BHP secures major port expansion

Capacity at Port Hedland's inner harbour is set to increase to cater for the iron ore expansion projects by BHP Billiton, which today secured an agreement with the state government.

BHP will move to increase its capacity at the port to move a total of 240 million tonnes per annum through the inner habour to cater for the Rapid Growth Projects 5 and 6.

The company's current approved capacity is at 155mtpa.

But the announcement didn't shed any further light on BHP's outer harbour development plans.

Last week, BHP chief executive Marius Kloppers remained tight-lipped on details on the development of an outer harbour, known as the Quantum project, saying it was still in prefeasibility study mode.

In the announcement, the minister added that the government and BHP, along with other interested parties, have been working together to develop up to 400mtpa capacity in the Port Hedland outer harbour which would start exports within five yeas.

Less than two weeks ago, Minister MacTiernan said the development of an outer harbour at Port Hedland did not depend on a commitment by BHP.

The news could add to the speculation that BHP is banking on a successful takeover bid for Rio Tinto, giving it access to Rio's Cape Lambert and Dampier port facilities - both of which have the potential to be expanded.

BHP had previously flagged infrastructure synergies in the Pilbara as one of the attractive features of a BHP-Rio merger.

The expansion comes as facilities at Port Hedland become increasingly squeezed as new iron ore producers come online and BHP and Rio Tinto ramp up iron ore output.

Fortescue Metals Group has completed the development of its own port facilities and plans to eventually ship up to 200mtpa.

Two new multi-user berths and associated infrastructure in the Port Hedland inner harbour, which are yet to be built, are reserved for members of the North West Iron Ore Alliance, including BC Iron Ltd, Atlas Iron Ltd, Brockman Resources Ltd and FerrAus Ltd.

The two new berths will add an extra 50Mtpa iron ore export capacity and could be in operation as early as 2012.

The total inner habour's capacity has now more than doubled over the past two years to move through over 400mtpa.

In its annual report, BHP expects RGP5, with an estimated capital expenditure of $6.1 billion, to be completed in 2011. The project will boost iron ore capacity to 200mtpa.

BHP is currently working on the $1.8 billion RPG4 which is scheduled for completion in 2010 and will increase capacity to 155mtpa.

Planning and Infrastructure Minister Alnnah MacTiernan said the inner habour agreement will also accelerate progress with the $225 million Utah Point berth Development.

"The Utah Point project will see manganese and chromite storage and export operations move further away from the town, so the port can use existing berths closer to town for the ever increasing volumes of general cargo," she said.

"It will also provide long-term capacity for smaller iron ore producers.