The Western Australia Iron Ore operations will receive $6.6 billion dollars to expand capacity to 220 million tonnes per year.
Queensland Coal (50% owned by BHP) is in line for $2.5 billion dollars in projects. Mining capacity will expand to 4.9 million tonnes and port capacity will expand to 11 million tonnes per year.
Hunter Valley Energy Coal will receive $400 million dollars (see previous story about 300 full-time jobs), to add 4 million tonnes of run-of-mine production.
All three deposits are massive in size and hold the types of coal in demand globally. The minimum inventory lives of both Hunter Valley Energy and Queensland Coal are in excess of 100 years and Western Australia Iron Ore’s mine life being greater than 200 years.
The additional capital expenditures not only expand capacity but retool existing infrastructure to better handle the types of effects from cyclones and rains which disrupted operations the past few years.
Strong demand from China
Strong demand coming from China fuels the investments in metallurgical coal. Two years ago China was a net exporter in terms of metallurgical coal but almost overnight, China’s import demand jumped significantly leading many to believe that China’s metallurgical coal production is in a significant state of decline.
Manganese alloy production year to date jumped by 54% from a year ago and sales volumes reached record levels on strong market demand.
The metallurgical coal segment remains under significant pressure as heavy rains flooded open pit mines in the Bowen Basin. Production in the March quarter was down 18% from a year ago.
Despite lower copper prices BHP’s coal and iron ore divisions continue to show strong demand and growth despite significant challenges to operations from Mother Nature.
The $10 billion dollar capital expenditures will expand coal production and help relieve pressure on port operations caused by storms in Western Australia.