BHP has begun the preparation for its $5 billion investment South Flank project in Pilbara. The removal of approximately 8.9 million tonnes of material for a 40 million tonne a year crusher installation has many in awe. See the footage of the first blast here.
What this means for the mining industry
Ore from South Flank is predicted to replace 80 million tonnes the company currently mines at Yandi each year and more. Yandi’s 56% ore output is set to be replaced by South Flank’s 62-63% iron product. This will raise BHP’s average ore grade from Pilbara to 62%.
The high investment from BHP can be used as an example of the rising success within mining investment. This announcement came 3 weeks after Fortescue Metals Group announced it would develop a new mine in Pilbara named Eliwana, which will replace the Firetail mine which is nearing the end of its life. According to Fortescue Metals Group’s Quarterly Production Report, this $US1.27 billion project “supports the introduction of a 60 percent iron grade product and provides flexibility to take advantage of market dynamics while maintaining Fortescue’s low-cost status and production capacity.”
BHP’s South Flank project is aimed at the replacement of existing production lines such as the Yandi mine, which is also reaching the end of its life. It will also help to lift the average quality of Pilbara Ore, offering relatively low phosphorus content. Phosphorus is an impurity found in ore, meaning the higher its appearance, the more ore product is discounted.
BHP has planned to automate sections of South Flank operations, predicted to increase operational efficiency and safety.
What is the mining economic position in Western Australia?
South Flank will be the biggest ever mine expansion, leading to the world’s biggest iron ore mining and production hub. The project is situated 100km north-west of Newman, and will involve clearing 16,257ha of land to make room for an open-cut mine, relevant infrastructure, accommodation villages, and relevant machinery.
2500 jobs are expected to be available during construction, and a further 600 ongoing roles within South Flank. Western Australia has recorded the strongest growth in new jobs in 5 years, with unemployment rates now at 6.4%. BHP has committed to adopting a strong local procurement and job focus, stating that 85% of South Flank’s construction budget will be spent in Australia, 90% of this will be in Western Australia. The South Flank production will produce $600 million to the state in royalties. WA Premier Mark McGowan explained “This project is a positive injection into Western Australia in terms of improving business confidence and benefiting the State's economy,”
The first South Flank ore production is targeted for 2021, offering an anticipated 145 million tonnes per year, with a predicted duration of more than 25 years.
McGowan further details “BHP's decision, with its joint venture partners, to go ahead with the South Flank project is testimony that Western Australia is a secure and attractive place to invest."
Read more of mining in WA here.
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