Sydney/Tokyo: BHP Billiton and Mitsubishi Corp will invest a total of $4.2 billion to expand coal mining in Australia and are looking at further investments, BHP said on Tuesday.
The project initially will add 8 million tonnes per year capacity in exports of metallurgical coal used in making steel, with an expectation of a rapid, low-cost expansion to 10 million tonnes per year, BHP said.
BHP and Mitsubishi operate a 50-50 joint venture covering seven mines in Australia’s Bowen Basin region and will each contribute $2.1 billion to the work.
The work will require development of a new mine, Caval Ridge, and expansion of the alliance’s Peak Downs colliery.
Production will start in 2014 and run for more than 60 years, BHP said.
“This is a continuation of BHP Billiton’s strategy of investing in large, low cost, expandable mines with long lives,” BHP’s metallurgical coal division president, Hubie van Dalsen, said in a statement.
“Additional expansion projects are being advanced to follow this investment in due course,” he said.
Mines owned under the BHP-Mitsubishi alliance have a combined output capacity of more than 58 million tonnes per year of mostly metallurgical coal, representing about a fifth of annual global trade.
Separately, Mitsubishi in a statement said it was looking to grow its presence in the sector in response to expectations of rising demand for metallurgical coal globally.
BHP earlier this year said it would spend $80 billion by the end of 2014 on new projects across its businesses.
It has already earmarked funding for a number of projects, including iron ore, copper and coal mining.
BHP shares fell 2.7% to A$36.77, outpacing a 1.5% decline in the wider market.