(Updates with closing share price in fifth paragraph.)
Dec. 6 (Bloomberg) -- Anglo American Plc, the third-largest miner of coal used in steel, approved the $1.7 billion Grosvenor project in Queensland as it seeks to triple Australian output.
Grosvenor, south of the company’s Moranbah North mine, will produce 5 million metric tons a year and a study is under way for an expansion, Anglo said today in a statement. The company had forecast initial production at the mine of 4.3 million tons.
Anglo plans to spend $85 billion in the next decade raising output of coal, copper, iron ore and other metals and minerals needed in fast-expanding Asian economies. Under the proposals, it will seek to boost Australian production threefold by 2020.
Projected development costs at Grosvenor of $340 a ton of capacity are higher than expected, “reflecting continued capex inflation for mining projects across the globe,” Tony Robson, an analyst at BMO Capital Markets, wrote in a note today, citing the securities company’s earlier estimate of $233 a ton.
Anglo said the ratio of investment to output was “highly competitive.” Rivals BHP Billiton Ltd. and Mitsubishi Corp. in March announced $1.6 billion of spending on the Daunia mine in Australia for 4.5 million tons of annual output, or $355 a ton. Anglo fell 0.3 percent to 2,494.5 pence at the close in London.
“Grosvenor is the first of our next phase growth projects and will initiate our industry leading production growth of metallurgical coal from our Australian business over the next decade,” Chief Executive Officer Cynthia Carroll said.
First production of coal at Grosvenor is expected in 2013, depending on necessary permits and licenses, Anglo said in the statement. The company has won permission from the Queensland government to expand the Abbot Point coal port, it added.
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