BHP Billiton will push ahead with a multibillion-dollar Pilbara iron ore mine because WA has returned to a more stable investment environment after the State election, the miner’s top executive in Perth says.
Iron ore boss Edgar Basto said the rejected WA Nationals plan for a $US5-a-tonne levy had jeopardised the South Flank development by making it less competitive with rival projects in the BHP portfolio.
“That was going to, in a way, to wait on that decision,” Mr Basto said yesterday. “The fact that we don’t have that (levy) is going to be a big plus in terms of how does the project stack up compared with other projects in our portfolio.”
He said that in a meeting with BHP officials after the election, Premier Mark McGowan had ruled out new imposts on miners.
“The people of Western Australia sort of dismissed the potential policy for an additional tax and they showed it in the way they voted at the last election,” Mr Basto said on the sidelines of the Global Iron Ore & Steel Forecast Conference.
“Those are good signals that sort of tell you that people understand how important the industry is for the region.”
The mining lobby’s expensive campaign against the proposed levy on BHP and Rio Tinto was a factor in then Nationals leader Brendon Grylls losing his Pilbara seat. The party has retained the policy.
The 80 million tonnes-a-year South Flank project is proposed to replace BHP’s Yandi mine near Newman when it becomes depleted over the next five to 10 years.
Mr Basto told the conference the investment case was strong for developing the deposit.
“The return of a more stable investment environment in WA helps build our confidence to make this significant investment,” he said.
“While this project is still in study phase, if approved by the board, it will see development of the world’s largest iron ore mining and processing centre located next to billions of tonnes of high-grade resources.”
BHP is yet to put a price on the project. Mr Basto said the cost would be covered under the miner’s long-term average sustaining capital cost of $US4 a tonne produced at its WA mines, or more than $1 billion a year. The average is being reassessed.
A JP Morgan research note released yesterday estimated the cost of South Flank to be about $US2.4 billion, or about $US30 a tonne spread over five years.
