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News Releases 2007
Determination of investment to increase system capacity of Western Australian iron ore operations
March 23, 2007
ITOCHU Corporation and Mitsui & Co., Ltd. have decided to make investments to increase system capacity of Western Australian iron ore operations. The project is being operated jointly with BHP Billiton, an Australian-British firm that ranks the world's biggest mineral resource enterprises (see Note 1).
ITOCHU and Mitsui operate three iron ore joint ventures with BHP Billiton in Mt. Newman, Yandi, and Goldsworthy (in each, the interest shares are 85% for BHP Billiton, 8% for ITOCHU, and 7% for Mitsui). Taken together, these projects shipped about 108 million tons of iron ore in 2006, mainly to Asia.
Worldwide, the seaborne trade in iron ore amounted to about 400 million tons in 1996 but increased by about 320 million tons over the next ten years and reached 720 million tons in 2006, largely due to the fast-paced demand growth in China. It is projected to top 900 million tons in 2010. To meet this global demand increase, the companies involved in the aforementioned three joint ventures are implementing series of staged growth projects, and currently promoting construction to boost the capacity to 129 million tons. The new round of investment is for a succeeding expansion to raise the annual capacity by another 26 million tons to 155 million. Initial production is expected to commence in the first half of 2010.
It is estimated that the investment for this expansion will total AUD2.73 billion (about JPY250 billion; see Note 2). The outlay by the two Japanese partners will total about AUD410 million (about JPY36.8 billion, consisting of about JPY19.6 billion by ITOCHU and about JPY17.2 billion by Mitsui).
The construction for capacity expansion will take place mainly at Mt. Newman. The final processing, which has been performed at Port Hedland so far, will be relocated to the mine. The capacity of railway and port facilities will also be expanded to cope with the increased volume of transportation. Besides raising system capacity, the expansion will make the production more efficient and lead to environmental improvement by reducing dust emissions in the port area.
Due to the new investment, the production and shipment volume corresponding with the interest of the two Japanese partners in the three joint ventures will rise from the current level of 16.1 million tons (about 8.6 million for ITOCHU and about 7.5 million for Mitsui) to 23.2 million tons (about 12.4 million for ITOCHU and about 10.8 million for Mitsui).
ITOCHU and Mitsui are expanding the capacity for supply of iron ore to meet the growing demand.
Note 1 Profile of BHP Billiton
Date of establishment
|June 30, 2001
The world's largest international diversified resources company, BHP Billiton was born with the merger of BHP, an Australian firm dealing mainly in iron ore, coal, oil, and natural gas, and Billiton, a South African firm whose business centers around aluminum, non-ferrous metals, and coal.
The company is dual-listed on the stock exchanges in Sydney and London, and is also listed on the Johannesburg (South Africa) and New York stock exchanges.
Results in the fiscal year ended June 31, 2006
This figure represents the remainder after subtraction of the investment of AUD220 million in the Jimblebar mine, to which BHP Billiton owns all the rights, from the total project investment of AUD2.95 billion.