BHP approves South Flank project
04 July 2018
BHP: The
BHP Board has today approved US$2.9 billion (BHP share; US$3.4 billion
100 per cent)1 in capital expenditure for the
South Flank project in the
central Pilbara,
Western Australia.
BHP President Operations, Minerals Australia, Mike Henry, said the South
Flank project will fully replace production from the 80 Mtpa (100 per
cent basis) Yandi mine which is reaching the end of its economic life.
“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. “The project will
create around 2,500 construction
jobs, more than 600 ongoing operational
roles and generate many opportunities for Western Australian suppliers.
It will enhance the average quality of BHP’s Western Australia Iron Ore
(WAIO) production and will allow us to benefit from price premiums for
higher-quality lump and fines products.”
The South Flank project expands the existing infrastructure at
Mining Area C, and involves construction of an 80 Mtpa crushing and
screening plant, an overland conveyor system, stockyard and train
loading facilities, procurement of new mining fleet and substantial mine
development and pre-strip work.
First ore from South Flank is targeted in the 2021 calendar year, with
the project expected to produce ore for more than 25 years.
South Flank iron ore will contribute to an increase in WAIO’s average
iron grade from 61 per cent to 62 per cent, and the overall proportion
of lump from 25 per cent to approximately 35 per cent. It is expected to
have a strip ratio in line with the WAIO average.
In June 2017, BHP approved an initial funding commitment of US$184
million (BHP share), primarily for the expansion of accommodation
facilities to support current and future workforce requirements.
The South Flank project will be the major contributor to a material
increase in WAIO Total Marra Mamba Ore Reserves, as outlined in Appendix
1 (https://www.bhp.com/-/media/documents/media/news/2018/180614_bhpapprovessouthflankprojectappendix1.pdf?la=en).
[1] BHP has an 85 per cent interest in Mining Area C and the South Flank project, with ITOCHU Minerals and Energy of Australia Pty Ltd and Mitsui Iron Ore Corporation Pty Ltd collectively owning the remaining 15 per cent interest. Overall capital intensity of US$45 per tonne of annual capacity includes initial funding of US$216 million (US$184 million BHP share) announced on 26 June 2017. Overall South Flank project expenditure fits within Western Australia Iron Ore’s previously indicated average annual sustaining capital expenditure of approximately US$4 per tonne over the next five years, with actual sustaining capital expenditure highly variable in any given year during the development of South Flank.
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Source: BHP Billiton - www.bhpbilliton.com
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