(EnergyAsia, March 7, Friday) — Australian resources giant BHP Billiton said it has approved a US$975 million coal optimisation project which includes utilising reserves across the Douglas and Middelburg Mine Services (MMS) collieries and developing new mines with low strip ratio coal to be fed into a new 14-million-ton-per-year processing plant. The plant will replace the existing, less efficient washing plant at Douglas.

BHP Billiton said the project will enable it to maintain coal exports from the combined Douglas Colliery and MMS at current levels whilst also fulfilling domestic contractual commitments. BHP Billiton’s share is approximately 9.5 million tons per year.

The new mines are expected to begin producing from mid-2008 while the new plant is expected to receive coal from mid-2010. The mine is expected to have a life of 26 years.

The Douglas and MMS collieries are currently owned through the Douglas Tavistock Joint Venture (DTJV), in which BHP Billiton has an 84% share and Xstrata has a 16% share.

To facilitate the project, which is to be developed and owned solely by BHP Billiton, the DTJV will be restructured with each of the joint venture partners being allocated coal resources according to their ownership share.

A number of regulatory approvals are being sought to give effect to this restructure.

Dave Murray, President of BHP Billiton Coal, said: “Approval of the DMO project is a core component of BHP Billiton’s coal strategy and is in keeping with BHP Billiton’s focus on operating low-cost, long-life assets.

“This project allows us to realise maximum value from these assets by optimising the existing reserves at Douglas and MMS and enabling us to maintain exports through to 2034.

“With the recent approval of the US$450 million investment in the Klipspruit project, our South African coal operations will now comprise three world class assets, namely Middelburg Mine Services (which now incorporates the resources of Douglas Colliery), Khutala Colliery and Klipspruit Colliery.”