BHP Ticks Off South Flank Iron Ore Expansion
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BHP has given the greenlight to the expansion of an existing iron ore mine in the Pilbara - the second project from a big miner in the region in the past month or so.
BHP Billiton says it will spend $US2.9 billion ($USA3.8 billion) expanding its South Flank iron ore project in. It has been under discussion at the company now for the best part of three years.
The expansion will add 25 years productive capacity to the South Flank operation and will start production in 2021.
The project will replace BHP’s Yandi mine, one of its foundation mines in the Pilbara, which is nearing the end of its life.
BHP said the expansion will include a new crushing plant, overland conveyor system and train loading facilities, it said.
The move comes as steel mills in China are increasingly using higher-quality iron ore in an effort to cut down on pollution and improve efficiency and output.
“South Flank is a capital efficient project which offers attractive returns, and which was approved following a thorough evaluation under BHP’s Capital Allocation Framework,” according to Mike Henry, heard of BHP’s Australian operations.
“It will enhance the average quality of BHP’s Western Australia Iron Ore production and will allow us to benefit from price premiums for higher-quality lump and fines products.” BHP said the South Flank ore will increase the average grade of its iron ore mined in Western Australia to 62% from 61%.
In late May Fortescue Metals approved the development of a $US1.28 billion ($1.7 billion) mine and rail project in in the Pilbara to be called Eliwana.
It will also gradually replace an existing mine and will also help Fortescue lift its iron ore grade from around 58% to closer to 60%.
Production from the mine is set to start in December 2020 and output will replace some of the 58% ore already produced by Fortescue, allowing it to maintain its 170 million tonnes a year shopping rate (the company is now shipping small, but growing quantities of 58% ore to India) for 20 years.
Glenn Dyer has been a finance journalist and TV producer for more than 40 years. He has worked at Maxwell Newton Publications, Queensland Newspapers, AAP, The Australian Financial Review, The Nine Network and Crikey.
At the AFR he was a finance writer, Finance Editor, News Editor and Chief of Staff. At the Nine Network he was supervising producer of Business Sunday for more than 16 years. He has also written for other online and analogue print publications here and overseas.