Australian mining giant BHP Billiton has announced the approval of US$1.094 billion ($AU1.22 billion) in capital expenditure for the expansion of the company's WAIO (West Australia Iron Ore) operations.
The given amount represents pre-approval expenditure for Rapid Growth Project 5 (RGP5) which, as one of several expansion phases, is expected to increase WAIO's installed capacity to more than 200 million mt per annum by 2011.
This pre-approval funding will be used to commence duplication of the railway track between the Yandi mine and Port Hedland and begin the expansion of the inner harbor at Port Hedland. Construction of this second railway is expected to begin in May 2008 and is subject to various government approvals. The early funding will also allow early procurement of long lead items and detailed engineering studies to expand capacity at Yandi and Area C.
Commenting on the expansion, President BHP Billiton Iron Ore, Ian Ashby said, "The core of the Pilbara is progressively moving to the Yandi/Area C mining hubs. Double tracking the rail to this area will create the rail capacity to support our planned expansion to more than 300 million mt per annum."
In parallel with this project, BHP Billiton is advancing its studies on outer harbor development at Port Hedland. Combined with the RGP5 rail work, the port expansion would complete the major infrastructure requirements to support an operation of over 350 million mt per annum.
In the last quarter of 2007, BHP Billiton delivered RGP3, which expanded the capacity at Area C by 20 million mt per annum and RGP4 is on track to increase installed capacity to 155 million mt per annum in 2010.
The approval for the balance of the RGP5 capital is expected during the second half of 2008. The early investment in RGP5 is expected to result in incremental production, beyond RGP4's capacity, before the finalization of RGP5 in 2011.
In scope of the growth program, BHP Billiton carried out many projects, which were completed within approved operating currency budgets and schedules, such as RGP2, which was approved in October 2004 and increased capacity by eight million mt per annum. Construction was completed in 2006.
RGP3 was approved in October 2005 and increased capacity by 20 million mt per annum to 129 million mt per annum. Construction was completed at the end of 2007.
In addition, RGP4 was approved in March 2007 and will increase capacity by 26 million mt per annum to 155 million mt per annum, with construction works being planned to be completed in 2010.
BHP Billiton's partners in its Pilbara iron ore operations are Itochu Minerals & Energy of Australia Pty Ltd, Mitsui-Itochu Iron Pty Ltd and Mitsui Iron Ore Corporation Pty Ltd.