BHP to Invest Billions in Australian Iron Ore, Coal

Mining giant BHP Billiton said on March 25 that said that is would pump US$7.4 billion into continuing production growth in the company's Western Australia iron ore operations to boost capacity to more than 220 million tons a year.

Of that, $3.4 billion will be used to develop its Jimblebar mine and rail links, and to buy mining equipment and rolling stock. Another $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 $6.6 billion to the projects and its partners the rest.

The Melbourne-based Anglo-Australian miner also announced a 5 billion cash injection into three key metallurgical coal projects in Queensland's Bowen Basin, with BHP's share $2.5 billion. This will add 4.9 million tons 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 $400 million will be used to expand a thermal coal mine in the New South Wales Hunter Valley.

BHP iron ore president Ian Ashby said the intention was to develop port capacity so that the company could fill its 240 million tons 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 debottlenecking 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.

BHP is in the money after reporting a 72% surge in half-year net profits to $10.52 billion for the six months to December 31, as emerging markets snap up raw materials and the West edges out of its economic slump.