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BHP Billiton

will spend $US1.85 billion

<font face="arial, geneva, helvetica" size="2">BHP Billiton will spend $US1.85 billion ($A2.3 billion) to expand its iron ore operations in the Pilbara region of Western Australia in a bid to satisfy increasing demand from China.</font>

<font face="arial, geneva, helvetica" size="2">The major expansion will increase iron ore output from the Pilbara's operations to 155 million tonnes a year, with initial production expected to start in the first half of 2010.</font>

<font face="arial, geneva, helvetica" size="2">BHP produced about 90 million tonnes of iron ore from its Pilbara operations in fiscal 2006.</font>

<font face="arial, geneva, helvetica" size="2">BHP president of iron ore Ian Ashby said the Rapid Growth Project 4 expansion would deliver large-scale benefits to the company, its customers, employees and local communities.</font>

<font face="arial, geneva, helvetica" size="2">"The RGP4 project will further increase the efficiency of our integrated mine, port and rail operations and represents a key investment in our ongoing strategy to be more responsive to customer needs," he said.</font>

<font face="arial, geneva, helvetica" size="2">Mr Ashby said a range of options to expand capacity beyond RGP4 were also being evaluated, subject to customer demand.</font>

<font face="arial, geneva, helvetica" size="2">"We are committed to creating further value-adding options for the business and providing the next phase of growth opportunities beyond our recent expansion projects," he said.</font>

<font face="arial, geneva, helvetica" size="2">The RGP4 expansion includes development of a new crushing and screening plant and additional stockyards, car dumping and train loading facilities at Mt Whaleback.</font>

<font face="arial, geneva, helvetica" size="2">BHP Billiton owns an 85 per cent stake in the project with partners Itochu Minerals &amp; Energy of Australia, Mitsui-Itochu Iron and Mitsui Iron Ore Corporation holding the balance.</font>

<font face="arial, geneva, helvetica" size="2">Last month, Rio Tinto approved an $US860 million expansion to the Cape Lambert port which will increase its export capacity from 55 to 80 million tonnes.</font>

<font face="arial, geneva, helvetica" size="2">The expansion is expected to be completed by the end of 2008 and will allow Rio to export up to 220 million tonnes of iron ore annually.</font>

<font face="arial, geneva, helvetica" size="2">Rio produced about 97.2 million tonnes from its Pilbara operations in calendar 2006.</font>

<font face="arial, geneva, helvetica" size="2">BHP and Rio are the two largest exporters of iron ore in the Pilbara region and have been progressively ramping up and expanding their operations to meet surging demand from China.</font>

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