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Port Hedland

BHP Billiton has approved $917m in pre-commitment funding for constructing a 100 million ton-a-year harbour, to strengthen its iron ore operations at Port Hedland in the Pilbara region of Western Australia.

BHP has committed $779m to fund its share of an initial $917m expansion of the Port Hedland harbour while the remaining money comes from its partners Itochu and Mitsui.

Final decision on the project is expected to be reviewed for full approval in the fourth quarter of 2012.

BHP Billiton president of iron ore Ian Ashby said this investment is an important first step in providing the infrastructure to allow them to fully develop the company’s resource base in Pilbara.

“The development of the outer harbour is pivotal for our longer term growth objectives and this initial funding is rapidly turning those plans into a reality,” Ashby added.

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By GlobalData

The funds now earmarked will enable the company to progress feasibility studies and procurement of long lead time items, as well as allowing it to start dredging works. Dredging works are subject to the necessary regulatory approvals while at the same time engineering studies are underway to match mine and rail expansions to the expanded port capacity.

Phase one of the Outer Harbour Development would include construction of a four-kilometre jetty, a four-berth wharf, 32 kilometres of dredged departure channel and infrastructure, including stockyards.

Construction is scheduled to start in the first half of 2016.

According to Deutsche Bank estimates, BHP’s outer harbour project is expected to cost $20.7bn, including $12.7bn for the port and $8bn for associated development of its mines. The company has plans to increase annual iron ore production to 220 million tons by 2014 and to 350 million tons by 2020.

BHP Billiton has already earmarked $7.4bn to increase its iron ore export capacity from 155 million tons a year in 2011 to 220 million tons in 2014, through the Jimblebar mine.

Image: Port Hedland Outer Harbour Development will help BHP Billiton increase annual iron ore production to 220 million tons by 2014 and to 350 million tons by 2020. Photo: BHP Billiton.