BHP Billiton Doles Out Initial Funding to South Flank Project

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BHP Billiton Limited BHP approved an initial funding of $184 million for the South Flank project. The company affirmed that this central Pilbara project will not only generate construction jobs but will also help boost productivity in Western Australia.

Over the last three months, BHP Billiton's shares have lost 6.98%, compared with the 8.13% decline of the Zacks categorized Mining - Miscellaneous industry.

Inside the Headlines

BHP Billiton's South Flank project calls for the construction of a new ore deposit, which is located approximately 130 kilometers (km) away from the north-west of the Newman town and is roughly 8 km away from the company's Mining Area C operation. The new deposit will be constructed to sustain aggregate iron ore production in the Western-Australian region as the company's Yandi mine is anticipated to witness ramp down by early or mid-2020.

The company anticipates that the ramping up of activities at the South Flank deposit will overlap with the operations of its Yandi mine. Also, capital efficiency of the South Flank project is strengthened because it will include usage of Mining Area C operation's premium infrastructure. The capital cost of the project is estimated at $30--$40 per ton.

Reasons for Underperformance

BHP Billiton currently carries a Zacks Rank #5 (Strong Sell). The company and its peers, VALE S.A. VALE , Rio Tinto PLC RIO and Glencore Plc GLNCY , are currently under pressure due to the recent slump in iron ore prices. Over the last three months, iron-ore prices have dipped nearly 37.7% to $55.5 per ton as of Jun 26, 2017. An overall excess supply situation is weakening the prices of this major steel making component in the recent times.

Moreover, headwinds such as outbreak of natural disasters, excessive industry rivalry or unfavorable government mining and exploration policies might hurt performance of these stocks in the quarters ahead.

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The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

This article appears in: Investing , Business , Stocks
Referenced Symbols: GLNCY , VALE , BHP , RIO

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