BHP wins rights to two more berths in W.Australia

BHP Billiton's Western Australia Iron Ore (WAIO) site has been granted the right to develop two additional berths in the Inner Harbour as part of its efforts to expand production in the region, in which it has an 85 per cent operating stake.

WAIO currently produces 240m tonnes per annum (mtpa) and recent studies have revealed that there is potential to ship substantially more than this volume.

The two new berths do not come with guaranteed shipping capacity beyond BHP Billiton's current 240 mtpa throughput allocation.

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President of the Iron Ore division, Jimmy Wilson, said: "Over the past 10 years, BHP Billiton has invested around $19bn 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 de-bottlenecking 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."

The share price fell 1.48% to 1,931.50p by late afternoon.

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