A second mining major has given the green light to a big iron ore development in a month, with BHP’s board approving the $4.5 billion South Flank development on Thursday.
A second mining major has given the green light to a big iron ore development in a month, with BHP Billiton’s board approving the $4.5 billion South Flank development on Thursday.
It follows Fortescue Metals Group’s decision to proceed with the Eliwana mine in May, a project worth around $1.7 billion.
The two mines are needed to ensure high capacity utilisation across both companies’ port and rail infrastructure operations in the Pilbara as older mines deplete.
Rio Tinto is expected to make a decision on the Koodaideri mine in coming months.
In the case of BHP, South Flank will commence operation in 2021 and replace the aging Yandi mine, which will hit the end of its economic life next decade.
BHP will pay 85 per cent of the cost of the project, while its venture partners will foot the remainder of the bill.
The new mine will produce 80 million tonnes of ore per annum, with capital expenditure to cover a crushing plant, conveyor system, stockyard and train loading facilities and a new mining fleet.
WA operations president Mike Henry said construction would create 2,500 jobs, with a further 600 operational roles for the project.
“South Flank is a capital efficient project which offers attractive returns, and which was approved following a thorough evaluation under BHP’s capital allocation framework,” Mr Henry said.
“It will enhance the average quality of BHP’s Western Australia Iron Ore production and will allow us to benefit from price premiums for higher-quality lump and fines products.”