The expansion, timed to come online in 2014, has not yet been permitted and will require additional mining equipment.

Of the development cost, BHP’s share equates to $2.1 billion and the life of the initial project is expected to be greater than 60 years.

The Caval Ridge mine will have the capacity to produce 5.5Mtpa, while the Peak Downs mine, which lies immediately to the south, will expand by 2.5Mtpa.

The investment will include construction of a coal handling and preparation plant at Caval Ridge.

It will also process ore from the Peak Downs expansion, which will be fed into the plant via a conveyor.

Caval Ridge, which already has all the necessary regulatory approvals, will be an open cut dragline and truck and shovel operation, with coal railed to the BHP Billiton Mitsubishi Alliance’s Hay Point coal terminal.

BMA is owned equally by BHP and Japan’s Mitsubishi Development and operates seven mines in the Bowen Basin – Goonyella Riverside, Broadmeadow, Peak Downs, Saraji, Norwich Park, Gregory Crinum and Blackwater.

This article first appeared in ILN's sister publication Miningnews.net.