BHP Billiton to spend $2.9bn on South Flank project

The project will fully replace production from the Yandi mine, which is reaching the end of its economic life. BHP said it will build an 80m tonne of ore per year crushing and screening plant, an overland conveyor system, and stockyard and train loading facilities. The project also involves the procurement of a new mining fleet and substantial mine development and pre-strip work.

Mike Henry, president of operations for Minerals Australia, said: "South Flank is a capital efficient project which offers attractive returns, and which was approved following a thorough evaluation under BHP's capital allocation framework.

"The project will create around 2,500 construction jobs, more than 600 ongoing operational roles and generate many opportunities for Western Australian suppliers. It will enhance the average quality of BHP's Western Australia Iron Ore (WAIO) production and will allow us to benefit from price premiums for higher-quality lump and fines products."

First ore from South Flank is targeted in the 2021 calendar year, with the project expected to produce ore for more than 25 years.

At 1300 BST, the shares were down 1.5% to 1,722p.