BHP May Spend $25 Billion on Iron Ore, Citigroup Says

BHP Billiton Ltd., the world’s largest mining company, may spend $25 billion expanding its iron ore operations after yesterday committing $80 billion to develop its own mines and oil fields, Citigroup Inc. said.

The sixth stage of an expansion of BHP’s Western Australian iron ore mines, known as RGP6, may cost more than $5 billion and developing Port Hedland, its existing export port, may cost more than $15 billion, Citigroup analysts led by Clarke Wilkins said yesterday in a report.

BHP yesterday reported a 72 percent gain in first half profit to $10.5 billion and damped talk that it would make major acquisitions, instead outlining the plan to spend the $80 billion through to 2015. It also expanded a $4.2 billion share buy back to $10 billion.

BHP may spend $15 billion to 2015 on its petroleum assets, including expansions at Atlantis and Mad Dog in the Gulf of Mexico, and the Browse, Scarborough and Thebe projects, Wilkins said. Expanding the Olympic Dam mine in South Australia may cost more than $20 billion and $5 billion of that may be spent by 2015, he said.

BHP gained 0.1 percent to A$46.64 at the 4:10 p.m. Sydney time close on the Australian stock exchange today. Wilkins boosted his target price to A$56, up from A$50.

The company may also spend more than $10 billion building new coal mines, Caval Ridge and Daunia, and expanding the Hay Point, he said. The Jansen potash project in Canada may be developed at a cost of between $5 billion and $10 billion, he said.

（source from：Bloomberg）