BHP to boost production
BHP Billiton, the world’s largest mining company, will invest $1.3bn (£735m) to boost iron-ore production in western Australia in the face of rising demand by Asian markets led by China.
The move comes just 24 hours after Rio Tinto said it would also commit $1.35bn to increase the iron-ore production of its mines in western Australia for the same reason.
BHP said that $235m of the project’s funds will be used to replace ageing rail and port facilities at Nelson Point in Port Hedland.
The Anglo-Australian business said the work will push its production in the area up 20 million tonnes a year to 42 million tonnes. Billiton said work on the project will begin immediately and expects the new production to come on stream in the fourth quarter of 2007.
Graeme Hunt, president of BHP Billiton Iron Ore, said: “The project builds on our outstanding track record of bringing new production capacity on line over the last few years and lays the foundation for further expansions that will drive the future success of the business.”
China’s demand for steel has risen 20 per cent a year on average since 2000 as the population buys more consumer goods, and as the country continues an extensive building programme.
Merrill Lynch and a number of other analysts forecast that iron-ore prices will rise by a further 10 per cent this year.
Also, yesterday mining giant Anglo American said it had received regulatory approval to go ahead with a $516m expansion of its Lake Lindsay coalmines in central Queensland, Australia. Anglo American said the building would increase production in its German Creek mines from 6m to 10m tonnes.
