BHP Iron Ore seeks to double output at Yandi mine

BHP Iron Ore is seeking Western Australian Government approval to double output at its new Yandi mine - only weeks after starting production.

Premier Carmen Lawrence said today BHP wanted to spend another $3.5 million on plant expansion and boost the Pilbara iron ore mine's output to 10 million tonnes a year.

"On past performance we would expect 80 per cent or more of that money to be spent here in WA and it will certainly create more jobs," she said.

BHP had decided on the expansion because it wanted to be in a position to take maximum advantage of the expanding demand for Yandi's new type of low alumina iron ore.

"Already demand for the ore from Japanese steel mills has exceeded Yandi's planned production and although the existing plant can handle a larger output, BHP is sufficiently confident about its new product to push ahead with an expansion program."

Dr Lawrence said it was only last week that the first shipment of Yandi ore left for Japan from Port Hedland.

BHP had already invested more than $80 million in the Yandi mine, including construction of a new rail spur line to link the mine development with the main rail network to the coast.

"An analysis just completed for BHP shows the development has brought considerable benefits to WA industry," Dr Lawrence said.

"Some 91 per cent of the original Yandi construction contracts and purchases went to Australian companies - and 81 per cent of them were WA companies.

"BHP expects WA companies will take a similar share of the new contracts."

Dr Lawrence said the expansion proposals involved enlarging the existing ore processing plant and buying more equipment.

"We would expect approvals to be ready by the end of April."