BHP Invests $975 Million in South Africa Coal Project

Global mining giant BHP Billiton(BHP.AX)(BLT.L) said it plans to invest $975 million to upgrade and expand its thermal coal mines in South Africa to sustain coal exports amid soaring coal prices.

BHP approved an investment plan to develop new coal reserves across its Douglas and Middleburg collieries in South Africa and build a coal processing plant with a capacity of 14 million tonnes a year, Melbourne-based BHP said in a statement on Saturday.

BHP said the new coal processing plant would replace the existing, less efficient washing plant at Douglas mine.

The expansion project will enable BHP Billiton to maintain energy coal exports from its Douglas and Middleburg colleries at current levels of 9.5 million tonnes a year as well as fulfill its domestic contractual commitments.

First coal from the new mining areas is expected by the middle of 2008, while the new processing plant is expected to receive coal in mid-2010, BHP said. The anticipated life of mining operations is to 2034.

Prices of thermal coal, used in power generation and the manufacturing of cement, have risen over 145 percent from a year ago to about $135 a tonne, due to surging demand and supply disruptions from key exporters Australia, China and South Africa.

The Douglas and Middleburg collieries are currently owned through the Douglas Tavistock Joint Venture, in which BHP has an 84 percent share and Xstrata Plc (XTA.L) has a 16 percent share. BHP said would solely develop and own the coal expansion project and the joint venture would be restructured.