It is reported that BHP Billiton for so long relegated to junior partner in the Pilbara iron ore duopoly with Rio Tinto has finally fired a shot across the bows of its arch rival by declaring an ultimate objective that even pips Rio long term target.

On the first of a four day analysts tour of its Pilbara operations, iron ore boss Mr Ian Ashby revealed that BHP was setting a long term production target of 450 million tonnes of iron ore a year to full exploit the potential of his division assets.

Rio long term disclosed target is production of 433 million tonne per annum compared with existing capacity of about 225 million tonne per annum.

BHP's aspiration target is almost three times the annualised rate of 155 million tonne per annum achieved by its Pilbara unit in the June quarter and based on an iron ore spot price of USD 178 a tonne could gross the mining giant as much as USD 80 billion in annual revenue.

BHP has not put a timeline on when it hopes to reach the 450 million tonne per annum milestone or hinted at the cost but told the 34 analysts and investors yesterday that it expects to hit 350 million tonne per annum by the end of this decade. It has already sanctioned a USD 7.4 billion expansion to 240 million tonne per annum which will take up all available space in Port Hedland inner harbour.

A move to 350 million tonne per annum and beyond will require the development of an outer harbour at Port Hedland which is being investigated by BHP. The outer harbour will feature an eight berth, 4 kilometres long jetty. It will also require the development of Greenfield mine projects in the Pilbara on top of expansions at existing operations.

BHP and Rio have been expanding their Pilbara operations at an average cost of about USD 150 per incremental tonne.

(Sourced from thewest.com.au)