BHP sells mine stake

BHP Billiton has sold a 15 per cent stake in a West Australian iron ore mine to two Japanese conglomerates for $US1.5 billion ($1.64 billion).

By InvestSMART · 22 Jun 2013

By InvestSMART ·
22 Jun 2013

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BHP Billiton has sold a 15 per cent stake in a West Australian iron ore mine to two Japanese conglomerates for $US1.5 billion ($1.64 billion).

Itochu is investing $US800 million while Mitsui is stumping up $US700 million in shares and loans in BHP's Jimblebar mine in the Pilbara.

Itochu will hold an 8 per cent stake in the project, and Mitsui 7 per cent.

BHP Billiton's iron ore president, Jimmy Wilson, said the deal would improve simplicity and flexibility. "We are pleased to extend our successful, long-standing joint venture relationship with Itochu and Mitsui," he said in a statement.

The Foreign Investment Review Board has to approve to the transaction for the mine, rail and port infrastructure project, which is expected to be signed in the September quarter.

The Jimblebar mine will have initial production capacity of 35 million tonnes a year, rising to 220 million tonnes once it becomes fully operational.

The mine will have an initial 35 million-tonne-a-year capacity and forms part of BHP's plan to boost its output in the Pilbara to 220 million tonnes from 185 million tonnes by financial 2016.

The Jimblebar mine is expected to begin production in early 2014.

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Frequently Asked Questions about this Article…

What stake did BHP sell in the Jimblebar mine and how much was the deal worth?

BHP Billiton sold a 15% stake in its West Australian Jimblebar iron ore mine to two Japanese conglomerates for US$1.5 billion (about A$1.64 billion).

Which companies bought into the Jimblebar mine and how much did each invest?

Itochu invested US$800 million for an 8% stake, while Mitsui invested US$700 million (in shares and loans) for a 7% stake in the Jimblebar project.

Where is the Jimblebar mine located and what is its role in BHP's operations?

The Jimblebar mine is in the Pilbara region of Western Australia. It forms part of BHP's Pilbara iron ore operations and its plan to boost regional output.

What is the Jimblebar mine's production capacity and how will that change over time?

Jimblebar will have an initial production capacity of 35 million tonnes a year, with capacity rising to 220 million tonnes a year once fully operational.

How does the Jimblebar sale fit into BHP's Pilbara output targets?

The Jimblebar project is part of BHP's plan to increase Pilbara output to 220 million tonnes from 185 million tonnes by financial 2016, helping the company reach its higher production target.

When is the Jimblebar mine expected to start production?

The Jimblebar mine is expected to begin production in early 2014.

Does the Jimblebar transaction need regulatory approval and when is it expected to be finalised?

Yes — the transaction requires approval from the Foreign Investment Review Board for the mine, rail and port infrastructure project. The deal was expected to be signed in the September quarter, subject to that approval.

What did BHP say about extending partnerships with Itochu and Mitsui?

BHP's iron ore president, Jimmy Wilson, said the deal would improve simplicity and flexibility and that the company was pleased to extend its successful, long‑standing joint venture relationship with Itochu and Mitsui.