BHP Billiton Limited (ASX: BHP) shareholders woke to the news that Australia’s largest mining company will plough an additional $US2.9 billion ($3.83 billion) investment in Western Australia’s Pilbara region.

BHP is the 85% owner of Mining Area C in the Pilbara, including the iron ore project called South Flank. Together with its partners ITOCHU Minerals, Energy of Australia and Mitsui Iron Ore Corporation, the project will be boosted by $US3.4 billion ($4.5 billion) in spending to bring the project up to 80 million tonnes of production each year.

“The project will create around 2,500 construction jobs, more than 600 ongoing operational roles and generate many opportunities for Western Australian suppliers,” BHP’s Mike Henry said.

“It will enhance the average quality of BHP’s Western Australia Iron Ore (WAIO) production and will allow us to benefit from price premiums for higher-quality lump and fines products.”

The South Flank project will replace 80 million tonnes of production from the Yandi mine, which is nearing the end of its economic life.

Due to its high quality of ore BHP says the average grade of the iron ore across the Pilbara will improve from 61% to 62%.

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