BHP approves $2.9bn investment for South Flank iron ore project

18 June 2018 (Last Updated June 18th, 2018 11:18)

Multinational mining firm BHP has received approval from its board to make an investment of $2.9bn for the development of the South Flank iron ore project in the central Pilbara, Western Australia (WA).

Multinational mining firm BHP has received approval from its board to make an investment of $2.9bn for the development of the South Flank iron ore project in the central Pilbara, Western Australia (WA).

The company owns an 85% interest in the project, while the remaining 15% interest is owned by ITOCHU and Mitsui.

The total cost of the project is expected to be $3.4bn, with the remaining share of the investment to be made by BHP’s partners.

“The project will create around 2,500 construction jobs, more than 600 ongoing operational roles and generate many opportunities for Western Australian suppliers.”

BHP Minerals Australia operations president Mike Henry 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.”

With an estimated mine life of more than 25 years, the project will enable the company to fully replace production from the 80Mtpa Yandi mine, which is anticipated to reach the end of its economic life in the early-to-mid 2020s.

Through the South Flank project, the company intends to expand the existing infrastructure at Mining Area C, with construction of an 80Mtpa crushing and screening plant, an overland conveyor system, a stockyard and train loading facilities.

BHP will also procure a new mining fleet, and conduct mine development and pre-strip work as part of the expansion. The company expects to commence production at the project in 2021.

South Flank will allow the company to lift the average iron grade of its ores from its WAIO iron ore operations from 61% to 62%.

The decision to proceed with the development of the project comes after BHP approved an initial funding commitment of $184m in June last year for the expansion of accommodation facilities at the project to support workforce requirements.

Separately, the company has selected CIMIC’s affiliate CPB Contractors to deliver the construction of bulk earthworks, concrete and underground services for the South Flank project.