The initial project will add 8 million metric tons per year (mtpy) capacity in metallurgical coal, with the expectation of a rapid, low cost expansion to 10 million mtpy. This additional 2 million mtpy per will only require the addition of mining equipment, according to the company, but it has not yet been permitted.

The total investment in the initial project is $4.2 billion, of which BHP Billiton’s share is $2.1 billion. The resource life of the initial project is expected to be greater than 60 years. First coal is expected in calendar year 2014.

The new Caval Ridge mine will have the capacity to produce 5.5 million mtpy. The Peak Downs mine will expand production by 2.5 million mtpy. The investment will include construction of a new coal handling and preparation plant at Caval Ridge to process production from the Caval Ridge mine and Peak Downs expansion. Coal from the Peak Downs expansion will be transported by conveyor to the new plant. The Peak Downs mine lies to the immediate south of the new Caval Ridge mine.

The Caval Ridge mine will be an open cut dragline and truck and shovel operation, with coal railed to the BHP Billiton Mitsubishi Alliance Hay Point Coal Terminal. The project has received all necessary regulatory approvals.

“This investment in the Caval Ridge mine was foreshadowed in March of this year when BHP Billiton announced investments in the new 4.5 million mtpy Daunia mine, the life extension of the Broadmeadow mine, and the 11 million mtpy expansion of the Hay Point Coal Terminal,” said Hubie van Dalsen, president, BHP Billiton Metallurgical Coal. “This is a continuation of BHP Billiton’s strategy of investing in large, low cost, expandable mines with long lives. Additional expansion projects are being advanced to follow this investment in due course.”