ITOCHU & Mitsui invest US$1.5 billion in BHP mine

Japanese trading houses ITOCHU Corp and Mitsui & Co Ltd will invest a combined $1.5 billion in BHP Billiton’s Jimblebar iron ore mining hub in Australia. ITOCHU and Mitsui will invest approximately US$800 million and US$700 million respectively in shares and loans, representing an 8 percent and a 7 percent interest in the mining hub and resource. The consideration includes a share of costs already incurred by the Jimblebar expansion project. ITOCHU and Mitsui will also contribute future development costs for Jimblebar in proportion to their shares.

Jimblebar is a large prospective deposit located 41km east of Newman in the Pilbara region. The mine is now under construction and will be a large scale, low cost, open pit mining operation with an initial production capacity of 35 million tons per annum, and with embedded options for expansion to 55 million tons per annum for incremental capital investment.

ITOCHU and Mitsui, together with BHP Billiton, have a long term relationship in three iron ore joint ventures, Mt. Newman, Yandi, and Mt. Goldsworthy in Western Australia (BHP Billiton holds an 85% share, ITOCHU 8%, Mitsui 7%), and Jimblebar ore will be transported through the rail and port facilities owned by these joint ventures.

The three joint ventures shipped a total quantity of approximately 180 million tons in financial year 2012, and are currently expanding infrastructure capacity to 220 million tons per annum (including to service Jimblebar).

Through this transaction, ITOCHU and Mitsui seek to increase iron ore supply capacity through the Western Australia Iron Ore operations, in response to the expected increase in the medium to long-term worldwide iron ore demand.