BHP approves funding for iron ore growth

BHP Billiton has approved US$1.094 billion of capital expenditure to underpin accelerated growth of its Western Australian Iron Ore (WAIO) business.

This amount represents pre-approval expenditure for Rapid Growth Project 5 (RGP5).

RGP5 is expected to increase WAIO’s installed capacity to more than 200 million tonnes per annum (Mtpa) during calendar year 2011.

This pre-approval funding will be used to commence duplication of the railway track between the Yandi mine and Port Hedland and begin the expansion of the inner harbour at Port Hedland.

Construction of this second railway is expected to begin in May 2008, subject to various government approvals.

The early funding will also allow early procurement of long lead items and detailed engineering studies to expand capacity at Yandi and Area C.

“The core of the Pilbara is progressively moving to the Yandi/Area C mining hubs. Double tracking the rail to this area will create the rail capacity to support our planned expansion to more than 300 Mtpa,” President BHP Billiton Iron Ore, Ian Ashby said.

“In parallel with this project, we are advancing our studies on the outer harbour development at Port Hedland. Combined with the RGP5 rail work, the port expansion would complete the major infrastructure requirements to support an operation of over 350 Mtpa,” he said.

In the last quarter BHP Billiton delivered RGP3 which expanded the capacity at Area C by 20 million tonnes per annum and RGP4 is on track to increase installed capacity to 155Mtpa in calendar year 2010.

The approval for the balance of the RGP 5 capital is expected during the second half of calendar 2008.

The early investment in RGP5 is expected to result in incremental production, beyond RGP4’s capacity, before RGP5 is completed in 2011.

BHP Billiton’s partners in its Pilbara iron ore operations are: Itochu Minerals & Energy of Australia Ptd Ltd, Mitsui—Itochu Iron Pty Ltd and Mitsui Iron Ore Corporation Pty Ltd. BHP Billiton share is 85%.

BHP Billiton’s growth program to date includes the following recent projects, which were completed within approved operating currency budgets and schedules:

  • RGP2, which was approved in October 2004 and increased capacity by 8Mtpa. Construction was completed in 2006
  • RGP3, which was approved in October 2005 and increased capacity by 20Mtpa to 129Mtpa. Construction was completed at the end of 2007

In addition, RGP4, was approved in March 2007 and will increase capacity by 26Mtpa to 155Mtpa.

Construction will be completed in 2010.

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