BHP Approves Spending for Port Hedland Iron Ore Expansion

BHP Billiton Ltd. (BHP), the world’s largest mining company, approved initial spending on a A$14 billion ($14.9 billion) expansion of its iron ore export harbor in Western Australia to boost supply to steel mills.

The company sanctioned spending of $779 million to fund its share of an initial $917 million expansion of the Port Hedland harbor, Melbourne-based BHP said today in a statement. The funds will allow the world’s third-largest iron ore exporter to progress studies on the expansion and begin procurement of long lead items, it said.

Port Hedland’s harbor enlargement, which includes rail, ore stockpiles and a four kilometer (2.5 mile) jetty, will add capacity of 240 million metric tons a year, the Western Australian Environmental Protection Authority said last month. The expanded facility will help BHP, which trails Vale SA and Rio Tinto Group in iron ore exports, increase supply to China, the world’s biggest steelmaker.

“This investment is an important first step in providing the infrastructure to allow us to fully develop our world class resource base in the Pilbara,” BHP Iron Ore President Ian Ashby said in the statement. “The development of the outer harbor is pivotal for our longer-term growth objectives and this initial funding is rapidly turning those plans into a reality.”

The initial spending is for the construction of a 100 million ton per year outer harbor, BHP said. The project is expected to be reviewed for full approval in the fourth quarter of this year, it said. The A$14 billion cost estimate comes from a report last year by the state’s Department of Mines and Petroleum.

To contact the reporter on this story: Ben Sharples in Melbourne at bsharples@bloomberg.net

To contact the editor responsible for this story: Andrew Hobbs at ahobbs4@bloomberg.net

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