The Rising Influence of Rising Affluence

[DewDiligence]

BHP Commits $10B for Australian Projects

[This is the first definitive statement about how BHP plans to utilize its colossal cash hoard; the $10B amount is the first installment toward BHP’s previously announced $80B of cap-ex during the next five years and is in addition to the planned $10B share buyback (#msg-60136197). Management does not appear to be concerned in the slightest about changes to the Australian mining tax or implementation of the proposed carbon tax.

BHP’s own PR’s on these expansion plans are in:
http://www.bhpbilliton.com/public/redirect.jsp?id=8336 ,
http://www.bhpbilliton.com/public/redirect.jsp?id=8337, and
http://www.bhpbilliton.com/public/redirect.jsp?id=8338 ;
webcast slides (17 pages) are at http://www.bhpbilliton.com/bbContentRepository/docs/110324investingInHighQualityGrowthmRandolph.pdf .]

http://www.marketwatch.com/story/bhp-billiton-to-pour-billions-into-australia-2011-03-24

›March 24, 2011, 2:59 p.m. EDT
By William Spain, MarketWatch

CHICAGO (MarketWatch) — In a sign of confidence in demand for coal and steel, BHP Billiton will pour billions of dollars into expanding its operations in Australia, the mining and energy giant said Thursday.

BHP Billiton will sink almost $7 billion worth [actually $7.4B according to BHP’s own PR] of capital investment to increase production of iron ore in Western Australia to build the capacity to deliver more than 220 million tons a year, with the first production expected from a new mine in early 2014.

Of that sum, $3.3 billion will go to the development of the Jimblebar mine and rail links and new mining equipment and rolling stock, while about $2 billion will be used to improve Port Hedland, adding new berths, ship loaders and other equipment. The rest of the investment is targeted to port blending facilities and rail yards to enable ore blending, the expansion of resource life “and to prepare for the future growth of the business beyond the inner harbor,” the company said.

The company also approved three metallurgical coal projects in the Bowen Basin in Central Queensland that will add 4.9 million tons of annual mine capacity while 11 million tons of annual port capacity will be added at the Hay Point Coal Terminal. The total price tag will be $5 billion, of which Billiton will shell out half. [Mitsubishi will pay the other half.]

Further, it will put a $400 million investment into expanding Hunter Valley Energy Coal in New South Wales, in a move to increase thermal coal production by 4 million tons a year.‹