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BHP to increase capacity at WA iron ore operations

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BHP Billiton has announced approval for the Rapid Growth Project 3 (RGP3) which will increase capacity at its Area C iron ore mine in Western Australia by 20 million tonnes per annum (Mtpa) to 42Mtpa.

Work on the project will commence immediately, with initial production forecast to begin in the fourth quarter of calendar year 2007.

The Board has approved capital expenditure of $US1.3 billion for BHP Billiton’s 85 per cent share of the project. This includes approximately $US235 million of sustaining capital required for the replacement of ageing port and rail infrastructure. The capital expenditure fully reflects recent cost increases that have been experienced in the resources sector in Western Australia.

The RGP3 scope includes the development of a new pit at the Area C ‘E Deposit’ and the construction of new crushing and screening facilities at the mine’s ‘C Deposit’.

Port and rail facilities will also be expanded to facilitate this capacity increase and position the business for further staged growth. The expansion will include a new stockyard, upgraded car dumper and ship loading facilities, as well as additional rolling stock and rail sidings.

Due to the nature of the expansion activities, particularly in relation to the berth and car dumper upgrades, some latent capacity will result at the port operations. This capacity will be taken up as future expansions come on line.

President BHP Billiton Iron Ore Graeme Hunt said RGP3 is part of the company’s broad investment program to meet growing demand for all steel making raw materials.

“The project builds on our outstanding track record of bringing new production capacity on line over the past few years and lays the foundation for further expansions that will drive the future success of our business,” he said.

“We are currently in the feasibility stage for Rapid Growth Project 4, which is focussed on expanding the Newman operations, and are studying further growth options to ensure we continue meeting customer needs over coming decades.”

Since 2001 BHP Billiton has increased production at its Western Australian iron ore operations from around 68Mtpa to over 100Mtpa in 2005. This has been achieved through the completion of projects such as Area C and the Products and Capacity Expansion in 2003 and 2004 respectively, the Accelerated Expansion in 2004, and more recent projects including RGP1. All of these projects have been completed on time and within budget.

The RGP2 expansion also remains on schedule and budget with initial production forecast to commence in the second half of calendar year 2006.

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