The board of mining giant BHP has approved the $4.49 billion development of its South Flank project in Western Australia’s Pilbara region, and Rio Tinto says it’s ready to spend upwards of $2.5 billion replacing its own iron ore capacity.
BHP said last week it is targeting 80 million tonnes of annual production from the South Flank project, which is largely expected to replace output from the aging Yandi mine.
BHP minerals Australia president Mike Henry said the massive spend will provide around 2,500 construction jobs, and more than 600 ongoing operational roles.
“South Flank is a capital efficient project which offers attractive returns, and which was approved following a thorough evaluation,” Henry said on June 14.
South Flank will extend BHP’s existing infrastructure at its Mining Area C site.
The project will construct an 80 million tonne per annum crushing and screening plant, an overland conveyor system, and stockyard and train loading facilities.
The spend also includes procurement of new mining fleet, and substantial mine development and pre-strip work.
Product from South Flank will increase BHP’s Pilbara operation’s average iron grade from 61% to 62%, and will boost the overall proportion of lump from 25% to around 35%.
“[The project] 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,” Henry said.
WA Premier Mark McGowan welcomed the announcement by BHP, saying the additional construction jobs would help boost the local economy.
“The investment is welcome news for Western Australia, and yet another sign that the economy is turning the corner and jobs are being created for Western Australians,” the premier said.
The move is the latest spur of confidence from WA’s major iron ore miners. Fortescue last month announced plans to spend $1.5 billion building 30 million tonnes per annum of new mining, processing and rail infrastructure, and Rio Tinto is progressing with a feasibility study for its proposed Koodaideri project.
Koodaideri would be the first of three major capacity replacement projects for Rio Tinto in its WA iron ore business.
Chris Salisbury, Rio’s iron ore boss, told reporters on June 18 the miner expects to spend roughly $2.2 billion on replacement mines over the next three years.
“We have an extensive pipeline of future development options,” Salisbury said. “In 2018, our 700 kilometre drilling programme will provide both ongoing reserve replenishment and significant optionality to optimise operations.”