BHP and partners to proceed with South Flank iron ore project in Australia

Mining industry news : Australian mining company BHP is all set to move ahead with the development of the South Flank iron ore project in the central Pilbara region in Western Australia after its board approved its share of $2.9 billion in capital expenditure.

The total South Flank iron ore project cost is expected to be initially $3.4 billion. Itochu and Mitsui, the other partners in the Australian iron ore project will chip in with the remainder investment of $510 million.

While BHP owns 85% stake in the South Flank iron ore project, Itochu and Mitsui own stakes of 7% and 8%, respectively. The three partners will develop the iron ore mine under their Mt. Goldsworthy Joint Venture. Mitsui will contribute $240 million while Itochu will invest $270 million in the South Flank iron ore project.

Expected to have a production life in the excess of 25 years, the South Flank iron ore project is slated to produce its first ore in 2021.

Map showing South Flank iron ore project in Australia. Image courtesy of ITOCHU Corporation.

Through the South Flank iron ore mine development, BHP and its Japanese partners are looking to fully make up for the production from the 80Mtpa Yandi iron ore mine, whose economic life is expected to come to an end in the early-to-mid 2020s. The Yandi iron ore mine had been in production since 1991.

Commenting on the South Flank iron ore project, Mike Henry – BHP President Operations, Minerals Australia, said: “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.

“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 iron ore project is essentially the expansion of the nearby existing Mining Area C infrastructure and will see the construction of a crushing and screening plant, stockyard and train loading facilities apart from procuring new mining fleet and carrying out other activities for mine development and pre-strip.

Apart from the South Flank iron ore project in Australia, BHP is partnered by Itochu and Mitsui in three other iron ore mines – Mt. Newman, Yandi and Mt. Goldsworthy in Western Australia.