BHP has approved capital expenditure of $2.9-billion for the South Flank iron-ore project, in the central Pilbara, Western Australia.
The project, in which BHP holds an 85% interest, will cost $3.4-billion to develop and will fully replace production from the 80-million-tonne-a-year 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.
“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,” BHP Minerals Australia president Mike Henry said on Thursday.
The South Flank project expands the existing infrastructure at Mining Area C, and involves the construction of an 80-million-tonne-a-year 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% to 62%, and the overall proportion of lump from 25% to about 35%. It is expected to have a strip ratio in line with the WAIO average.
Itochu Minerals and Energy of Australia and Mitsui Iron Ore Corporation hold the remaining 15% interest in the South Flank project.