Western Australia Iron Ore Dual Harbour Strategy
August
24, 2012
As foreshadowed in BHP Billiton’s profit announcement on
22 August, the Company has been evaluating the most efficient means of expanding
production from Western Australia Iron Ore (WAIO) beyond its current 240 million
tonnes per annum (mtpa) Inner Harbour throughput allocation in Port Hedland.
Preliminary studies have shown the potential for WAIO to
ship substantially more than 240 mtpa from the Inner Harbour. As a result, work
on the Outer Harbour has been slowed while WAIO’s focus has shifted to
maximising its potential capacity from the Inner Harbour.
Today the Western Australia Minister for Transport and
Port Hedland Port Authority announced that WAIO has been granted the right,
subject to the State approvals processes, to develop two additional berths in
the Inner Harbour. These berths do not come with guaranteed shipping capacity
beyond BHP Billiton’s current 240 mtpa throughput allocation. WAIO believes
there is substantially more opportunity to optimise its Inner Harbour
throughput, given there is significant underutilised Inner Harbour port
capacity. Port users may ship beyond their shipping allocation if unused
capacity is available.
BHP Billiton President Iron Ore, Jimmy Wilson, said:
“Over the past 10 years, BHP Billiton has invested
approximately US$19 billion in growing its WAIO business. What has become
apparent through this process is that a number of the existing facilities have,
or with minor modifications will have, the potential to deliver substantially
more capacity than was assumed originally.
Development of the Outer Harbour remains attractive. Its
initial development would require dredging a shipping channel and turning basin,
as well as constructing a four kilometre jetty with associated stockyards and
car dumpers at Boodarie. Additional expansion in the Inner Harbour would delay
the requirement for many of these investments.
The right to develop these berths and prudent
debottlenecking in the Inner Harbour provide for a lower cost port capacity to
match easily accessible growth options in our mines and rail. The Outer Harbour
continues to be an important part of our long-term strategy. Despite the
substantial establishment costs associated with this greenfield facility, our
analysis concluded that development of the first 50 mtpa phase of the Outer
Harbour Project would deliver a value-adding investment return as a standalone
project. The Outer Harbour therefore remains a critical part of our future
growth plans, but is not our best option right now”.
Background notes:
BHP Billiton owns 85 per cent of WAIO and is the
operator. In the 2012 financial year, WAIO produced 174 mt of iron ore (100 per
cent basis). Production is forecast to increase by approximately five per cent
in the 2013 financial year. Commissioning of the WAIO Port Hedland Inner Harbour
Expansion project remains on schedule for the second half of the 2012 calendar
year and is expected to increase our Inner Harbour capacity to 220 mtpa (100 per
cent basis).
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