintenance.

``There's clearly major disruptions to multiple operations,'' said Grant Craighead, a mining analyst at Sydney- based Stock Resource. ``All the companies are chasing alternative power sources and supplies. There have been a few pullbacks in production forecasts but probably the bigger impact will be at the cost line where people are going to struggle through with alternative fuel supplies but at a higher cost.''

Alcoa Inc., the world's third-largest aluminum producer, and companies including Minara Resources Ltd. and Newcrest Mining Ltd. have been left with reduced energy supplies since the blast at Apache's Varanus Island plant 60 miles (100 kilometers) west of Karratha. Gas flows may be disrupted until October because of fire damage at the site, UBS AG said.

Two Months

Apache is ``gaining confidence'' that partial gas supplies will be resumed in two months as forecast, the Houston-based company's Australian unit said today. Apache has sourced materials required to repair pipelines on Varanus Island, mostly from within Australia, and has secured valving from the U.K., which will arrive ``soon,'' it said.

Clough Ltd., the Australian engineering and contract mining company, today said it won a contract to assist Apache with repairs. A team that had been working on the island on a project to upgrade compression systems will be reassigned to the repair work, Perth-based Clough said.

Businesses in the state, generator of more than a third of the nation's exports, are losing ``millions of dollars'' a day, the state's Chamber of Commerce and Industry said today.

``The loss of up to one third of the state's gas supply is threatening the livelihood of a large number of Western Australian business owners,'' James Pearson, the chamber's chief executive, said at a press conference in Perth.

`Heavy Dependence'

The state government has no plans to invoke emergency powers to take over gas supplies, Carpenter told reporters today at a briefing in Perth. A report into the explosion will be made public, he said, without giving a timetable.

Energy Minister Ferguson said he will meet the state's deputy premier and representatives from the private sector tomorrow. Western Australia has a ``heavy dependence'' on gas, the minister said.

``One of the issues that has been a live debate in Western Australia for some years now is domestic gas capacity,'' Ferguson said. ``Pipeline capacity and associated issues will be something that has to be considered as a result of this accident because it very much goes to the issue of energy security.''

Burrup, a Perth-based ammonia producer, today postponed its planned A$502 million ($470 million) initial share sale, blaming the gas shortage, which has shut its plant.

Babcock Power

Babcock & Brown Power, Western Australia's biggest natural gas retailer, may have to sell its best asset to bolster funds as the gas outage cut profit, Credit Suisse Group said today. The Sydney-based company, set to complete a A$2.7 billion debt refinancing next week, needs to raise a further A$635 million in debt to cover a loan and capital expenditure through mid-2009, Credit Suisse said today in a report.

Babcock Power shares dropped 21 percent in Sydney, extending yesterday's 31 percent slump.

Rio normally buys two-thirds of its natural gas needs in the state from Apache, Gervase Greene, a spokesman for the London-based company, said by phone from Perth today.

``As part of managing demand for the reduced power we have brought forward planned maintenance shutdowns,'' The gas shutdown hasn't affected production or shipments to customers, he said.

BHP Billiton Ltd., the world's biggest mining company, said yesterday it will shut down a nickel smelter and refinery in Western Australia for four months to bring forward the rebuild of the Kalgoorlie nickel smelter. The move sent nickel to a three-week high.

Western Australia yesterday ordered the restart of a mothballed power station to counter the effects of the explosion and scaled back the operations of a desalination plant to save energy. The state has established a so-called recovery group to respond to the social, economic ``human needs'' arising from the crisis, and an employment protection group.

To contact the reporter on this story: Angela Macdonald-Smith in Sydney at amacdonaldsm@bloomberg.net; Jason Scott in Perth at Jscott14@bloomberg.net

Last Updated: June 13, 2008 04:32 EDT