Mining giant BHP Billiton said yesterday that it will pour almost US$13 billion into expanding its coal and iron ore operations in Australia, key commodities that are driving the boom in Asian economies.
The cashed-up resource giant’s huge spending spree will see investment in mine and rail projects across the country as well as new equipment, as it moves to meet ever growing demand from key markets in China and India.
Anglo-Australian BHP said US$7.4 billion would be pumped into production growth in its Western Australia iron ore operations to boost capacity to more than 220 million tonnes a year.
Of that, US$3.4 billion will be used to develop its Jimblebar mine and rail links, and to buy mining equipment and rolling stock.
Another US$2.3 billion is earmarked for improvements to Port Hedland, including extra berths and shiploaders, a car dumper, rail works and rolling stock.
The rest of the investment will be used to improve port blending facilities and rail yards. BHP will contribute US$6.6 billion to the projects and its partners the rest.
The Melbourne-based miner also announced a US$5 billion cash injection into three key metallurgical coal projects in Queensland’s Bowen Basin, with BHP providing US$2.5 billion.
This will add 4.9 million tonnes of annual mine capacity through development of the company’s Daunia operation and a new mine in Broadmeadow.
Port capacity at the Hay Point Coal Terminal will also be increased.
Another US$400 million will be used to expand a thermal coal mine in the New South Wales Hunter Valley, the company said in a statement.
BHP iron ore president Ian Ashby said the intention was to develop port capacity so that the company could fill its 240 million tonnes per annum allocation in Port Hedland’s inner harbor.
“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 de-bottlenecking program,” he said.
First production from the Jimblebar mine was expected in early 2014.
BHP Billiton metallurgical coal president Hubie van Dalsen said the company had a deep pipeline of expansion projects to develop its large reserves of metallurgical coal.
“Our strategy is to rapidly progress development of these projects to capture the increasing demand we see for hard coking coal,” he said.
Australian Stock Report head of research Geoff Saffer called BHP’s decision a big boost for Australia.
“It’s incredible, a nearly US$10 billion investment [BHP’s share] in coal and iron ore underlines the confidence BHP has in the future of our resources sector,” he said.
Despite the expansion plans, BHP’s shares initially fell on the Australian Stock Exchange, largely due to speculation it could be considering a possible takeover bid for Woodside Petroleum, analysts said.
The company’s shares recovered to close the day five cents firmer at A$44.76 (US$44.76).
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