HomeEnergy MineralsBilliton approves massive coal expansion project

Billiton approves massive coal expansion project

The Mozal smelter
in southern Mozambique
Johannesburg, South Africa — MININGREVIEW.COM — 03 March, 2008 – BHP Billiton – the world’s largest diversified resources company – has announced approval of the Douglas-Middelburg optimisation project (DMO) – a US$975 million (R7.3 billion) initiative to expand its Douglas and Middelburg Mine Services quarries.

A weekend company announcement revealed that the DMO project scope included using reserves across the Douglas and Middelburg Mine Services (MMS) collieries, as well as development of new mining areas with low strip ratio coal, with product being fed into a new 14 Mtpa coal processing plant. The new coal processing plant would replace the existing, less efficient washing plant at Douglas.

The project will enable BHP Billiton to maintain energy coal exports from the combined Douglas Colliery and MMS at around current levels of approximately 9.5 Mtpa, while also fulfilling domestic contractual commitments.

“First coal from the new mining areas is expected in mid-2008, and the new plant is expected to receive coal in mid-2010,” the announcement said. “The anticipated life of mining operations is till 2034.”

The Douglas and MMS collieries are currently owned through the Douglas Tavistock Joint Venture (DTJV), in which BHP Billiton has an 84% share, with Xstrata holding the other 16%. According to the announcement, the DMO project is to be developed and owned solely by BHP Billiton, so the DTJV will be restructured with each of the joint venture partners being allocated coal resources according to their ownership share. A number of regulatory approvals are being sought to give effect to this restructure.

BHP Billiton Coal president Dave Murray commented: "Approval of the DMO project is a core component of BHP Billiton’s coal strategy, and is in keeping with the company’s focus on operating low-cost, long-life assets. This project allows us to realise maximum value from these assets by optimising the existing reserves at Douglas and MMS, and enabling us to maintain exports through to 2034,” he added.

“With the recent approval of the US$450 million (R3.4 billion) investment in the Klipspruit project, our South African coal operations will now comprise three world class assets,” Murray concluded, “namely Middelburg Mine Services (which now incorporates the resources of Douglas Colliery), Khutala Colliery and Klipspruit Colliery."