Melbourne, Australia — 15 November 2012 – Diversified mining giant BHP Billiton expects to expand its iron ore capacity by nearly a fifth just by working its mines, rail lines and ports harder as it looks to control costs in a softer iron ore market.
Reuters reports that uncertainty over iron ore prices due to stuttering demand for the steel-making ingredient from China has prompted a rethink of expansion plans by most iron ore miners, including top global iron ore miner Vale.
BHP Billiton iron ore chief Jimmy Wilson said the company had slowed its growth plans, like Australia’s no.3 iron ore miner Fortescue Metals Group, while their bigger rival Rio Tinto was pressing ahead with an expansion that would give it at least a third more capacity than BHP and more than double Fortescue’s capacity.
“Looking forward, things are not as rosy as they were in the past. The imperative to grow as aggressively as we were in the past has diminished slightly,” Wilson added.
Caught out by escalating costs, a sharp slide in iron ore prices and a persistently strong Australian dollar, BHP shelved plans in August to build a US$20 billion iron ore harbour at Port Hedland in Western Australia that would have eventually doubled its iron ore capacity to 440Mt.
BHP is focusing instead on milking as much out of its existing inner harbour, rail line and mines, increasing its capacity in smaller steps without huge capital outlays.
“The aspiration would be, just by squeezing our existing infrastructure with modest capital investments across our business, to be able to achieve around the 260Mt mark,” Wilson said.
He gave no timeframe or cost for achieving the higher target after it reaches 220Mt in 2014.
Source: Reuters Africa. For more information, click here.