- By Region
BHP Billiton has received the final environmental approval for its $20bn iron ore project in Western Australia, as the world’s biggest mining groups come under pressure from shareholders to take a more cautious approach to investment.
The London-listed miner said on Thursday that Australia’s federal government had approved the project, which involves the expansion of the Outer Harbour at Port Hedland, enabling BHP to expand its exports of iron ore to about 350m tonnes a year by 2022.
The entire project, including work at the mine itself, could cost in excess of $20bn, according to analysts at Deutsche Bank.
The Outer Harbour development – one of BHP’s “mega-projects” that will total as much as $100bn in capital expenditure over the next 15 years – is likely to be considered by the miner’s board later this year.
Jac Nasser, BHP’s chairman, this month said that the mining industry now has “more projects than cash flows. All of us in the industry are having to make choices”.
His comments echoed those of Alberto Calderón, chief executive of aluminium, nickel and corporate development at BHP, who has said that the miner’s capital spending would be approved and managed in a way that “maximises value, reduces risk and balances short and long-term returns”.
Analysts expect BHP to press ahead with the Outer Harbour expansion, which requires the construction of a 4km jetty and the dredging of a 30km channel into the ocean.
BHP sees Chinese demand for iron ore remaining strong until 2024, offering an opportunity to feed the nation’s appetite for steelmaking materials. Last year the miner produced about 144m tonnes of iron ore from its operations in Western Australia.
Other projects – such as the Olympic Dam copper and uranium mine and the development of Jansen, a potash project in Canada – are more likely to be phased out or delayed, argue analysts.
Thursday’s approval “completes the process of environmental assessment for the Outer Harbour Development”, said BHP, but underlined that the first phase of the project remains “subject to board approval”.