BHP has announced that they are moving ahead with the development of the South Flank iron ore project after approving $244 million (US$184 million) in initial funding for the project in Pilbara, Western Australia.
According to Mike Henry, BHP President of Operations, Minerals Australia, the project is set to create several hundred construction jobs and provide opportunities for Western Australian suppliers with the initial work focusing on the expansion of accommodation facilities to support existing and future workforce requirements.
The development in South Flank is part of BHP’s Mining area C hub, located 92km west-north-west of Newman, and is set to replace the production from the 80Mtps Yandi mine which is predicted to reach the end of its economic life in the early to mid 2020s and coincidently generating several thousand construction jobs.
The project is expected to be submitted for Board approval in the middle of the 2018 calendar year with final investment decisions set to be made during this time.
“As well as supporting our current operational requirements, this work will advance potential first ore from South Flank, while we further optimise the full development and progress external and internal approvals. As we have said previously, a continuing stable investment environment in Western Australia is required to underpin ongoing investment in the business, including this project,” Mr Henry said.
Mr Henry went on to say the South Flank project was a capitally efficient option to replace Yandi production and it offered higher returns as it is established as a highly-competitive operation due to its high-grade lump (62 per cent), lower phosphorus operation compared to Yandi (58 per cent) and a strip ratio, in line with the WAIO average.
“The capital efficiency of South Flank is underpinned by the planned use of existing infrastructure at the Mining Area C operation, which would, if approved, become one of the largest standalone iron ore processing centres in the world, within reach of several billion tonnes of high-grade ore,” Mr Henry said.
The project's capital cost is expected to average between US$30 to US$40 per tonne, as WAIO’s previously average sustainable capital expenditure of US$4 per tonne for fitting over the next five years.
Henry said if South Flank was approved, Mining Area C would become one of the largest standalone iron ore processing centres in the world, within reach of several billion tonnes of high-grade ore.
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Source: The West Australian, BHP Billiton and Australian Mining