BHP plans $US10b expansion

March 25, 2011

BHP Billiton will spend nearly $US10 billion ($9.89 billion) to expand iron ore operations and energy and metallurgical coal projects in Western Australia.

The world’s biggest resource company will spend $US6.6 billion in an iron ore project expansion in Western Australia, $US2.5 billion to expand three metallurgical coal projects in Queensland and $400 million on an energy coal project in NSW.

BHP shares initially rose 0.5 per cent on the news, but slipped in morning trade and were recently down 0.5 per cent at $44.51. Rival Rio Tinto rose 0.6 per cent.

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The company said it and its partners would spend $US7.4 billion to develop the Jimblebar mine and rail links, to further develop Port Hedland and to build ore blending facilities, taking the annual iron ore capacity to 220 million tonnes.

BHP Billiton’s president of iron ore, Ian Ashby, said the intention was to develop the port capacity so that the company could fill its 240 million tonne per annum allocation in Port Hedland’s inner harbour.

‘‘We have intentionally overbuilt the ore handling facilities at Jimblebar and expect to incrementally grow mine production to ensure that our port and rail systems are operated at full capacity during this debottlenecking program,’’ he said in a statement.

BHP Billiton said first production from the Jimblebar mine was expected in early calendar 2014.

A total of $US3.4 billion will be spent on the Jimblebar mine, including buying rolling stock, with initial capacity of 35 million tonnes per annum, with embedded options to expand to 55 mtpa.

A further $US2.3 billion, including BHP Billiton’s share of $US1.9 billion, will be spent on Port Hedland, adding two berths and shiploaders and other works.BHP Billiton and its partners will spend $US1.7 billion on the port blending facilities and rail yards.

The Melbourne-based company also approved spending $US2.5 billion ($A2.47 billion) on three coking coal projects in the Bowen Basin in central Queensland. BHP’s share is half of the total $US5 billion to be spent on the expansion.

BHP Billiton metallurgical coal president Hubie van Dalsen said the company had a deep pipeline of expansion projects to develop its large reserves of metallurgical coal.

‘‘Our strategy is to rapidly progress development of these projects to capture the increasing demand we see for hard coking coal,’’ he said.

BHP Billiton said the projects would add 4.9 million tonnes of annual mine capacity to the Daunia operation and a new mining area at Broadmeadow.

In a third statement, BHP Billiton said it would spend $US400 million to expand Hunter Valley Energy Coal in NSW, to increase coal production by four million tonnes per annum to about 24 million tonnes per annum.

‘‘The emergence of demand for coal in the key growth markets allows us to get product to market quickly, ahead of further coal preparation plant expansions,’’ BHP Billiton Energy Coal President Jimmy Wilson said.

BHP Billiton is cashed up after reporting a new Australian record first half net profit in February of $US10.524 billion ($A10.41 billion) for the six months to December 31.

BHP Billiton stocks rose 51 cents to close at $44.71 on the ASX yesterday.

Sourced & published by Henry Sapiecha

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