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BHP awards works contract for US$2.9B South Flank iron ore project to CIMIC

BHP Billiton Group awarded a A$260 million mining infrastructure works contract for the South Flank iron ore project, part of the Area C property, to CIMIC Group Ltd., shortly after approving a US$2.9 billion development of the Western Australian project.

The contract awarded to CIMIC's CPB Contractors by the mining giant covers the construction of bulk earthworks and concrete works to support the expansion and duplication of the existing rail loop and stockyard.

In addition, the contractor will also fulfill the earthworks and concrete works for the development of a new ore processing plant and train load-out facilities, as well as managing underground services, including electrical and water services, for the South Flank project.

BHP gave the go-ahead for the US$2.9 billion development, which will fully replace production from the 80 million-tonne-per-year Yandi iron ore mine, which is reaching the end of its economic life.

First production from South Flank is targeted in 2021, and the project is expected to produce ore for over 25 years.

The company expects the lift in average iron ore grade to 62% when South Flank project starts production in 2021 will provide a huge boost for the miner, particularly given its "leaner" operations than Yandi, which its production will replace.

In June 2017, BHP approved an initial funding of US$184 million, primarily for expanding accommodation facilities to support workforce requirements.

The mining major secured conditional approval in December 2017 from Western Australia's Environment Protection Authority to develop South Flank.