BHP presses button on South Flank

  • BHP presses button on South Flank

BHP presses button on South Flank

BHP will invest almost $4 billion in a new mine in WA's Pilbara, announcing the move to push ahead with the South Flank project, which will replace its aging Yandi mine and is tipped to create thousands of jobs.

"The project will create around 2500 construction jobs, more than 600 ongoing operational roles and generate many opportunities for Western Australian suppliers", he said.

Production is expected to start in the 2021 calendar year and run for more than 25 years.

In a statement BHP, which has an 85 percent stake in South Flank, said the quality of the ore would take the average grade for the company's Western Australian iron ore to 62 percent from 61 percent.

Overall the South Flank project will involve $3.4bn in investments, with smaller partners providing the rest of the money, BHP said.

BHP has selected CIMIC's CPB Contractors to deliver the construction of bulk earthworks, concrete and underground services for the development.

The South Flank development is one component of BHP's strategy to increase the mining, processing and out-loading capacity of the Mining Area C hub.

BHP's announcement is the second major iron ore operation to garner board approval in recent weeks in WA's Pilbara, following Fortescue Metals Group's late May announcement that it would spend $US1.3 billion developing its Eliwana mine.

BHP and Fortescue need to build new mines to continue their existing production rates, and Koodaideri is required if Rio wants to hit its ultimate plan of exporting 360 million tonnes of high-quality iron ore from the Pilbara.

Itochu and Mitsui will also contribute, bringing the total cost of the project to $A4.55 billion ($US3.4 billion).

Currently, traders are bullish on the high grade iron ore market in the near term in light of strong demand and production control in some northern regions caused by unfavorable weather.

"We are going to see a bit of pressure in the market as a result of multiple projects being pursued at the same time".