BHP Billiton and its partners in iron ore and coal have committed to spending $US13 billion in total on a string of major expansion projects.
BHP said on Friday that its share of the spending will be nearly $US10 billion ($A9.87 billion) to expand iron ore operations and energy and metallurgical coal projects in Western Australia, Queensland and NSW.
The market took the expansion news in its stride, with the shares up 50 c to close at $44.76 on the ASX on Friday.
The plans follow the move six weeks ago to spend $US4.75 billion buying into the US natural gas business in Arkansas, a move that will make it a major producer overnight.
That was after the company committed itself to spending around $US5 billion expanding its share buyback to $US10 billion over this year.
So all up BHP will be spending close to $US20 billion starting this year on capital management and expansion plans.
BHP is cashed up after reporting a new Australian record first half net profit in February of $US10.524 billion ($A10.41 billion) for the six months to December 31.
It had billions of dollars of cash on its books at December 31, meaning no net debt.
BHP, which is the world’s biggest resource company, said on Friday that it will spend $US6.6 billion in an iron ore project expansion in Western Australia, $US2.5 billion to expand three metallurgical coal projects in Queensland and $US400 million on an energy coal project in NSW.
The moves were announced a day after the Federal Government accepted all the recommendations of an inquiry into its Minerals Resource Rent Tax, and with full knowledge of the carbon tax debate.
In fact BHP CEO, Marius Kloppers was the first senior CEO of a big Australian company to come out in favour of a carbon tax several months ago, which he was pilloried by some sections of the media.
The company said in its statement that it and its partners would spend $US7.4 billion to develop the Jimblebar mine and rail links, to further develop Port Hedland and to build ore blending facilities, taking the annual iron ore capacity to 220 million tonnes.
BHP Billiton’s president of iron ore, Ian Ashby, said the intention was to develop the port capacity so that the company could fill its 240 million tonne per annum allocation in Port Hedland’s inner harbour.
‘‘We have intentionally overbuilt the ore handling facilities at Jimblebar and expect to incrementally grow mine production to ensure that our port and rail systems are operated at full capacity during this debottlenecking program,’’ he said in the statement.
BHP Billiton said first production from the Jimblebar mine was expected in early calendar 2014.
A total of $US3.4 billion will be spent on the Jimblebar mine, including buying rolling stock, with initial capacity of 35 million tonnes per annum (mtpa), with embedded options to expand to 55 mtpa.
A further $US2.3 billion, including BHP Billiton’s share of $US1.9 billion, will be spent on Port Hedland, adding two berths and shiploaders and other works.BHP Billiton and its partners will spend $US1.7 billion on the port blending facilities and rail yards.
BHP 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. BHP Billiton share of investment takes into account the 100% owned BHP Billiton Iron Ore Jimblebar operation.
A few minutes later on Friday, the company released a second statement saying the board had given the greenlight to the spending $US2.5 billion ($A2.47 billion) on three coking coal projects in the Bowen Basin in central Queensland. BHP’s share is half of the total $US5 billion to be spent on the expansion.
BHP Billiton metallurgical coal president Hubie van Dalsen said in the statement that the company had a deep pipeline of expansion projects to develop its large reserves of metallurgical coal.
‘‘Our strategy is to rapidly progress development of these projects to capture the increasing demand we see for hard coking coal,’’ he said.
BHP Billiton said the projects would add 4.9 million tonnes of annual mine capacity to the Daunia operation and a new mining area at Broadmeadow.
In a third statement, BHP Billiton said it would spend $US400 million to expand Hunter Valley Energy Coal in NSW, to increase coal production by four million tonnes per annum to about 24 million tonnes per annum.
‘‘The emergence of demand for coal in the key growth markets allows us to get product to market quickly, ahead of further coal preparation plant expansions,’’ BHP Billiton Energy Coal President Jimmy Wilson said in the statement.
