The project comprises an 11km overland conveyer system which will transport coal from the Peak Downs mine the coal handling preparation plant at the nearby Caval Ridge mine.

The investment will also include a new mining fleet, a new stockpile and run-of-mine station at Peak Downs, as well as an upgrade of the Caval Ridge CHPP and stockyard.

It will result in the Caval Ridge CHPP increasing throughput to reach its 10 million tonne per annum capacity.

BHP president operations, Minerals Australia Mike Henry said the project formed the “missing link” between the two mines.

“This investment furthers our productivity agenda, reduces costs, releases latent equipment capacity, and strengthens our coal business’ global competitiveness,” he said.

“We are committed to Queensland’s Bowen Basin and this project creates new employment opportunities during construction and locks in ongoing operational roles.”

The project will create up to 400 new construction jobs and will secure 200 ongoing operational jobs.

Construction will begin mid-year and take around 18 months.

BHP CEO Andrew Mackenzie flagged in February that the project was close to being approved and would reduce trucking costs.

The Queensland Resources Council welcomed the news, saying it showed the ongoing strength of the Queensland coal industry.

“These investments are driven by companies willing to invest because they see the fundamental drivers of global demand for high-quality Queensland coal remain strong,” QRC CEO Ian Macfarlane said.

“We know demand remains strong as there is no viable substitute for coking coal in the production of blast-furnace steel – no ‘Uber’ process waiting in the wings.

BMA is a 50:50 joint venture between BHP and Mitsubishi. It operates seven Bowen Basin mines, while BHP operates another two with Mitsui.

Queensland Coal produced 21.1Mt of metallurgical coal in the December half.

BHP shares were up by 1.6% to A$24.04 in mid-afternoon trade.