BHP will spend $3.9 billion on developing its majority-owned South Flank iron ore mine in the central Pilbara.

BHP has committed to what looks like being its biggest iron ore investment of the next 10 years, ploughing $A3.9 billion ($US2.9 billion) into development of its majority-owned South Flank mine in the central Pilbara.

The dual-listed mining giant said the Western Australian project will fully replace production from its 80 million tonnes per year Yandi mine, which is reaching the end of its economic life.

Western Australian project

BHP Minerals Australia president Mike Henry said South Flank would prove capital efficient and offer attractive returns.

“I wouldn’t want to comment on our competitors but, for us, this is the only investment of this size that we’ll have over the course of next decade,” Mr Henry said on Friday.

“This sets us up really well.”

South Flank iron ore will help increase BHP’s average iron grade in WA from 61 per cent to 62 per cent, and the overall proportion of lump ore – which allows for more efficient steelmaking than smaller fine ore – from 25 per cent to approximately 35 per cent.

Production is expected to start in 2021 and run for more than 25 years.

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