BHP will spend $US2.9 billion ($3.9 billion) to develop the South Flank iron ore project in the Pilbara, Western Australia.
The miner, which today approved the investment, owns an 85 per cent stake in the project, with ITOCHU and Mitsui sharing the remaining 15 per cent interest. South Flank has been forecast to cost $US3.4 billion ($4.5 billion) between the owners.
South Flank has been flagged to replace production from BHP’s 80Mt/y Yandi mine, which is scheduled to reach the end of its economic life next decade.
The project will expand BHP’s existing infrastructure at Mining Area C, with construction of an 80Mt/y crushing and screening plant, an overland conveyor system, stockyard and train loading facilities, procurement of new mining fleet and substantial mine development and pre-strip work.
BHP is targeting first ore at South Flank, which is expected to have a mine life of more than 25 years, in 2021.
Mike Henry, BHP president operations, Minerals Australia, described South Flank as a capital efficient project that offered attractive returns.
“The project will create around 2500 construction jobs, more than 600 ongoing operational roles and generate many opportunities for Western Australian suppliers,” Henry said.
“It will enhance the average quality of BHP’s Western Australia Iron Ore (WAIO) production and will allow us to benefit from price premiums for higher-quality lump and fines products.”
South Flank iron ore will contribute to an increase in WAIO’s average iron ore grade from 61 per cent to 62 per cent, and the overall proportion of lump from 25 per cent to about 35 per cent.
The investment follows BHP’s initial $US184 million funding commitment in June last year for South Flank’s accommodation facilities to support workforce requirements.