Steely re­solve

BHP Bil­li­ton to ex­pand iron ore op­er­a­tions

Townsville Bulletin - - Investor -

BHP Bil­li­ton Ltd has backed China to main­tain its hunger for steel in an­nounc­ing a $ 9.89 bil­lion ex­pan­sion to its iron ore and coal op­er­a­tions.

The world’s big­gest re­source com­pany is cashed up and 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 $ 400 mil­lion on an en­ergy coal pro­ject in NSW.

That is part of BHP Bil­li­ton’s com­mit­ment to $ US80 bil­lion in or­ganic growth projects over the next five years, as it looks to spend some of it mas­sive prof­its on ex­pan­sion.

The com­pany re­ported a record $ US10.5 bil­lion first half net profit last month.

Chief ex­ec­u­tive of fer­rous and coal, Mar­cus Ran­dolph, said the com­pany was con­fi­dent about con­tin­ued de­mand from emerg­ing Asian mar­kets.

‘‘ In all three of these busi­nesses we have large, high qual­ity re­source bases that are close to ex­ist­ing in­fra­struc­ture and our cus­tomers,’’ he said yes­ter­day.

‘‘ In en­ergy coal, in­creased de­mand for se­aborne ther­mal coal in In­dia and east Asia pro­vides an op­por­tu­nity for us to ac­cel­er­ate growth in Mt Arthur’s ( NSW) coal run of mine pro­duc­tion.’’ In WA, the com­pany will 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.

That in­cluded adding two berths and shipload­ers and fill­ing its 240 mil­lion tonne per an­num al­lo­ca­tion in Port Hed­land’s in­ner har­bour.

In cen­tral Queens­land’s Bowen Basin, the projects would add 4.9 mil­lion tonnes of an­nual mine ca­pac­ity to the Dau­nia op­er­a­tion and a new min­ing area at Broad­meadow.

The com­pany will also in­crease en­ergy coal pro­duc­tion by four mil­lion tonnes per an­num to about 24 mil­lion tonnes per an­num at its Hunter Val­ley En­ergy Coal in NSW.

BHP Bil­li­ton had wasted money in the past on failed ac­qui­si­tions so it made sense to pur­sue or­ganic growth, said Mine Life se­nior re­sources an­a­lyst Gavin Wendt.

The com­pany’s share price was weaker ear­lier on Fri­day but re­cov­ered to close up five cents at $ 44.76.

IG Mar­kets strate­gist Ben Pot­ter said the higher than ex­pected cap­i­tal in­ten­sity of the iron ore ex­pan­sion of $ US183 a tonne might have scared off in­vestors.

CASHED UP: BHP Bil­li­ton’s chief ex­ec­u­tive of fer­rous and coal, Mar­cus

Ran­dolph says the com­pany has ex­pan­sion plans

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