It is reported that BHP Billiton has eased concerns about the potential USD 48 billion Port Hedland iron ore harbour expansion as it showed off its Pilbara region iron ore assets to investors this week.

The Port Hedland outer harbour development which BHP has been forced to pursue after two failed attempts to gain access to Rio Tinto Pilbara harbours was ahead of schedule on environmental approvals, BHP iron ore environmental executive Carl Binning told analysts on a tour of the Pilbara.

Analysts reports from the tour have been generally positive about the expansion previously the subject of some scepticism.

BHP has said capacity in the outer harbour could be 240 million tonnes a year which analysts estimate would cost USD 48 billion. That would bring the port capacity to 480 million tonnes.

A first stage of the outer harbour is targeted for approval in the second half of next year. Because of the extra work required, it had been assumed the development cost of the outer harbour and associated mines and railways would be much more than the USD 183 a tonne BHP has budgeted for its expansion to 240 million tonnes.

Mr Glyn Lawcock UBS analyst said the presentations had improved his outlook on the expansion. He said that "We are more comfortable about going ahead with the outer harbour."

He added that "Assuming a USD 200 a tonne capital cost to build with USD 4 billion to USD 5 billion required upfront to establish a 4 kilometres jetty and construction of the channel we estimate the outer harbour to be worth about USD 10.8 billion net to BHP with an internal rate of return of 15%."

UBS attributes no value for the outer harbour in its USD 270 billion valuation for the mining giant.

(Sourced from www.theaustralian.com.au)