BHP investment in South Flank iron ore project to generate hundreds of jobs

Image: BHP

BHP is moving ahead with development of the South Flank iron ore project as a potential replacement for production from the ageing Yandi operation in the Pilbara region of Western Australia.

The company today approved a $US184 million ($244 million) investment in South Flank, reinforcing this view of the project’s future.

BHP’s initial funding for the $US3.2 billion South Flank project is expected to generate hundreds of construction jobs and provide opportunities for WA suppliers, BHP Australian operations president Mike Henry explained.

South Flank, which will leverage and expand the existing Mining Area C hub, remains BHP’s preferred option to replace production from the 80Mtpa Yandi mine when it reaches the end of its economic life next decade.

The project is expected to be submitted for board approval in mid-2018, with first ore targeted in 2021 and ramp-up timed to coincide with the ramp-down of Yandi.

Full development of South Flank would generate several thousand jobs during construction.

Henry said the capital-efficient South Flank project was a compelling option to replace Yandi production and offered attractive returns.

Its high-grade lump and fines ore and a strip ratio in line with the BHP WA Iron Ore (WAIO) average would establish it as a highly-competitive operation.

The initial funding will be used primarily for the expansion of accommodation facilities to support current and future workforce requirements.

“As well as supporting our current operational requirements, this work will advance potential first ore from South Flank, while we further optimise the full development and progress external and internal approvals,” Henry said.

“As we have said previously, a continuing stable investment environment in Western Australia is required to underpin ongoing investment in the business, including this project.”

The capital cost for South Flank is expected to be in the range of $US30-$US40/tonne, with expenditure fitting within WAIO’s previously indicated average sustaining capital expenditure of $US4/tonne over the next five years.

“The capital efficiency of South Flank is underpinned by the planned use of existing infrastructure at the Mining Area C operation, which would, if approved, become one of the largest standalone iron ore processing centres in the world, within reach of several billion tonnes of high-grade ore,” Henry said.

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