BHP enters final quarter of South Flank development

BHP's Western Australia Iron Ore operations Image: BHP

BHP has now developed more than three quarters of the South Flank iron ore project in the Pilbara region of Western Australia.

The company advanced its development projects and delivered strong results during the 2020 financial year despite the impact of COVID-19.

BHP had three major mining projects under development during the fiscal year, including South Flank, the Spence Growth Option in Chile, and the Jansen potash project in Canada.

The 85 per cent-owned South Flank project is set to be the largest iron ore processing facility ever built in Western Australia.

On schedule and budget, the 80-million-tonne-per-year project currently sits at 76 per cent completion, with BHP targeting the start of production in mid 2021.

“Our development projects and exploration programs are progressing well and in line with our strategy. We have secured, and will continue to grow, options in copper and nickel, where increasing demand and our capability give us competitive opportunities,” BHP chief executive officer Mike Henry, in the company’s 2020 financial year results announcement, said.

“BHP delivered a strong set of results for the 2020 financial year that reflect the strength, resilience and quality of our people and our portfolio. In a year marked by the challenges of the global COVID-19 pandemic, social unrest in Chile and commodity price volatility, we were safer, more reliable and lower cost.”

South Flank will replace production from BHP’s 80-million-tonne-per-annum Yandi mine. The company stated that iron ore prices have been high since the Brumadinho tailings dam tragedy in Brazil occurred in early 2019.

However, Brazilian supply recovery, the possibility of a new iron ore supply in West Africa and a reduced demand for iron ore in China are all aspects that BHP stated “would make it even more important to create competitive advantage and to grow value through driving exceptional operational performance”.

BHP has recorded an attributable profit of $US8 billion ($11 billion) for the 2020 financial year, which is in line with the previous financial  year.

The company has also continued to implement autonomous trucks at three coal and iron ore mine sites in Australia.

Daunia coal mine in Central Queensland is scheduled start autonomous truck operations in February 2021, with the rollout to be completed in 2022; Newman East iron ore mine in Western Australia will finish its deployment of autonomous trucks by the end of this year; and Goonyella Riverside mine in Queensland is expected to finalise the launch of 86 autonomous trucks by early 2022.

BHP has also provided an outlook for coal, with metallurgical coal continuing to face uncertainty and weakened prices due to COVID-19.

The company is “looking at options” to leave BHP Mitsui Coal, New South Wales Energy Coal, and Cerrejón.

But a move away from blast furnace steel making is “still decades in the future,” according to BHP.

Seaborne hard coking coal demand, along with the use of energy coal will increase in India to keep the commodities competitive.

“We expect most major economies will contract heavily in 2020, China being the exception. Recovery will vary considerably by country,” Henry said.

“Our diversified portfolio and high-quality assets position us to continue to generate returns in the face of near-term uncertainty, even as we secure and create the options in future-facing commodities that will allow us to sustainably grow value in the long-term.”

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