According to The Australian Financial Review, BHP Billiton and its Japanese partner will spend $US204 million ($271 million) on an 11-kilometre conveyor that will carry coking coal from its Peak Downs mine in Queensland to its Caval Ridge mine, lifting output by 4 million tonnes a year and creating 400 jobs.
The conveyor is designed to take advantage of the excess capacity at the miner's Caval Ridge coal handling plant; in the last year BHP has been trucking coal between the two mines at a rate of 1 million to 2 million tonnes per annum, but the overland conveyor will slash the costs of moving the coal.
The project was one of several highlighted last year by BHP chief executive Andrew Mackenzie as an example of the "latent capacity" that the miner could unlock across its operations with relatively small amounts of investment. BHP will stump up half the capital.
Coking coal prices have spiked to record levels above $US300 a tonne in recent weeks following what has been described as "panic buying" in the wake of Cyclone Debbie, which slammed Queensland's coal fields.
But Mike Henry, the chief executive of BHP Australian mining operations, emphasised that BHP did not expect the price spike to last, and high prices were not needed to make the conveyor investment economic.
"Even at the long run [price] level … we are long to have a very high-returning business here."
Construction work on the conveyor will start soon and it is expected to be commissioned in the March quarter of 2018. It will ramp up to full capacity by 2019.
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