BHP to spend almost $US10bn in expansion

BHP Billiton has announced it will spend $7.4 billion to expand its Western Australian iron ore operations' capacity to over 220 million tonnes per annum, and has invested another $2.6 billion on its Queensland coal operations.

The company said it would spend $US3.4 billion for the development of the Jimblebar iron ore mine and its rail infrastructure, and the acquisition of equipment to deliver initial capacity of 35 mtpa, with the option to expand that capacity to 55 mtpa.

BHP's Port Hedland port infrastructure will receive a capital injection of $2.3 billion for two additional berths and shiploaders, a car dumper and connecting conveyor belt and rail infrastructure.

And $US1.7 billion will be spent on port blending facilities and rail yards to enabgle ore blending at Port Hedland.

BHP's share of the investment is $US6.6 billion. Its partners, Itochu Minerals & Energy of Australia, Mitsui-Itochu Iron and Mutsui Iron Ore Corporation will contribute the balance.

The company said the capital investment would continue production growth in the company's WA iron ore operations.

"It will deliver an integrated operation with capacity in excess of 220 million tonnes per annum (mtpa), on a 100 per cent basis, with first production expected from the new Jimblebar mine in early calendar year 2014," the Melbourne-based company said in a statement on Friday.

Meanwhile, the company also approved spending $US2.5 billion ($A2.47 billion) on three coking coal projects in the Bowen Basin in central Queensland. BHP's share is half of the total $US5 billion to be spent on the expansion.

BHP Billiton said the projects would add 4.9 million tonnes of annual mine capacity to the Daunia operation and a new mining area at Broadmeadow.

In a third statement BHP Billiton said it would spend $US400 million ($A395.55 million) to expand Hunter Valley Energy Coal in NSW.

The total investment announced by BHP today is over $10 billion.

"Our intent with these projects is to develop port capacity that, with subsequent debottlenecking, will allow us to fill our 240 mtpa allocation in the Port Hedland inner harbour," BHP Billiton's president of iron ore, Ian Ashby said of the WA projects.

"We have intentionally overbuilt the ore handling facilities at Jimblebar and expect to incrementally grow mine production to ensure that our port and rail systems are operated at full capacity during this debottlenecking program."

BHP Billiton is cashed up after reporting a new Australian record first half net profit in February of $US10.524 billion ($A10.41 billion) for the six months to December 31.

BHP Billiton stocks rose 51 cents to close at $44.71 on the ASX on Thursday.