South Flank, at Mining Area C, is the preferred option to replace production from the depleting 80 million tonne per annum Yandi mine early next decade.

While the development, which is expected to cost $2-3 billion, is not yet approved, BHP president operations, Minerals Australia Mike Henry said the early funding would be used for the expansion of accommodation facilities to support current and future workforce requirements.

“As well as supporting our current operational requirements, this work will advance potential first ore from South Flank, while we further optimise the full development and progress external and internal approvals,” he said.

“As we have said previously, a continuing stable investment environment in Western Australia is required to underpin ongoing investment in the business, including this project.”

The early funding is expected to generate several hundred jobs, with the full development to require thousands of workers.

Capital costs for South Flank are expected to be $30-40 per tonne, with expenditure fitting within BHP’s previously indicated average sustaining capital expenditure of $4/t over the next five years in the Western Australian Iron Ore division.

“The capital efficiency of South Flank is underpinned by the planned use of existing infrastructure at the Mining Area C operation, which would, if approved, become one of the largest standalone iron ore processing centres in the world, within reach of several billion tonnes of high-grade ore,” Henry said.

South Flank is expected to be submitted for board approval in mid-2018, with first ore targeted for 2021.